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The concept brings together independent organizations that are connected through the products and services they offer; they independently and/or mutually add value to the product or service that is to be delivered to the end user. It involves a situation in which an organization contributes to the addition of the value of the products and services prior to delivering them to its customers. Over the last few decades, the theory and concept of business management have gone through significant changes. Many of the old methods previously used for conducting business have been challenged while the new approaches have been developed. Therefore, the survival of any business does not only depend on its ability to function properly but also on its ability to corporate within the supply chain. An analysis of changes in the differences between supply chain processes that were adopted before and during the 21st century helps to understand the changes that have taken place over time.
All products and services that are created in the chain with the intention of being delivered to end-consumers always have an end chain as a target point. Therefore, the primary reason for which a supply chain exists is serving the end-consumer who is present in the marketplace (Lu, 2011). Ultimately, the level of a supply chain’s ability to serve customers defines the competitive advantage of a market. Based on one’s expectation in relation to a supply chain, the similar concept may be given, in which only the names are changed. For instance, in the case of a chain for adding value, the name value chain may be used. However, if a supply chain is perceived as a continuous demand that originates from customers, then the chain may be referred to as a demand chain.
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The supply chains maintained in the manufacturing sector are identical in terms of the flow of the materials involved, from the raw materials to finished products. The continuous flow and transformation of goods binds the whole supply chain together and even defines the boundary. The supply chain of one type of product cannot be combined with that of another product because the flow of materials is different in each particular case. Importantly, whenever materials are flowing along the chain, the companies that own them may also change their logistic activities until the materials reach the consumer (Lu, 2011). In all of these cases, the transactional processes involving a product or service being bought or sold comes with the change in the party that owns the process of material’s flow from the one supplying it to the one buying it. This is done repeatedly until the end user is reached. The occurrence of a commercial flow is limited to a chain that involves at least two companies. However, within an organization, material flow occurs without the change of ownership, hence, commercial flow does not take place.
Customers in the modern global supply chains have unique characteristics; they are borderless. Apparently, national borders do not limit customers in the supply chain in terms of sourcing, marketing, manufacturing, or delivering goods and services. The borderless principle is superior to the principle of physical material flow. Since customers’ access to the goods and services has become borderless, customers can enjoy different brands, services, various kinds of financing and enhance technological collaboration (Lu, 2011). Technological developments, regional and bilateral trade agreements, as well as the facilitation in the trade process of global organizations, have created more customers all around the world.
Customers in the global supply chain environment enjoy cyber-connection. The global business environment is not clustered into different independent local markets anymore. Instead, customers are interconnected within a single market through cyber connections (Walker & Jones, 2012). The interconnection of global customers is a spontaneous and hardly controllable process, which is unlikely to be reversed. Through cyber-technology, customers have been able to share large amounts of data quickly and reliably with their suppliers or other stakeholders in the supply chain.
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Customers in the current global supply chain are aware of the need to preserve the environment. Indeed, the last decade has been characterized by the mainstreaming of conscious customers who are more concerned about negative impacts of businesses and economic activities made to the environment. Global customers seem to have embraced green and eco-sustainable business strategies in the global supply chain management (Sarkis, Zhu, & Lai, 2011). Besides, governments of the leading economies have increasingly promoted green business initiatives thereby creating awareness among customers.
Moreover, customers in the current global supply chains have become the advocates of socially responsible business activities. Customers consider fair trade as well as business ethics when choosing the businesses to deal with (Sarkis et al., 2011). Moreover, customers have started considering the ethics and social responsibilities guiding the supply chain when they are deciding on what to purchase and when. Thus, the globalization and social responsibility aspects have become the vital components in today’s business sector.
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Globally, companies’ revenues have increased over the years because of the measures that have been instituted in the process of supply chains’ organization. For instance, there are suppliers who have been using lean supply strategies. Lean methods have helped to achieve the best results in terms of time, technology use, and resource allocation among other core aspects in the supply chain (Matopoulos, Barros, & van der Vorst, 2015). Notably, most of the challenges in global supply chains remain closely associated with time. Cost reduction by driving down excessive inventory, both staged and in-transit one, as well as proactive response to outbound and inbound events, have become crucial for companies in current supply chain environment. Inventory costs often increase when materials cannot be moved quickly enough, while the responsiveness of supply chain is determined by the lead-time. Increased time management in the supply chain has enabled suppliers and buyers to reduce expenses, particularly, inventory costs thereby increasing revenues. Similarly, the extensive use of technology has eliminated the need for human resources in supply chain thereby increasing revenue flows for suppliers and buyers (Matopoulos et al., 2015). There is no doubt, therefore, that supplies have significantly increased their revenues through the application of appropriate methods and technologies.
