Do You Understand Supply Chain? How To Educate Your Organization

As supply professionals, we have a responsibility to all other segments of our businesses to ensure we are engaging and teaching those segments about what our discipline entails. Supply chain is not easily understood. It takes time and patience to help others in different areas of a business to understand the interconnectivity of the various aspects of supply chain and how they affect each other. Any easy way to begin this conversations is by asking co-workers, “what does supply chain mean to you?”

From sales to production to customer service, it is crucial that all teams in a business understand the supply chain and how one issue may affect getting the end product to a customer. We are seeing this every day with the rise of finished good shortages on the customer side. When teaching someone somewhat green to the field of supply chain, an easy starting point is to discuss the bullwhip effect. The bullwhip effect explains very simply how changes in the downstream supply chain (closer to the customer) can impact the upstream supply chain (toward the suppliers). A great way to illustrate this is through a simulation called the “beer game.” This is an inventory exercise that demonstrates these changes by varying the end customer demand and having the various pieces of the simulated supply chain react to those changes usually causes huge shortages or overages of “material.” Anyone can participate in this simulation and can not only show how the supply chain is impacted, but also help participants understand the different departments within the supply chain.

Departmental understanding is also important for those outside of the supply chain. Often, coworkers will look to communicate with whoever they are comfortable with or already know, but that does not mean that is the person they should be working with on the issue. For this reason, the supply chain should have a robust organizational chart that has high level details about what each department is responsible for to streamline finding that correct person to help.
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Finally, supply chain has a duty to communicate processes. Processes are a major part of the supply chain and the related processes to another department can be extremely valuable in gaining traction between the two groups. This includes helping groups understand ERP systems and the impact they play on the business. This can help other departments understand the supply chain and the roles they play within it as well as how to positive impact it to make it more efficient. Groups outside the supply chain can also begin to learn the value of supply chain and where the supply chain can be beneficial in helping create need value. The supply chain is able to play a role in new process development, which can save money. It can also be part of the product development process to understand bottlenecks and capabilities, but can also work to avoid design flaws that others may miss not having a different perspective in the room. It is this type of collaborative effort that allows the various business departments and a supply chain to work to develop a strategic competitive advantage.