In this article, we’ll reveal how documenting supply chain data in a step-by-step process can bolster relationships, subsequently fast-tracking and adding value to supply chains.
A well-organized and transparent supply chain is an important part of the procurement process. Businesses that fail to spot and address disruption in their supply chain are at risk of losing out due to delays, errors, and costly last-minute changes.
This is why supply chain mapping is essential.
In this article, DeepStream explains what supply chain mapping is, why it’s important, and the processes involved in mapping out a supply chain.
What is Supply Chain Mapping?
Supply change mapping (SCM) is a process involving the documentation of information relating to every aspect of a supply chain, from logistics to suppliers and wholesalers.
With this information, a business’ entire supply chain can be traced on a global scale – allowing them to identify and mitigate risks at each stage.
For example, a car manufacturer can create a supply chain map of all materials used, where they’re sourced from and how they’re transported across the globe.
Why is it important?
Supply chain management is essential for understanding where certain processes or partners may be underperforming and how changes in strategy can be used to help solve problems within that area.
Maybe products aren’t being boxed and shipped fast enough to keep up with global demand. So, the company, after referring to its supply chain map, realises that the team boxing these products is understaffed and therefore isn’t able to keep up with demand. This issue can now be solved by hiring more staff.
With a deeper understanding of how the market is influencing a business – underpinned by insights collated in a single database– it is easier to predict, plan and mitigate any risks affecting the supply chain.
How to Identify the Key Components of a Supply Chain
To successfully and comprehensively map a supply chain, two key components must be kept in mind. These are Entities and Functions.
These are businesses that a company relies on to source most of their materials, process them, or package and ship them. These include anything from wholesalers to distributors or vendors. When mapping out a supply chain, think of these as the individual nodes that must be linked together.
These are the processes that connect entities to the supply chain itself. Think of them like roads linking each node. How does a supplier ship goods to a manufacturer?They are transported. Therefore transportation (plane, truck or cargo ship) would count as an individual function.
As an example, imagine a car manufacturer creating a supply chain map. The first node on that map would be the suppliers in charge of the raw materials like carbon fibre or glass. These would be connected via a function – in this case transport by truck – as these materials are shipped to a manufacturer to be processed and made into cars. From the manufacturer, these cars are then distributed to retailers via sea cargo.
Email correspondence would also be another function connecting each partner, as constant communication is always in effect.
What are the Benefits of Supply Chain Mapping
Supply chain mapping comes with several benefits that can boost the sustainability and viability of any business, both national and international. These include:
This encompasses the value of goods. A supply chain map helps identify where products – including raw materials – are being damaged or lost and could potentially be slowing down production.
Mitigating Risk Impact
Imagine a third-party supplier breached regulations or broke sustainability protocols. How would a business be affected by that?Understanding how another company’s impact could sabotage the supply chain can help a business prepare for the worst in the future to avoid disruption.
Speeding Up Processes
By comparing supply chain entities, it’s easy to understand where delays in business efficiency might be occurring, leaving them open to quick resolution.
Discovering Effects on Cash Flow
Smaller suppliers may need shorter payment terms to solve cashflow issues. An efficient and streamlined supply chain is the most effective way to ensure all payments are made on time.
Strengthening Supply Chain Overall
Communication can help strengthen bonds between various entities within the supply chain. This communication is streamlined by a clear and transparent map of partners.
DeepStream streamlines the procurement process. With our RFx software, all supplier information and communications are aligned in a single database that is clear, secure and easy to browse.
How to Map a Supply Chain
Understanding how a supply chain works is only part of the challenge, next a business needs to map its partners and process by following a set of simple steps:
First, it’s important to identify every stakeholder involved in the supply chain. This includes roles like suppliers, manufacturers and retailers.
It is often best practice to use supply chain management software to help record every business and point of contact. It may also be useful to rethink communications strategies. Are all partners in the supply chain using the optimal possible form of communication, or is it time for a change?
It is important to understand the relationship between not only a business and its suppliers but also one supplier and another.
Understand what each entity in the supply chain sells and what actions they perform. As this web of connections expands, everyone within the chain understands exactly what risks and bottlenecks may arise between each link.
Costs & Timings
Next, work out the costs and timeframe involved in each part of the supply chain.This will help a business understand exactly what part of the supply chain is the most expensive or takes the most time to manage.
This gives a business a broader perspective from which to make beneficial changes to mitigate risks or reduce costs.
Account for Risks
With almost every business (and that accounts for every entity within a supply chain) there are associated risks, whether legal, environmental, economic or political.
It’s important to understand which entities in the supply chain could potentially delay or disrupt projects and how best to take measures to mitigate these specific risks.
Tracking data is essential in maintaining an in-depth and up-to-date understanding of supply chain performance through the monitoring of orders, shipments, returns and other documents. This acts as a running indicator of supply chain efficiency that can be measured against designated KPIs to determine overall success.
How can the data from this process be analysed to identify areas for improvement?
The real value of supply chain data comes in how it is turned into actions that help businesses avoid costly disruption. But how do businesses know when to acton these insights?
Key performance indicators (KPIs) can be used to benchmark data and identify the areas in which a supply chain is succeeding and what areas it is underperforming.
It is important to keep data updated regularly and in a single format so that allKPIs can be easily benchmarked. This makes it easier to pivot strategies at the earliest opportunity when needed to minimize potential losses.
RFX software provides an effortless way of keeping all supplier data in one place – making it easier to make important decisions when you need to,
For more information on how DeepStream can assist with every stage of the procurement process, contact us and request a demonstration!
Frequently Asked Questions (FAQs)
What is a process map in the supply chain?
A process map is a visual representation displaying the actual supply chain processes, including entities and functions. It is usually displayed in a flowchart format, starting from the source to the customer.