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Complete supply chain analysis: a comprehensive guide

October 29, 2021

An efficient, cost-effective and competitive supply chain management (SCM) system forms the backbone of every successful business, and to a large extent, entire industries. It is the entire cycle of producing and delivering a service or a product from the very first step of product or service development to the sourcing of raw materials, and on to the production, logistics, ending with the delivery of the final products to the end users.

 

What is the concept of supply chain analysis?

The concept of a comprehensive supply chain analysis involves detailed scrutiny and an organised evaluation of the supply chain activities with the goal of maximising customer value, enacting long-term sustainability and attaining significant competitive advantage.

 

A good supply chain strategy and management system benefits from information systems that do more than simple spreadsheets to monitor these activities. Using proven business processes such as logistics benchmarking provides companies with the possible benefits of improving the supply chain operations.

 

The information flow gives the key players room for flexibility and optimisation to control and monitor the movement of products and services throughout the chain. Doing so also provides the opportunity for these supply chain stakeholders to coordinate with each other efficiently.

 

The five important steps of supply chain management

At each stage of SCM are multiple layers of activities, resources and information that are managed by supply chain managers and other resources. The entire process involves five key steps: planning, sourcing, execution, delivery and returns.

 

1)   Production planning creates the strategic framework and creates the blueprint of the entire operation from start to finish. Major talking points such as the cost-effectiveness of manufacturing a product or component on their own, or procurement from domestic or foreign suppliers; and mapping the network of production facilities, warehouses, their design, the levels of production needed, and transport logistics.

 

2)   Sourcing is the procurement of raw materials and components from various suppliers. This involves identifying possible wholesaler sources for these followed by a stringent selection and negotiation process. Companies may often require several suppliers or a network of suppliers, either of which still require evaluation. Overseeing such a network, especially those that employ a global supply chain, may also entail that export and import requirements are adequately addressed.

 

3)   Execution green-lights all the plans and processes agreed upon during the planning and sourcing stages. At this point, some tentative output is expected in the form of finished products ready for testing, packaging and delivery. Available data can be quantified to optimise production and delivery times, and to identify possible choke points that may cause potential delays or other problems. 

 

4)   By the time of the Delivery stage, it is imperative that the right products and quantity of such should reach the right customers at the right place and time. Logistics providers play a crucial role in ensuring that all these are accomplished smoothly and efficiently. With technology, it should be easy to keep track of warranty and trial periods for products, invoicing, payment receipts, inventory allocation, warehousing networks, and output in real-time.

 

5)   The cycle concludes with Return Handling. Supply chain managers at this point utilise IT software for inventory management and logistics management to authorise returns, schedule product shipments, replacement of damaged, defective, or end-of-life items from retailers and distributors and provide refunds if needed. Returns management should be viewed as a value-added measure among supply chain managers.

 

 

It is essential that businesses see all the activities and transactions happening throughout the entire supply chain system. Supply chain Traceability solutions can consolidate all the information companies need from their chain partners into a comprehensive data framework that makes it easy to access and validate. 

 

Why is it important to do supply chain analysis?

Implementing a timely supply chain management analysis gives companies the opportunity for optimisation of their existing operations and resources through data-driven decisions. Achieving a profitable business with a lean yet strong supply chain performance is the dream of every enterprise. Companies can reach this goal by harnessing the power of data and the appropriate technology to conduct warehouse monitoring, improve supply chain partner responses and conduct performance measurements based on customer feedback.

 

Data-driven supply chain analyses can provide businesses with insights into future risks and help identify trends that may provide added value into reducing risk impact. Using customer and vendor inputs, enterprises can predict future demand with planning accuracy by establishing metrics and using forecasting tools.

 

The difference between supply chain and value chain

Discussing the supply chain also brings up the subject of the value chain. Both the value chain and supply chain process have similar goals - but with slight differences in methodology - which are to satisfy customers with their products and keep their operations running smoothly and efficiently.

 

The supply chain is a process that involves the basic five steps, from planning and sourcing to delivery and returns – for companies to provide the product or service to the customer. Supply chain managers oversee the participation and coordination of all the parties in the supply chain network to fulfil customer requests.

 

On the other hand, the value chain focuses on the interaction and coordination between the supply chain participants, and how they can add value to their existing or new products and services to gain a competitive and profitable edge. Thus, the value chain occurs within the supply chain operations, and is designed for the purpose of creating value that exceeds the cost of providing their goods and services to customers.

 

 

The role of transparency

Top-tier enterprises are constantly improving their value chain to maintain the premium status of their products and services among their customers. Consumers are becoming increasingly vocal, especially on social media platforms, about the brands they invest and support.

 

The growing trend in supply chain management is the demand for greater transparency and sustainability. With the help of solutions like Visibility, businesses can get insights into their market’s activities, get updated about their supply chain partners, and stay competitive to rise above disruptive events and industry challenges.