Supply Chain

    In logistics, the term “supply chain” refers to the connection between all processes, from the production of a raw material to the finished product for the end customer.

    Definition: What is a supply chain?

    The supply chain encompasses the planning, execution, and control of all integrated processes from the ordering of a product to its delivery. Simply put, the supply chain is the entire flow of goods from raw materials to the final product. Several companies and stakeholders are involved throughout the supply chain, forming a network. These include, for example, manufacturers, suppliers, wholesalers, and retailers, as well as the customer. Today, supply chains are usually highly complex and span multiple countries or even continents; these are referred to as global supply chains.

    What are the phases of the supply chain?

    Supply chain processes can be divided into three areas: procurement, production, and distribution.

    • Procurement: The necessary raw materials are procured.
    • Production: Processing of the raw materials
    • Distribution: The finished product is made available to the end customer.

    Supply chain vs. value chain

    While the supply chain, in simple terms, describes the flow of goods from raw materials to the finished product, the term “value chain” refers to the resulting path of value creation through the various processes and work steps. Every activity along the value chain is intended to contribute to the product’s added value. An optimal value chain provides a competitive advantage, as the company can offer an equivalent product, for example, at a lower price than its competitors. The value chain also includes non-physical activities such as marketing and product development. The supply chain falls under the purview of operational management, whereas the value chain is part of business management.

    Supply chain 4.0

    Supply Chain 4.0 refers to the complete digitization of the supply chain using big data and artificial intelligence, with each step intended to be carried out autonomously. Processes—from communication, through production and retail, to distribution—are to be fully automated. Even now, more and more companies are relying on digital logistics processes to meet rising customer demands, such as high product availability and low prices. The transition to Supply Chain 4.0 is an ongoing and continuous process for companies, supported by specialized supply chain management software.

    What is supply chain management?

    Due to globalization and changes in consumer buying behavior, supply chains and value chains have become extremely complex. To address all these challenges, there is what is known as supply chain management (SCM for short). Successful supply chain management helps to optimally plan and control a supply chain. This makes it possible to meet and improve upon increasingly demanding customer requirements.

    What types of supply chain management are there?

    • Collaborative SCM
    • Lean SCM
    • Agile SCM
    • Fully Flexible SCM
    • Campaign-Based SCM

    Collaborative Supply Chain Management describes products that are characterized by a high degree of demand predictability and strong customer loyalty.Lean Supply Chain Management focuses primarily on reducing and curbing waste, such as costs. Agile Supply Chain Management is the solution for a rapidly changing market environment.Fully flexible Supply Chain Management is very resource-intensive and is primarily used in crisis situations.Campaign Supply Chain Management applies primarily to companies operating in the project sector. The goal is to align supply chains with customer needs.

    How can the supply chain be optimized?

    Supply chain optimization is defined as designing the logistics value chain along the process to be as efficient, transparent, and flexible as possible. This can mean, for example, optimizing the process of fulfilling customer requests so that the customer receives the desired services as quickly as possible with minimal effort on the part of the respective supplier or company. However, the goals and challenges vary depending on the industry and the nature of the business. In any case, using specialized supply chain software is always worthwhile.