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supply chain management (SCM)

Supply chain complexity

The most basic version of a supply chain includes a company, its suppliers and the customers of that company. The chain could look like this: raw material producer, manufacturer, distributor, retailer and retail customer.

Supply chain management

A more complex, or extended, supply chain will likely include a number of suppliers and suppliers’ suppliers, a number of customers and customers’ customers — or final customers — and all the organizations that offer the services required to effectively get products to customers, including third-party logistics providers, financial organizations, supply chain software vendors and marketing research providers. These entities also use services from other providers.

The totality of these organizations, which evokes the metaphor of an interrelated web rather than a linear chain, gives insight into why supply chain management is so complex. That complexity also hints at the types of issues that can arise, from demand management issues, such as a release of a new iPhone that chokes demand for old iPhone cases; to natural supply chain disruptions, such as the halt of transportation in the U.S. in 2015 due to extreme winter weather, or California’s drought and its effect on crops; to political upheaval, such as the strikes in India that throttled movement at its largest container port.

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