Supply Chain: a connected business network

Every time you go to a place eager to buy a certain product and cannot find it - not because they don't sell it, but because "we had it, but we sold it all and it will arrive again in a few days, but I don't know when", most likely this is a supply chain issue.

This is a problem, because you probably give up buying there to buy elsewhere. And if your experience is better at this other establishment, you get the impression that the first place is unprepared to meet your demands.

And by losing your preference as a customer - and many others, probably -, this issue, generated by poor supply chain management, starts to generate losses to all links in the chain, from the manufacturer to the retailer, through distributors and raw material suppliers.

But after all, what is supply chain?

The supply chain is the name given to the set of companies and people related to each other to exchange information, products and services with the main purpose of meeting the needs and desires of the end consumer. In other words, ensure that when he arrives at a store, he can easily find the product he is seeking. And if you think about it, there are a lot of people involved.

Let's take an orange juice box as an example. Before you go to the market and find it on the shelf, someone must have planted the oranges, then, they were harvested and processed. After that, the juice was packaged, transported and finally distributed to retail companies like supermarkets. And, throughout this, there are still complex purchasing, negotiation and replenishment dynamics.

The whole process seems very simple, when it works. But coordinating Supply Chain flows with all their variables has its challenges. One of the greatest lies in the fact that supply chains rely on several companies at each level. And these companies, in turn, are related in multilateral transactions, increasing the number of variables to be managed.

We also must consider the current level of demand from consumers. Due to the large volume of information they receive daily, they demand price and deadline from companies they buy from - if possible, delivered yesterday. If he doesn't find what he needs in the first store, he goes to another and he may not return to the first - all because the second was better in managing their supply chain. But we will get back to this subject later.

Important Supply Chain Values

The supply chain focuses on external integration. In other words, it includes the entire transformation of natural resources into inputs, production, inventory management and distribution.

Having this process well aligned is key for inventory management - as well as having the technology to automate this management. The supply chain, therefore, depends on an important value.

As you can see, all parties in the supply chain depend on collaboration among manufacturer, retailer and distributor, as none of them can operate in isolation. It is important that the distribution strategy is extremely well aligned to prevent the goods from being idle in stock or having missing products at the points of sale.

In addition to collaboration, another rising value in the corporate world is sustainability. Therefore, good management also considers the environmental impact generated in the manufacturing and distribution of goods. It is critical to think about actions that reduce damage to nature, such as the responsible exploitation of natural resources and the correct disposal of production waste.

Another good example of sustainable management is the attention to not produce more than demand, preventing the disposal of goods after the expiration date has passed, especially in the case of food. Packaging used in transportation can also be more sustainable, which is enabled by reducing its quantity and choosing recyclable materials.

Supply Chain Management (SCM):

The supply chain, given its wide scope, going through several company departments and sectors, requires a strategic management to meet its needs. The idea is that all processes integrate a larger system, which, in the end, contributes to the bottom line of organizations.

Supply Chain Management is the process of managing the links and professionals involved in a company's production, distribution, purchasing, financial and tax process. In this context, the circulation flow of goods, services and strategic information for this work is part of SCM.

In other words, the company's relationship with its suppliers, partners and customers must work accordingly, thus favoring a more cost-effective, dynamic and profitable operation for those involved. And that is why this management impacts the company's productivity and competitiveness.

Always with the purpose of optimizing production and offering products to end consumers on time and according to their expectations, several methods are used to improve control at all stages.

Another important item that should be highlighted is the impact that proper control of Supply Chain Management has in relation to costs for a company. By strategically connecting all members of the production chain, such as the company's human capital, its technical infrastructure and the relationship with partners and suppliers, managers can quickly notice the difference in their management.

Processes are optimized, costs are reviewed and the number of failures plummets, along with bottlenecks and other incidents that can impair quality and end customer satisfaction - which, unfortunately, happens quite often, especially among companies that do not rely on efficient supply chain management.

However, it is necessary to consider a common reality in manufacturers: often outsourced companies and suppliers are involved in the process, making chain management an even more complex task. This is because it becomes very difficult to ensure the integration of all these agents as well as evaluate the performance of important processes, which are often outside the scope of internal management, since they are executed externally.

It is very clear then that the success of supply chain management is in the fine alignment among all parties involved. The balance in the flow of operations, then, is what ensures that all processes can keep up with demands, avoiding bottlenecks, shortages and slow deliveries, for example.

Meet the future of the supply chain: Supply Chain 4.0

Process automation inside companies, especially in manufacturers, is already a reality in the business world. Thanks to this mechanization, the traditional supply chain has evolved and, in many cases, has reached its limit. Despite its high level of technology and sophistication, it is still moving towards a more complete model of industry 4.0.

