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When a customer purchases any product or service, they expect it to be appropriate, delivered in the agreed place, with the established requirements, at the exact time, and at the agreed price. Although, they might not even think about the masterfully orchestrated choreography that takes place behind the scenes.
For an organization to make this happen, there are a series of processes that include the realization and coordination of all the activities necessary to obtain raw materials, their transformation, their transportation to the sales channels and/or the delivery to the final consumer. This series of processes is called the Supply Chain.
Supply chains have as main objective to satisfy the needs of the final customer in the best possible way. There are several factors that need to be taken into account: goods and services should be delivered on time, unnecessary waste minimized, time distribution optimized, inventory and warehouse management updated, and communication channels stablished. On top of that, the supply chain should be prepared to face unforeseen changes in demand, supply, and other conditions.
- "A chain is as strong as its weakest link"
This saying perfectly fits the supply chain. To achieve its objectives, the organization must have synergy between all its areas (sales, purchasing, finance, production, logistics, etc.), since the timely fulfillment of all activities depend on the success of the supply chain. You must have good organizational relationship and communication channels, so that the flow of information and materials from one process to another is optimal. If any process (or link) of the chain fails, the final product will not be delivered in ideal conditions to the customer.
For example, if the Purchasing Department does not define reliable suppliers in delivery and quality, it may not have the raw materials on time and delay the production process, or there may be complaints; If they make a bad price negotiation, it can increase the operational cost. On the other hand, if the Production and Logistics Departments are not coordinated, storage problems may arise due to lack of space, and if Production is not coordinated with the Sales Department there may be low inventories in certain products and high inventories in others. If the Sales Department does not inform the Logistics Department about the delivery requirements of a customer's order, the product may arrive late or at the wrong place.
Good and numerous relationships are needed to achieve the ultimate goal of the supply chain.
Another important thing to keep in mind is that not only internal processes must be improved, but also external ones. The relationship with the suppliers and the clients of the organization for the development of their processes must be considered, since these are key parts for the optimal growth of the organization.
In conclusion, it is of vital importance for organizations to understand that there must always be a synergy in the development of the processes along the links of the supply chain. This will allow products are services to keep the customer happy, and to minimize operating costs, which will achieve the successful subsistence of the organization.