FAQs (Frequently Asked Questions) On supply chain systems
Following are some of the frequently asked questions (FAQs) on supply chain systems that we have encountered in our speeches, workshops, seminars, and other forums. Feel free to ask more questions if your particular question is not answered below.
Why we are qualified to write this list of FAQs on supply chain systems?
VERY FEW PEOPLE KNOW SUPPLY CHAINS LIKE WE DO - retail, beverages, food, milk, dairy, meat, livestock, explosives, chemicals, cotton, rice, graphite, solar power, natural gas, crude oil, fertilizers, electronics, packaging, glass manufacturing, machine parts, automobiles, industrial goods, mining, etc are just some of the industries where boards and executives have benefited from our proprietary knowledge of the supply chain analytics.
Click on our project methodology above to see how supply chain analytics is an integral step in each and every project that we have undertaken in the last three decades.
Since when no one had heard of supply chain, our co-founder Vivek Sood has been considered one of the most authoritative professionals in the field when it comes to the subject of supply chain analytics in Australia, Asia, North America, South America and Europe.
He has written four seminal books about restructuring supply chains to gain massive advantage in business. He also regularly delivers keynote speeches at business schools and conferences such as University of Technology Sydney, Supply Chain Asia, Asian Bankers Forum, APEC Business Advisory Council.
He has been quoted in the authoritative business press and over 100 academic papers written by supply chain researchers around the world. Vivek and his team have examined thousands of supply chains during their projects over the last three decades and helped hundreds of executives build safe, cost effective and sustainable supply chains and careers.
supply chain Systems - FAQs
A supply chain itself is a network of organisations and facilities that transforms raw materials and inputs into products and services delivered to customers.
Supply chain systems are a set of tools that enable companies to efficiently handle the five flows of supply chains. We have discussed these five flows in a lot more details in another FAQ.
Once you get your mind wrapped around the vastness of supply chains with thousands of nodes around the world, and millions of handoffs in each of the flow - you realise the importance of supply chain systems. No human, or a collection of humans can handle this job in their brain.
In fact, we know for a fact that the concept of supply chain management came to life itself only after computing power came into existence to enable to do this.
Current supply chain systems keep track of all the flows in all the pipelines or networks of supply chains, as well as all the stock in all the nodes or stocking locations for each of the five flows.
Supply chain systems are the combination of software, data centres, processing power and information access devices. Taken together they help the operators, analysts and managers ensure that these five flows happen efficiently and effectively.
It all started very humbly with the introduction of cash registers that could process basic cash transaction and keep track of the daily sales.
In the 1970s the introduction of functional transactional system enabled automation of the low-value repetitive works within individual functions such as purchasing, invoicing, inventory tracking etc.
In the 1980s the new enterprise transactional systems with best in the class tool were introduced. These systems were generally owned by the users and supported by MIS.
They provided an accurate, consistent view of data across the company even though these were generally closed systems.
By 1990s and early 2000’s the best in class tools, and software reduced the role of the transactional approach, it introduced new synchronisation tools and analytical software into the system.
During the 2000s and 2010’s the term Object-oriented “plug and play” was introduced into the field which emerged the use of fully open software and established the standards of “plug and play” by the way ability to combine the software components was achieved.
By the start of 2010, New internet-based supply chain tools were already in vogue. These contained service-oriented architecture (SaaS) which ensured better GUI also with interactive and integrated software.
Thus the supply chain visibility was improved by the real-time tracking of information and also the extreme transaction processing ability was enabled to scale up the supply chain.
The entire history and evolution is explained in a gerat deal of details in our report titled SINK OR SWIM REPORT: HOW INFORMATION TECHNOLOGY CAN SAVE OR RUIN SUPPLY CHAINS. A newer edition of the same report is also available at https://globalscgroup.com/product/sink-or-swim-report/.
In the 1980s the mainframe systems were deployed for the supply chain systems, in inventory management, Manufacturing Resource Planning (MRP) and scheduling.
The information flow had inherent issues because it was controlled by MIS, causing the funnelling of information into bottlenecks.
By the wake of 1990s Mini-computers were introduced to work along with the mainframe in departmental as well as personal level.
This leads to the beginning of the dynamic approach inside the system and response improved. But the low-quality maintenance and the lack of adequate training was a hindrance.
During the 1990s and 2000s, the client/server systems began to show up in the supply chain, and they provided an attractive alternative to mainframe. These systems offered data integrity and synchronisation throughout the company. Modern client/server systems improved the Graphical user interface (GUI), leading to a reduction in error.
Fully distributed computing models was the vogue in the 2010s, and it enabled the business need to reduce the wall thickness between the customer and vendor for the free flow of data.
All the Enterprise software was coded in object-oriented codes for rapid development and reusability.
Enterprise web portals are the emerging trend in the environment. This comprises centralised, as well as service-oriented architecture, uses the software solution to improve connectivity and also use powerful tools such as software as a service ( SaaS).
The business trends faced by the organisations was the driving force in the evolution of information architecture.
Talking in the supply chain language - materials flows changed drastically in the 70s and 80s as a result of globalisation and removal of the trade barriers. Global trades exploded, and every company started looking internationally for better suppliers and lower prices.
As the materials flow became complex and larger, information flow needs exploded even more dramatically. And this explosion in the information flow to plan, manage and control the materials flow, moentary flow, risk flow, value flow in the supply chain became paramount.
This was the big pulling factor in the evolution of the information architecture of supply chain systems.
As noted in the FAQs on supply chain management - there are four levels of activities in in every department or functional area inside every company. These are - starting from the bottom to the top (or the periphery to the centre in the following infographic) - execution, scheduling, tactical planning, and strategic thinking. We cover this concept in great detail in our book Unchain Your Corporation.
Supply chain systems help in breaking the silos between the functional areas - such as sales, marketing, operations, purchasing, logistics, production, finance etc. - by bridging the gaps between them. That is the entire purpose of existence of supply chain management.
In summary, at each level these supply chain systems do this job differently. That is the reason why each level tends to have its own set of systems.
At the other periphery - for execution we have transaction processing systems - mainly ERP software such as SAP, Oracle etc. which operate at the last two levels mainly to record every transaction and to help plan and control each transaction / event as it happens.
In the middle we have decision support tools or systems (DSS) for tactical planning of demand and supply and their corresponding dependencies.
At the top we have tools for strategic planning and scenario planning. All these level of planning, decision making, competencies and tools are shown in the figure below.
There is a very good saying which is repeated so often that it has now become a cliché - "those who do not learn from the history are condemned to repeat it". This saying aptly summarises all the reasons why companies continue to make these mistakes.
The following graphic from the same report mentioned above ( SINK OR SWIM REPORT: HOW INFORMATION TECHNOLOGY CAN SAVE OR RUIN SUPPLY CHAINS. ) clearly illustrates these mistakes in sufficient detail and clarity: