A company’s supply chain is a set of activities or operations involved in carrying out the process of selling a product in its entirety. These activities range from supervision, the process in which raw materials are obtained, the manufacture of products, production, distribution, transport and delivery of these.
One of the objectives to achieve by a factory or company is to satisfy in the best possible way the needs of an end user or customer. Thus, the main objective of a supply chain is to provide the items and materials in quantity, quality and time needed at the lowest possible cost. Within this we can find others such as:
Establish good communication channels.
To have an adequate coordination.
Avoid unnecessary losses.
Improve distribution times.
Adapt inventory management.
Respect delivery times.
Respond effectively to changes in demand and supply.
The main thing is to keep it dynamic, that is to say that there is a continuous flow of information of all the process of obtaining and manufacture. In addition, in the different stages it is necessary to maintain all relationships with suppliers, wholesalers, and customers, controlled to obtain a refined dynamic.
Some of the Mayor Points in the Supply Chain
The more complex the supply chain, the more actors are involved in it. It is therefore more difficult to ensure that they maintain the required quality standards over time. In addition, suppliers have other suppliers at the same time, which again represent an additional factor of uncertainty.
Inventory management is an art, which once again becomes exponentially more complex the longer the supply chain. As they become longer and longer, the amount of inventory that companies have to manage increases.
Losses in transit & Returnable Assets
The loss of goods during transport is another major concern. The casuistry is infinite: from small incidents to the complete loss of a vehicle or carrier shipment (see the containers that were lost at sea), reaching extreme cases such as the hijacking of ships by pirates. And its consequences: economic losses, problems with insurance, delays in deadlines, paperwork with insurance, etc.
Most returnable assets in the supply chain are not tracked, or are only tracked manually, a process which creates inefficiencies and economic loss due to low return rates, delays and high costs associated with tracing these items. As a result, a large amount of assets are not circulated back to owners, and instead are either given to competitors or are inefficiently recycled or disposed.
Creating New Trust
As Dom Schiener (Co-Founder of IOTA) said in his presentation at the Bosch Connectivity event, the supply chain is a black box, we consumers and businesses have no idea what the process was that had to go through our mobile phone to be in our hands today, and it’s more than valid, we just care that the device works well. However, this interest would change if as consumers we talked about a product that is directly related to the risk to our health or life, we would like to be sure that the product we are going to use is made with the best materials and that those materials respected a process until reaching the company that assembles or manufactures them. We are never too cautious when it comes to that.