An interesting phenomenon has transpired over the last 20 years; the idea of moving goods from one location to another is becoming a more complex activity with each passing year. Where once it was looked at as simple, cost related activity- moving product from here to there- today, it is one of the fastest growing disciplines within most commercial operations. Maximizing output from process effectiveness can increase sales and decrease costs at the same time, and they are not mutually exclusive. In addition, it has become a science; in fact, it is one of academia’s fastest growing majors.
- Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point of- consumption in order to meet customers' requirements.
- Supply chain management is the integration of key business processes from end user through original suppliers that provide products, services, and information that add value for customers and other stakeholders.
- The management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole.
Although each definition is solid, the third one is revealing for its ability to be inclusive, over-arching, and, yet, simplistic. Perhaps the others are more specific, but the ‘management of upstream and downstream’ captures the essence of the movement of product. Delivering value is the outcome.
Managing Inventory and Building Supply
For Aurobindo, Supply Chain divides into two main areas- Managing Inventory and Building Supply based on Forecast.
The management of inventory is also known as supply planning. Aurobindo’s supply chain planners, based on the demand forecast, optimize the inventory, track the order to receipt cycle times, and minimize excess inventory. Considering Aurobindo’s breadth of inventory, the challenge is one that demands careful planning, good information, critical communication, and internal collaboration. The team earns its stripes daily, as the dynamics of Supply Chain Management can attest.
Demand Forecast team: Like the planners, the demand forecast team’s responsibilities are key components for a company with an ever growing portfolio of product. Simplistically, one can define the forecast as the use of customer purchasing trends to predict future customer demand. However, there are so many other factors to consider—new business opportunities, market trends, seasonal trends, and other potential snafus, like weather and geo-political upheaval – making forecasting a more complex process…part science, part art. The identification of and the degree of impact carry certain risks, playing havoc with the forecast.
Given the multiple, and often unforeseen challenges, there is a need to develop an extraordinary relationship between the two areas of responsibility. Aurobindo’s supply chain team nurtures this relationship. There is an understanding each person relies on the other to not only work diligently to ensure the engine runs smoothly, but also to challenge the forecast and/or the future supply needs. ‘The chain is only as strong as its weakest link.'
This need for complex planning, responsiveness, accountability, transparency, and internal communication are the key factors in delivering real-time and demand-led supply chain success. It would be safe to say Supply Chain is the quiet engine whose ability to run smoothly, to traverse across an often rocky landscape, and to go the distance can be the difference-maker in an industry characterized by the importance of product availability, company accountability, and solution-based outcomes.