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The production capacity of many suppliers in the supply chain has increased because of the use of principles that enhance mass production. For instance, companies have been using the Lean manufacturing principle of production that was developed in Toyota and has been refined over the years (Lu, 2011). The system increases production efficiency by minimizing wastes and errors and reduces costs related to transportation and inventories thanks to small-scale manufacturing. Lean manufacturing encourages optimization across organizations and supply bases. The lean producer uses a large number of suppliers and manages them in a tiered manner to create a small supply base. Apparently, using a small supplier base enables the lean producer to create spare time as well as other resources to interact with each other. The main concept in lean production involves the identification and elimination of wastes in materials, processes, time and information while adding value that customers perceive. Avoiding wasteful activities enables companies to focus more on the processes that enhance production output. Other aspects of lean principles that are crucial for increased production include demand management, process standardization, people engagement, collaboration, and continuous improvement. Lean processes have been used in reducing costs and labor over the years. Similarly, the agile supply chain framework has also been used to reduce the cost of resources and labor by leveraging resources across divisional units where operations take place.
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Supply Chains in the 21st Century
In the 21st century, the changes have occurred in the practices associated with supply chains. Manufacturing is one of the areas where changes have been witnessed. For instance, before the 21st century, most of the manufacturers owned factories and controlled production processes on their own (Kinaxis, 2009). The manufacturers had a complete knowledge regarding their capacity, programs, as well as manufacturing costs. Companies were able to adapt faster to changes that were taking place in the marketplace and restore a supply chain more easily. With owned companies and in-house sales offices, companies could determine their own inventory reports as well as the order in the supply chain. However, in the 21st century, significant shifts have occurred. A good example is off-shoring. It is now possible to have different components of supply chain handled by different people in different countries or regions. For instance, the manufacturer can have design, marketing, and sales facilities in the main manufacturing plant while processes involving manufacture of parts and final assembly occur offshore. In essence, while offshore activities were not happening before the 21st century, they have become very prominent in the 21st century (Kinaxis, 2009). Today, supply chains are multi-faceted and are distributed globally across different cultures, technologies and time zones. Manufacturing firms currently have little control over supply chain partners unlike before. As a consequence, manufacturers are now less agile to changes that occur in supply and demand processes.
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The 21st century supply chain, unlike before, promotes outsourcing as well as a multi-tier system that requires a new category of software to offer better products and services to consumers. Since the 21st century, supply chain is an integrated process; companies today have to use technology that can quickly help them in decision-making, particularly when seeking to ensure an effective balance between demand and supply (Kinaxis, 2009). It is now possible to provide real-time services through live collaborations in online platforms, agile response, and flexible testing. Response management systems in the 21st century supply chain encompass very important features that had been unavailable before. For instance, now there are is a possibility to customize personal alerts that can allow users to define their conditions as well as thresholds needed to take actions. There are also active spreadsheets, which allow teams to have a view, share or even manipulate live data using real-time analytics in a common spreadsheet interface. There exist live scorecards that quickly position and align alternatives with key performance indicators (KPIs) and corporate goals with supply chain management systems of an organization (Kinaxis Inc., 2017). Moreover, web-based access allows for timely access from anywhere globally in the process of the supply chain. The current real-time supply management systems is an advancement that enhances processes in the supply chain. As a consequence, the provision of services to customers has been enhanced significantly in the instances where such tools are used in the process of supply.
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In the past, enterprise resource program (ERP) was among the software tools that were used in supply chain management. However, in the 21st century, the modern software tools still can supplement those that were used before (Kinaxis, 2009). RapidResponse is among the crucial supply chain software tools that allow for integrated business planning, ensure the secureness of collaboration environment, enable quick response, and aid in making a well-argued decision.
In conclusion, there have been various changes in the concept of supply chain as applied in the business world especially within the last decade where software has been developed to ease the coordination of activities. Previously adopted procedures of managing business processes such as supply chain are slowly fading away to give way to new strategies that support current needs. Therefore, the success of supply processes in businesses will depend on the ability of the latter to incorporate the new concepts into their systems. Importantly, global customers have become borderless, cyber-connected, environmentally conscious people who are advocating socially responsible supply chain management practices. Besides, increasing revenues have been attributed to the introduction of methods such as lean supply systems.