To Move Milk from the Cow to your Fridge – the Function of Supply Chain
Inspired-Search | 17 November 2017
Written by: Annemieke Gelder
With the amount of innovation and digitalization around us, these are probably the most exciting times for Supply Chain professionals. In the next series we will discuss a couple of key Supply Chain trends and considerations for your strategic and organizational needs and to shape your next generation supply chain.
Milk comes from cows, not from the supermarket, and everything that happens in between is what we call “Supply Chain”. In our daily lives all physical goods we consume, use and utilize are brought to us through the function of supply chain, and yet it is a function not well known to the wider public, or even understood by business leaders.
Supply Chain is all around us
Supply chains come to life when we start keeping an eye out for the DHL trucks and container lorries on the road, the warehouses along side the high ways, but do you really have a clue where products actually come from until another production safety, child labor or pollution scandals emerges in the news?
Business leaders in Finance, General Management, Sales & Marketing like to watch the sales numbers and typically visit the stores where product is sold. Less frequently a view is taken on supply performance or actually visiting manufacturing operations, DC’s, warehouses or port operations in the operating markets.
Omni Channel strategies will immediately benefit from an integral approach to your supply chain design and requirements. Even more, supply chains deal with 3 core ‘flows’, which be on any business leaders’ mind: product availability to customers, information between trading parties; and cash, either locked up in (in-transit) inventory or released upon invoicing and payment (model 1).
MODEL 1 – 3 FLOWS HANDLED BY SUPPLY CHAIN
Supply Chain History and Development
Logistics is as old as people fighting wars. Military logistics was practiced in ancient times to move around resources and army supplies, however the ‘Supply Chain’ field is much younger. As my favorite author Alain de Botton puts it: ‘Two centuries ago, our forebears would have known the precise history and origin of (..) things they ate and owned as well of the people and tools involved in their production’.
In the 40’s mechanisation improved warehouse operations by replacing labor intense material handling processes. The 50’s saw the introduction of containers and gantries. The 60’s/70’s early computerization enabled innovative approaches to planning and inventory management, which would take a leap in the 80’s. This was also when leaders started to recognize an opportunity to improve the bottom line if trained professionals would perform these activities (Cerasis). ERP software emerged in the 90’s and today we see global shipments in standardized containers handled through various systems and integration.
This industrialized global trade brings great access to affordable and various products of many origins, but we also lost sight of the actual sources.
Variable Supply Chain Activities, Organization and Effectiveness
Supply chain professionals design, operate and manage transportation, warehousing, inventory management, packaging and logistics information. Inventory management ties in together planning and forecasting and the supply of raw materials managed through Procurement. As a result, there are many jobs in the supply chain field (CSCMP).
Supply Chain organizations are not standardized across industries, the setup driven by the nature of the product, service and industry. Add on any special company or leadership focus, the socio-economic background of the operating geographies and markets.
Procurement may therefore report into the CEO (25%), COO (22%) or CFO (13%; KPMG); Manufacturing and Operations operate stand-alone or as part of one function and ‘supply chain’ is sometimes looking after planning and elsewhere covering the whole end to end. This IS very confusing for anyone outside of the field!!!
There is not a “one-size fits all model” to supply chain and many leaders who are extremely effective in sophisticated and developed economies struggle significantly in emerging markets, where considered ‘basics’ as infrastructure and communications are at a relatively underdeveloped stage that the leaders have great difficulty achieving their goals.
Technology will drive Global Supply Chain Transparency
‘Supply Chain’ is mega cross-functional, dealing with cross border trade, legal, inventories, contracts, sales and local dynamics, and is probably one of the most diverse fields to operate in. Activities and organizations may not fit the ‘one size’ model, but the necessary skill-set is very transferable across industries, effectively all dealing with the core of moving goods from A to B.
This physical movement and its orchestration becomes increasingly technology driven through robotic vehicles, control towers, AI, automated (RPA) and instant transaction execution (block chain). Specifically, the improved visibility and block chain will drive enhanced consumer awareness, perception of product origin, improved production conditions and waste reduction. The more advanced supply chains become, the more they will help to return the visibility and understanding of the ‘cow to our milk’.
Annemieke Gelder has over 16 years experience in end-to-end supply chains across different industries. She is a certified Procurement Professional (MCIPS), Project Manager (PMP) and holds a MSc Business Administration in Supply Chain of the Rotterdam School of Management. She recently set up www.supplydirection.com to channel her learnings and views on supply chain trends, as well help business shaping and improving their supply chain operations.
Reading more blogs of Annemieke?
Consider reading her blog: Digital Logistics – Moving the Needle