The Supply Chain Management in Large Organizations
- Most large organisations have a long and streamlined supply chain. It’s clear understanding is one of the vital factors affecting the stability of work. It functions within companies and goes beyond them, eventually reaching the final consumer or user. Depending on the size of the company and types of its products, it can be long and complicated.
- The main term in this regard is a chain: a sequence of intermediaries, through which the production of goods or the provision of services is carried out.
- An important role in this chain is played by tiers: they are placed between a raw material manufacturer and a specific company. In other words, these companies can be named “suppliers’ suppliers.”
- In addition, the concept of flow is essential: it is a process that a product undergoes from the beginning of creation to final consumption. Proper flow operation can be observed when all parts of the supply chain are operating smoothly.
- A striking example of a product-based company is Samsung, a manufacturer of various types of technical equipment.
- The organisation’s supply chain begins with the makers of electronic parts for their phones and computers: these suppliers, or tiers, sell these details to Samsung. After the equipment is manufactured, it enters stores: this is the penultimate part of the stream.
- The supply chain ends when the buyer purchases a product. Thus, the supply chain begins inside the company when they buy materials for their work. Then, it expands and goes outside the organisation to reach the final consumer.
- An example of a service-based company is Busuu, a social network for learning languages. Tiers of this company can be, for example, ready-made software solutions and language lessons used by the developers of this application. The company uses these materials internally to create the product.
- External communication of the company is direct work with students who have installed the app.
- Thus, the supply chain in a service-based company seems simpler than in a product-based one. This is because they do not produce physical objects, so they can operate without supplies of raw material. However, a large number of people providing services are also involved in this chain.
- Enterprise Resource Systems can be considered necessary for the full functioning of any company. They allow organisations to control all the processes included in the supply chain, analyse data and understand when they need to make adjustments.
- The storage of information using these systems makes the work reliable and structured.
- They consist of several operational modules: logistics, production, supply and sales. Each of them plays an important role in the supply chain. As part of the logistics module, raw materials are supplied. Production and supplying allow companies to create a product, and sales – to sell it.
- For example, Samsung needs each of these modules to work.
- The ERP logistics module allows supplying the company with raw materials for work. At the moment, the company is looking for suppliers, acquires parts and delivers them to its production facilities.
- The production module contains basic rules for creating products. It may include, for instance, various instructions or product descriptions.
- The supplying module controls technical details and helps in the maintenance of the equipment, while the sales one allows selling the manufactured products.
- As for the service-based company Busuu, the logistics module is not as relevant for them, since they do not use physical raw materials. However, the remaining modules are also necessary and useful.
- Thanks to the rational management of the company within each module, they can provide services quickly and efficiently.