When I hear the term “supply chain,” I have two images in my mind. One is of a straight, finite-length standard chain, with each link assigned to a function like raw material mining, processing or synthesizing, transportation, manufacturing, distribution, etc. The other image is of a circle that begins and ends with recycling, reclamation, or raw material.
In actuality, the supply chain has many tributaries that look more like a river delta network; it does not always flow in a unidirectional manner. My mind says, if it were possible to straighten out the turns and kinks, knowing the shortest distance between points is a straight line, then wouldn't the traverse from one end to the other be shorter and faster? I'm still thinking graphically here. If the distances between the links could be made shorter, then the effective time from one link to another would be faster, also shortening the length of the entire chain.
Enter the concept of vertical integration. If I have one location where I synthesize the raw material; form it into usable bulk material packets; process the bulk material into products; pack the products; and ship the finished good to a consumer that's within walking distance and has an insatiable appetite for my goods, I have the greatest competitive potential in the world because my production, material, and transportation costs could not be any lower. I also have the huge advantage of controlling every step of the process along the way. Admittedly, that scenario is unrealistic, but, as in most cases, an ideal is a concept by which we can measure our progress towards the best possible results for our efforts.
Perhaps we cannot do much about the distance between links — because in most cases, we don't own the whole chain. That means we have to target the links over which we have influence and, to some extent, control. Perhaps full control stops at the front and back door of your company. This is the reality for most companies. So, what would happen if we began to look at what goes on inside our companies as mini supply chains? What if we look at what goes on inside individual departments as mini-mini supply chains?
Every individual has deliverables that contribute to the deliverables of the department that contribute to the deliverables of the customer. Once the customer receives the delivered goods or services, it closes the supply chain by sending a check back to the company. With that check comes the resources to sustain the business.
Now that we have a controllable supply chain within the company, I would like to list the significant tools for shortening the inner-link's times and distances. So in my next article, I will identify some key tools that can be used to maximize supply chain efficiencies within a typical R&D and manufacturing operation. We'll see that the result will be a faster time-to-market with a higher quality product that will be the most competitively priced while earning the highest return on the company's investment.