What Is the Supply Chain?

The supply chain isn’t just about moving goods from point A to B—it’s the intricate network of people, processes, tools, and systems that keep businesses running smoothly. From raw materials to customer delivery, it’s about getting the right things to the right place at the right time, all while minimizing delays and maximizing efficiency. Think of it as the backbone of any successful operation.

Definition

Unlike everyday items, it’s difficult to give a precise definition of the supply chain. It’s an abstract concept. It’s an integrated set of techniques, services and tools which ensure, when they interact correctly, the timely supply of goods, and the services that a company needs to function effectively in order to deliver to its customers what they ask for, without delaying or blocking its activities, whatever they may be (manufacturing, sales, distribution, R&D, etc.).

For example, an industry that produces vehicles would need, amongst other things:

• Raw materials for parts manufactured in-house or for subassemblies produced by subcontractors;
• Suppliers to buy materials or parts from, or to entrust certain production tasks to (subcontractors);
• Customers to buy the cars;
• Transportation to deliver the manufactured cars;
• Communication systems for interacting with customers and suppliers;
• Subcontracted services linked to non-strategic activities (cleaning and repair of premises, installation of machinery, etc.)

The list is obviously not exhaustive. Rather, it is a way to realize that knowing that you need aluminum and rubber is not enough to be effective – you also need to know how much aluminum and rubber you need, when, which materials will be needed, and where they will be used. Likewise, you need to be able to inform customers of the expected delivery dates of the vehicles they order, and to provide the cleaning company with a precise plan including recurring and one-off tasks.

Planning: An Essential Element of the Supply Chain

Another essential element is planning. It fits right into the supply chain. Through planning, the supplier network can adapt to customer needs. Customers can make informed decisions and choose one vehicle over another given certain factors: potentially different delivery times, staff availability at the cleaning company, etc.

But there is still a puzzle piece missing. If the planner does not know stock levels, or if the supplier cannot receive the orders, or if the customer cannot order the car, the system will be halted.

The Necessity of an Integrated System for Flexible Processes

In order for the business network to fulfill its mission through proper planning, the various stakeholders must communicate effectively with each other and certain data must be visible to them.

Each link in the chain has to be able to communicate with other links.

Here’s a summary of the different parts of this integrated system, based on the above insights:

I’ve often come across companies that calculate their needs for the week with Excel worksheets and then send orders to their suppliers by email or phone. Sometimes, suppliers can’t respond within the desired timeframe for the simple reason that they did not know whether their customer was going to order the products or services, or they didn’t know how much of the product or service would be ordered.

Prerequisites for an Efficient Supply Chain 

To ensure smooth, uninterrupted operations, a supply chain must be built on strong foundations. Here are the key elements every efficient supply chain needs:  

In conclusion

The supply chain is a lot like an orchestra, and its components are like the individual musicians: if they don't all play in harmony, the concert’s quality will be poor.