These changes did not happen overnight. With the arrival of the 4th industrial revolution and the resulting digital transformation that reached all sectors, another element came to be considered a protagonist when it comes to supply chain: data.

Currently, this is considered by many to be one of the most valuable assets of a company. The ability to capture and, especially, interpret this data brings to companies the possibility of much more assertive decision making. And this, of course, affects the end consumer, who sees more value in their shopping experiences.

That is why Supply Chain 4.0 carries a strong influence of data science, allowing greater integration among the agents that compose it, supporting its performance on machine learning, artificial intelligence and the Internet of Things - just mentioning the key concepts of the 4.0 wave so far.

All these innovations enable establishing innovative supply chains, capable of encompassing agents in different locations, with different characteristics and sizes. And all this adjusted to the consumption profile at each store.

Find out some of the technological trends
that are already revolutionizing supply chain concepts:

Artificial Intelligence
Anyone who has been following, even from afar, the digital transformation process inside companies, knows that many important decisions are made based on the interpretation of data and strategic information collected through software. Performance and inventory level data are cross-referenced with commercial and managerial information, generating precious insights that help managers decide the best way to produce, supply, distribute and serve their consumers.

Customer-focused chains
Increasingly, the target of supply chains is the end consumer. And for the future, the expectation is that waste of time and resources will be further reduced, thus generating cost savings for companies - and more competitive values for customers.

Autonomous supply chains
The creation and application of autonomous processes in the chains have been increasing. The results are reactions to market variations perceived with much more anticipation, allowing room for action, reducing costs and reducing waste.

And what gains will the 4.0 supply chain bring to the market?

Cost optimization
Data, constantly updated systems and state-of-the-art equipment will work towards an ever-greater integration of the chain's activities. And this, invariably, will reflect in cost optimization for the operations, once production and the inventories are adjusted.

Space optimization
Considering that all technological developments will be aimed at making the supply chain operate in an increasingly cooperative manner, the trend is for the stages to evolve according to consumer demand - since this will be responsible for all its transactions.

Therefore, all links will receive all the necessary information to manufacture the ideal product quantity, focusing on the right products. And the distribution process, in turn, works so that each retailer is supplied according to its exact consumption profile.

And this whole operation ends up reflecting on inventories, which start to keep in their structures only what will be effectively consumed.

In-depth data analytics
The information delivered is increasingly accurate and decisive for company decisions. And this also ends up reflecting on the consumer, who sees on the shelves a product mix that in fact meets consumption needs. This brings us to the last item, below.

Customer satisfaction
All this certainly brings customers who are happier and more satisfied. And, above all, more loyal to the brands that invest with more dedication on the developments that the 4.0 chain promises for a much closer future than you can imagine.

Supply Chain Professional

Just as the supply chain management area gains increasing prominence in the market due to the leading role of more advanced technologies and committed to providing valuable data for management, it was already expected that professionals who perform this function would become more popular.

What are the skills required to occupy this position in organizations today?

  • Information technology (IT) knowledge is essential for professionals who want to pursue a career in the supply chain area, since software is part of the daily activities of those who conduct this very strategic task.

  • Dynamism is also another essential quality, since the daily routine of the function is quite hectic and requires quick actions and decisions. It is also extremely important to understand the company well enough to be able to establish priorities during business hours, as many demands seem to have the same urgency.

  • Be a quick thinker, with simplicity to create and implement strategies.

  • Promote a strong relationship between the company and suppliers so that the work is conducted with commitment and focused on the partnership between the parties.

  • Build an environment around you that integrates the business globally, to better understand the risks and concerns, in addition to devising strategies that effectively improve the company's results.

  • Align all supply chain operations with the company's culture and objectives, so that both go hand in hand, delivering a product that meets expectations and achieves full customer satisfaction.

  • It is also very important to be fluent in more than one language, as performing this function usually puts the professional in contact with suppliers from different countries.

  • Proactivity is another quality that is highly valued when hiring - and maintaining - an employee in the supply chain area. This is because, given the dynamism required by the role, it is important to have the ability to foresee problems and work on solving them immediately, even without the approval of a direct manager. Since decisions need to be made quickly, there is no time for mistakes, let alone excuses.

Despite being a job with many different specific requirements for good performance, each effort to continue in the career will be very well rewarded, as the supply chain is one of the areas that most grows with digital transformation and greater competitiveness among companies - two situations that, although new, have no end date in sight.