The supply chain.

Concepts about the supply chain.

It is common that even international business professionals use the terms of logistics and the supply chain as synonyms, as two similar concepts, when they are different. Certainly different but related and somehow interdependent.

Let's start with the logistics that consists of the planning, execution and control of the products that we deliver to the customers in the right quantity, quality and time. Logistics includes processes such as transport management, fleet management, order planning, inventory of products or forecast supply and demand among others. In order to deliver the products from the production plant to the final customer. Seeking to round off the concept we will say that a logistics manager supervises all the activities of the product management, from the factory to its delivery to suppliers and customers. He directs the rest of his colleagues in the logistics team and implements improvements in the processes of development and creation of the plant in which he works. Logistics seeks to offer the best service at the lowest cost, to deliver quality products to customers. In the supply chain they are already in charge of finding quality raw materials at a good price, so that the costs are not high.

The supply chain controls the entire workflow in product management, from storage, distribution, to final contact with suppliers and customers. Logistics is therefore an additional component within the supply chain.

The Supply Chain Manager is in charge of obtaining the raw materials at the best possible price, making sure to satisfy the demands of the customers and carry out continuous process evaluations for their improvement. He is also in charge of coordinating all the logistics and their managers.

The logistics have to be organized in order to distribute the products in the shortest possible time. The supply chain controls the time of each of the processes of the plant so that logistics do not fail. Logistics delivers the product on time; the supply chain seeks to improve this time and that of other activities. Logistics is reinvented with each new method of distributing goods; supply chain management attempts to implement new techniques so that the supply chain is never obsolete. At the end of the day is logistics as a supply chain, we have to take into account that the distribution and delivery of the products should be done in the most efficient way possible. Only then will we achieve improvements for the development of the company.

Let us now talk about Supply Chain Management encompassing the planning and management of all activities involved in supply and acquisition, conversion and all logistics management activities. An important aspect is that it also includes coordination and collaboration with partners in the chain, which may be suppliers, intermediaries, service providers and customers. In essence, supply chain management integrates supply and demand management within and between companies.

In a supply chain, the flow of information is vital to be able to deliver inputs at the right time, not to stop production lines, nor to create a surplus of inventory and in this way, deliver the finished product on time to Final client.

The main function of the SCM Supply Chain is to optimize the production process from the purchase of the inputs to deliver the finished product to the final customer. The main actors of the chain are therefore: Suppliers; Manufacturers; Customers; points of sale; Carriers; Customs agents, regulatory agencies, Distributors. Good supply chain management brings benefits generated by cost and inventory reduction, improved responsiveness and customer service, as well as more efficient production and purchase / sale cycles.

Risks in the supply chain

Risk in the supply chain can be defined as the range of possible events that may have a negative effect on the flow of products or services resulting in some kind of quantitative or qualitative damage. Risk management in the supply chain seeks to assess, identify and quantify potential disruptions to reduce its impact.

Identifying the potential risks that organizations in a sector may face is a primary need for organizations, this will allow the creation of response mechanisms to know "what to do" and "who should do it" in case the probable risk becomes a reality.

The key processes that supply chain managers must be able to carry out in any organization related to risk are related to the identification of potential risks that can occur, to assess and classify the risk, to develop an adequate response plan and execute the response plan if necessary.

In Supply Chain, risk management in its entirety comprises a complex and detailed analysis from start to finish. As described by Gregory Schlegel and Robert Trent (Supply Chain Risk Management), most of the functions are well advanced in risk management in terms of supply, with less development in risks associated with demand but lack of adequate management of the risk in the environment surrounding the organization. This leads us to understand that as we move away from our closest and controllable environment, risk management becomes more complex and diffuse.

Define the types of risk starting with the supply, in this category can appear risks such as supplier availability, labor disruptions, prices, product quality, delivery time, transportation, customs.

Risks arising from management on demand, the main potential risks detected are forecast error, delays in deliveries, customer prices, quality, loss of customers, guarantees, unprofitable customers.

Risks in internal processes include all those risks that are part of the internal processes of the organization. Potential risks are related to information and technology, inventory management, capacity, payment and collection management, customer service, planning, strategy, production as well as issues related to mergers.

And finally risks in the environment that includes the potential risks that exist in the external environment of the company, can identify the legislation, regulations in the countries, customs regulations, the press, environment, natural disasters and political changes.