Commercial Integrator January 2022 - 10

AV BRAINS & BRAWN
The Supply Chain
Explained and Demystified, Part 1
A primer on what 'supply chain' actually means, how we've become vulnerable
and how we can do better moving forward. By Alan C. Brawn
THE TOUGHEST DECISION I have to
make as a writer is deciding on a relevant
topic and writing the first paragraph. For
this month's article, which will be presented
in two parts, the topic was chosen
for me not by our faithful editors but,
rather, by several of our readers and some
close colleagues of mine. Please permit
me to explain.
I have been having several ongoing
conversations on the topic of the supply
chain and its effect on our industry.
One was with a VP of one of the largest
integrators in the country. He was
lamenting the issues he was having in
supply shortages, noting that he had
never seen them before. The next conversations
were with some of the largest
distributors in the world, who were
- you guessed it - lamenting supply
and delivery issues. Last but not least, I
heard from several large manufacturers
about supply issues. If you think this was
only the big integrators, distributors and
manufacturers, you would be wrong.
This issue affects the large, the medium
and the small, and even end users.
Hence, the impetus to write about this
topic, which obviously impacts us all.
A fellow writer asked me what effect
I thought the supply chain " logjams "
would have on the market. Did I expect
economic momentum to outweigh those
issues? Good questions! For those who
want the Cliff's Notes version, here is my
response: " The 'logjams' you mention are
already having a negative effect on the
market. The big distributors and several of
the large integrators around the country
are having to 'adjust' their businesses to
the flow of goods and their availability.
In some cases, those adjustments mean
considering alternative products or
brands because of availability; in others,
they mean changing a design. In others,
they mean postponing until the 'logjams'
10
become less onerous. The economic
momentum (i.e., the demand) is there and
growing, but the supply will take some
time to catch up. " For those whose interest
I have piqued and who want a deeper
dive, stay tuned!
Nick Vyas, executive director of the
Kendrick Global Supply Chain Institute
at the University of Southern California,
sets it up for us to understand the scale
and scope of the problem. He says
that, today, manufacturers and their
customers face a " perfect storm " of
supply-chain issues. Nicole DeHoratius,
a professor at the University of Chicago's
Booth School of Business, opines, " We
might be able to buffer against one type
of risk or two types of risk, but it's the
fact that all these challenges are happening
at the same time. "
Let's take this beyond a sound bite and
provide a cursory understanding of the
supply chain, its complexities and where
we are today as an industry.
quired by an organization to deliver goods
or services to the consumer. In a more
granular sense, a supply chain focuses on
the core organizational activities required
to convert raw materials or component
parts through to finished products or
services. Figure 1 depicts the process from
procurement of raw materials or components
to the warehouse; then, it goes to
manufacturing, after which it goes to the
outbound warehouse; then, via logistics, it
goes to the consumer.
Now, you have a 30,000-foot view of
the supply chain. However, the issues
surrounding it cannot be condensed into a
simple graphic. The seriousness cannot be
overstated because this affects everyone,
everywhere. Let's begin whence it came.
In the Beginning...
The origins of what is known as supply
chain management (SCM) can be traced
back to the 1980s, when corporations
sought to lower production costs by
Supply Chain Management
Procurement
Operations Management
Downstream
Consumer
Raw Materials
Inbound Logistics
Goods in Warehouse
Manufacturing
Outbound Warehouse
Outbound Logistics
Consumer
Upstream
Demand
SOURCE: CIPS, 2020)
Figure 1: The supply chain consists of all organizational activities that span from the
procurement of raw materials to finished products finally reaching the customer.
What is the Supply Chain?
There are numerous definitions, but I
found one from the Chartered Institute
of Procurement and Supply (CIPS) that
explains it succinctly. In its simplest form,
a supply chain includes all the activities reCommercial
Integrator JANUARY 2022
outsourcing and offshoring manufacturing
and R&D activities to low-cost countries in
Asia. As one SCM researcher notes, " Over
time, practices that called for continuous
flow processing with low inventory levels,
just-in-time (JIT) production and accurate
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Commercial Integrator January 2022

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