Introduction to Supply Chain
Supply chain mainly works on the principle of cost and service, the cost that is incurred by the company in the process of the supply chain and the service that is being delivered to the customers. There are many factors that are included in the service given by the supply chain of the company. These features are :
- Lead time, it is time between the placement of the order till it is delivered to the end customers
- Responsiveness of the supply chain
- Reliability in the delivery offered
- Variety in the product offerings
As the cost of the company increases ,the level of the service delivery also increases.
Supply chain Typology
There are different typology that are attached to the functioning of the supply chain, which are given below :
- Order penetration point– This includes the time at which the order is being placed to the firm. It has three aspects which are (i) Make to stock, there are certain steps involved in the process of supply chain which are, source then make component then assembly and then delivery. In make to stock the order is placed after the process of assembly, that is just at the point of delivery. (ii) In make to order, the customer places the order at the time of source, that is the product is made only after the customer place an order for it. (iii) in configure to order, the order is placed before the assembly so that the changes in the product can be made with respect to the order and then it is delivered to the end customers.
- Supply chain focus- The main focus of the supply chain focus is on two main aspects which are efficiency in the performance of the supply chain in reaching to its customers satisfaction level and the other is responsiveness, which means how quickly the supply chain is able to fulfil its function in respect to the delivery and shorter lead time.
Measuring the performance of the supply chain
There are two main factors on basis of which the performance of the supply chain can be measured which are :
- Internal or organization facing- this factor involves the internal cost of the company, that is total cost incurred in the logistical operations, value added services ,warranty costs and the internal assets of the company which include the inventory matching with the demand and complete fulfilment of the order.
- Customer facing- which includes delivering effective and reliable services to the customers, fulfilling the orders, flexibility in terms of the response time and in production capabilities.