A supply network is a pattern of temporal and spatial processes carried out at facility nodes and over distribution links, which adds value for customers through the manufacturing and delivery of products. It comprises the general state of business affairs in which all kinds of material (work-in-process material as well as finished products) are transformed and moved between various value-added points to maximize the value added for customers.
A supply chain is a special instance of a supply network in which raw materials, intermediate materials and finished goods are procured exclusively as products through a chain of processes that supply one another.
In the semiconductors industry, for example, work-in-process moves from fabrication to assembly, and then to the test house. The term "supply network" refers to the high-tech phenomenon of contract manufacturing where the brand owner does not touch the product. Instead, she coordinates with contract manufacturers and component suppliers who ship components to the brand owner. This business practice requires the brand owner to stay in touch with multiple parties or "network" at once.
Resilient supply networks
A resilient supply network effectively aligns its strategy, operations, management systems, governance structure, and decision-support capabilities so that it can uncover and adjust to continually changing risks, endure disruptions to its primary earnings drivers, and create advantages over less adaptive competitors. Moreover, it has the capability to respond rapidly to unforeseen changes, even chaotic disruption. The resilience of a supply network is the ability to bounce back – and, in fact, to bounce forward with speed, determination and precision. In recent studies, resilience is regarded as the next phase in the evolution of traditional, place-centric enterprise structures to highly virtualized, customer-centric structures that enable people to work anytime, anywhere.
Resilient supply networks should align its strategy and operations to adapt to risk that affects its capacities. There are 4 levels of supply chain resilience. First is reactive supply chain management. Second is internal supply chain integration with planned buffers. Then comes collaboration across extended supply chain networks. Finally is a dynamic supply chain adaptation and flexibility.
From the strategic resilient viewpoint, a supply network must dynamically reinvent business models and strategies as circumstances change. It is not about responding to a one-time crisis, or just having a flexible supply chain. It is about continuously anticipating and adjusting to discontinuities that can permanently impair the value preposition of a core business with special focus on delivering ultimate customer centricity. Strategic resilience, therefore, requires continuous innovation with respect to product structures, processes, but also corporate behaviour. Renewal can be regarded as the natural consequence of a supply network’s innate strategic resilience.
In terms of operational resilience, the supply networks must respond to the ups and downs of the business cycle or to quickly rebalance product-service mix, processes, and supply chain, by bolstering enterprises agility, flexibility and robustness in the face of changing environments.
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- The Four Levels of Supply Chain Maturity
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