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Going Back To School On The Basics - September 2021

Bill’s Building Blocks
Going Back To School On The Basics - September 2021

Supply chains are everywhere in our lives. Once you understand this, they are easy to discern. My granddaughter just started her freshman year at college. The family’s efforts to get her to the university reminded me of the three basic flows of a supply chain. There was the information flow of applying and getting accepted plus uploading a vaccination record. There was the cash flow of paying for tuition, room and board, books, fees, and health insurance for the semester. There was the material flow of getting all of her stuff packed into the car and hauling it off to the campus. And there was the return material flow of coming home with certain items she decided she didn’t need once she got there.

The Tenth Edition of the APICS Dictionary (2002) listed the term ‘supply chain’ for the first time. “A supply chain is the global network used to deliver products and services from raw materials to end customers through engineered flows of information, material, and cash.” [As an historical aside, this supply chain definition was originally submitted to the APICS Curricula and Certification Council in 1998 for ratification and adoption into the APICS Dictionary by William T. Walker while he worked for Hewlett-Packard and served as President of the APICS Education & Research Foundation.]

 A global network – Global means both extending beyond one’s business organization and beyond one’s functional area of responsibility and extending end-to-end across its geography whether that is domestic or international.
 To deliver products and services – Product supply chains involve building and positioning material inventory. Service supply chains are built around information and cash, and are often used to differentiate product offerings from the competition.
 From raw materials to end customers – Supply chains are multi-echelon. Throughput means that material flows downstream from SOURCE to MAKE to DELIVER while cash flows upstream from DELIVER to MAKE to SOURCE before profits are made.
 Through engineered flows – Each flow is designed, constructed, measured, and optimized rather than left to chance. Each flow should be sustainable.
 Of information, material, and cash – These are the three basic flows in any supply chain. They occur and must be considered simultaneously. Information flow needs to be omni-directional, ubiquitous, and in today’s world secure.

Sometimes important new insights can be gleaned by comparing your current supply chain’s structure against a thorough review of supply chain basic definitions.

©2021 William T. Walker, CFPIM, CSCP-F, CLTD-F, CIRM has 42 years practitioner experience, authored Supply Chain Construction and Supply Chain Architecture, and teaches Supply Chain Engineering at NYU Tandon plus Demand Planning at Rutgers Business School. He is a 40+year ASCM member and APICS E&R Foundation past president. email: [email protected]