Importance of Organizational Supply Chains

An Overview and Explication of the Importance of Organizational Supply Chains
Although every organization has one, far too many companies of all sizes and types fail to analyze their supply chain in order to identify opportunities for reducing input, warehouse and transportation costs and optimizing the delivery of products and services to end consumers. To help determine the facts, the purpose of this paper is to provide an overview of supply chains and why they are critically important for all organizations. Including a description of a value chain and the corresponding flow of structure, the type of inputs and outputs that are typically used in supply chains and a discussion concerning inventory points and forecasting. In addition, a description of sourcing activities and associated risks as well as the implications of locations and logistics are also provided. Finally, a summary of the research and important findings concerning the importance of organizational supply chains are presented in the conclusion.
Value chain and flow of structure
Created by Michael Porter during the 1990s, a value chain is used to describe the flow of structure from the beginning of a supply chain to the completed delivery of goods and/or services to end consumers, usually in a graphic fashion to facilitate the identification of the multiple discrete steps that are involved in the value chain process (Porter, 2019). It is important to note, though, that every value chain is different in some way depending on the type of enterprise and its primary organizational objectives, but the main focus of the value chain analysis is to help business practitioners determine at which points along the value chain a competitive advantage can be achieved and sustained over the long term (Porter, 2019).
In addition, Porter (2019) also advises that an organization’s overall value system comprehends the value chain along the entire supply chain continuum. In this regard, Porter (2019) reports that, “A company’s value chain is typically part of a larger value system that includes companies either upstream (suppliers) or downstream (distribution channels), or both. This perspective about how value is created forces managers to consider and see each activity not just as a cost, but as a step that has to add some increment of value to the finished product or service” (para. 4). In order to achieve this desirable outcome, companies must also precisely determine the requisite inputs that are needed to deliver products and/or services to end consumers and these issues are discussed below.
Inputs and Outputs
A representative supply chain is depicted at Appendix A that illustrates inputs and outputs. Like a value chain, every supply chain is unique in its specific configuration, but some of the typical inputs for supply chains include all of the goods and services that are needed for an organization to deliver its own products and services (Carranza-Trinidad & Valdivia-Flores, 2018). In addition, inputs also include all of the associated customer services that are needed to achieve the final delivery of products and/or services to end users such as accounts receivable and payable administration, procurement and sourcing (Carranza-Trinidad & Valdivia-Flores, 2018). There are a number of factors that must also be taken into account in the acquisition of the requisite inputs which involve multiple inventory points and forecasting requirements as discussed below.
Inventory points and forecasting
All supply chains exist along a continuum that begins with the most basic inputs from a first of vendors which may be then used by subsequent vendors to add value by using them in their own products or services before final delivery to the ordering organization. Consequently, accurate forecasting of future supply chain needs represents a critical function since warehousing and transportation constraints may introduce unexpected delays which are then compounded along the remaining supply chain continuum (Baker, 2009).
Sourcing activities
As differentiated from procurement activities, sourcing activities generally involve performing the due diligence that is needed to identify optimal suppliers and evaluate their respective abilities to provide the goods and services that are needed by upstream organizations (Pagano, 2009). In addition, depending on the type of supply chain that is involved, sourcing activities may also include ongoing negotiations and collaboration with strategic supply chain partners in order to ensure that the maximum value is added along the entire supply chain network (Pagano, 2009).
Risks
The importance of efficient supply chain operations to the success of organizations of all types and sizes cannot be overstated, but there are an infinite number of risks that are arrayed against supply chain networks that invariably introduce delays and cancellations which have cascading and increasingly adverse effects. As a result, effective supply chain management requires careful attention to potential risks that are reasonably expected as well as contingency planning for risks that are unknown but which will require an alternative strategy in the event of their occurrence (Shashank & Goldby, 2009).
Locations and Logistics
As noted throughout, although all supply chains are unique, they are also frequently highly complex and involve a number of different organizations along the supply chain continuum. This means that the logistics, or the means by which products and services are moved along the supply chain, represents an especially daunting endeavor that requires ongoing oversight and appropriate inventory points to allow flexibility in case of need (Pontius, 2020). In this regard, Pontius (2020) emphasizes that, “Supply chain logistics executives must know how to choose the most advantageous mode of transportation, how to design and set up a warehousing facility, how to control and manage inventory and assets, and how to set up an efficient logistics network while minimizing cost and delivering top-notch customer service” (para. 2). Taken together, it is clear that the geographic location of upstream and downstream supply chain partners requires careful attention to the logistics that are involved, especially during unexpected occurrences such as the ongoing Covid-19 global pandemic which has severely disrupted global supply chains for the past several months.
Conclusion
Although it is conventional wisdom that armies march on their stomachs, the research showed that enterprises of all sizes and types also depend on their supply chains to achieve their organizational goals. The research also showed that an important component of supply chains is the associated value chain that is used to describe how value is added along the supply chain continuum using inputs to deliver outputs to end consumers. In addition, inventory points and accurate forecasting were also shown to be critical elements of the supply chain management process, together with ongoing sourcing efforts to identify optimal prices and vendors. Finally, complex supply chains invariably involve countless risks that are exacerbated to the extent that the supply chain network involves greater numbers of locations.





References
Baker, P. (2009, May 23). An exploratory framework of the role of inventory and warehousing in international supply chains. The International Journal of Logistics Management, 18(1), 37-41.
Carranza-Trinidad, R. G. & Valdivia-Flores, A. G. (2018). Supply chain: an input-output perspective. An example of application in the dairy products industry. International Journal of Supply Chain and Operations Resilience,3(3), 236-244.
Pontius, N. (2020, June 23). A definition and analysis of the challenges and benefits of supply chain logistics. Horizons. Retrieved from https://www.camcode.com/asset-tags/what-is-supply-chain-logistics/.
Porter, M. (2019). The value chain. Institute for Strategy and Competitiveness. Retrieved from https://www.isc.hbs.edu/strategy/business-strategy/Pages/the-value-chain.aspx.
Shashank, R. & Goldsby, T. J. (2009, May 22). Supply chain risks: A review and typology. The International Journal of Logistics Management, 20(1), 57-61.


Appendix A
PowerPoint Graphic of Representative Supply Chain