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…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.
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.…
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