There’s more to logistics than picking a distributor and simply hoping they deliver a stellar service. Ideally, it ought to be more hands-on. If you’re not regularly conversing with your transport partners or otherwise aren’t kept in the loop about your distribution network, it could spell bad news later down the line. Supply chain mapping (SCM) presents a valuable tool in this regard, acting as the first stepping stone towards robust strategic supply chain management.
Supply chain mapping is all about identifying supply chain dependencies and then managing the associated risks in a bid to fortify your business against market disruptions, address inefficiencies and improve overall performance.
Still uncertain? For what it’s worth, this is a complex topic, with plenty of nuances, so you’re not the only one. Now, allow us to get you up to speed with this dedicated guide.
Contents:
- What is supply chain mapping?
- Why SCM is beneficial for business
- What to include in your supply chain map
- A supply chain mapping example
- How to get started
What is supply chain mapping?
We laid some of the groundwork in the intro above, but it’s important we drill down into the details to provide the utmost clarity.
Supply chain mapping involves cultivating a strategic understanding of a business’s various suppliers and partners and then putting procedures in place to manage each risk that crops up along the way. This is achieved through a process of record-keeping, data collection and analysis.
The concept of supply chain mapping has existed for quite some time, yet it did not receive the same level of attention from mid- and senior-level managers in its early days as we see now. The reasons behind this increased interest are clear: expanding organisations are keen to stay in the good books of government, consumers, NGOs and other stakeholders, all whilst keeping the risk of their operations in control. Plus, with the introduction of sophisticated supply chain mapping/reporting software and other burgeoning supply chain technologies, it’s easier than ever to keep track of vast inventories and manage supplier relations.
An ongoing process
At a glance, gathering information about the various entities you work with along your supply chain and visualising them in a map sounds simple. However, this strategy doesn’t work when you cut corners.
Supply chain mapping is best implemented continuously; that is, when businesses take the time to revisit the documentation whenever there are changes to their processes and keep records up to date, rather than treating it as a one-off exercise. After all, there may be subtle changes from your partners you are not immediately privy to.
Why SCM is beneficial for business
Supply chains vary widely between industries and regions, but one thing remains certain: with adequate record-keeping, planning and review processes in place, you can more easily prepare for and mitigate the challenges posed by an increasingly globalised, changing world.
Before we breeze on to what should be included in a supply chain map, let’s pause as we further dissect some of the specifics of SCM’s financial, environmental and social benefits.
Supply chain mapping helps businesses:
Stay abreast of evolving regulatory standards
As a Logistics UK member and BRCGS Storage and Distribution AA Certified company, we are no strangers to evolving regulatory standards. From changes in food transport law and standards such as HACCP to ensuring your company is properly abiding by supply chain legislation, knowing who each of your distributors and suppliers are helps protect you from expensive legal ramifications.
Another crucial piece of legislation of this kind is the Modern Slavery Act – it requires businesses to demonstrate what they are doing to address modern slavery within their immediate business in addition to earlier stages in the supply chain.
Insulate higher-risk investments from supply chain disruption
It goes without saying that companies across a broad spectrum of industries can benefit from supply chain mapping, but those in particularly volatile sectors like agrifood and energy, where market fluctuations, regulatory changes and environmental factors can impact operations, will see the biggest potential returns. By adopting a proactive approach such organisations can respond more adeptly to disruptions and capitalise on opportunities as they navigate this increasingly uncertain world.
Improve efficiency across each step of the supply chain
Pinpointing the various actors in your supply chain should be seen as an opportunity for growth and efficiency. Here, you can review each step of your product’s journey and seek out more tailored solutions or perhaps even rethink your business partnerships if they are falling short of your expectations.
Whether you intend to improve your warehousing efficiency or simply weigh up the pros and cons of various transportation models such as rail versus road haulage, you can establish repeatable practices, deeper confidence in your partners, and stronger relationships as a result.
Increase the cost-effectiveness of their operations
Continuing on from the previous benefit, an effective supply chain map will help businesses take a more cost-effective approach to their operations. With the risk of shipping interruption reduced, both via security attacks and environmental impacts, you can prepare well in advance and react accordingly to mitigate the situation. This, paired with compliance, means that you are more in control of your cashflow as you know exactly where value is accrued and lost.
Develop relationships with key stakeholders
Whether you rely on a 3PL provider or a contract logistics firm, thanks to supply chain mapping, companies are able to develop strategic relationships with the distributors and suppliers who offer up the highest quality services for the best value for money and, of course, the least risk.
For example, a distributor working on a contract logistics basis might be a safer bet for growing businesses than a 3PL, despite its benefits, because the business in question is after a longer-term solution tailored to more complex products with more bespoke requirements.
On top of this obvious benefit is that having a better understanding of the agents in your supply chain can sometimes translate into greater negotiating power – after all, you know your requirements and how your partners can best satisfy them.
Enhance traceability and transparency
Traceability and transparency are of growing importance in supply chain management, particularly when consumers are more switched on about the origins and ethical implications of the products they purchase. In mapping distribution networks businesses can demonstrate their commitment to more sustainable logistics and ethical working practices to keep these savvy consumers on side.
Accrue a stronger brand reputation
As a result of each of the previous benefits, companies have a valuable opportunity to position themselves as a reputable, credible and reliable organisation. By streamlining their processes and strengthening their supply chain against the inherent risks of national and international distribution, along with demonstrating compliant and ethical practices, these businesses send a clear message to consumers and stakeholders. This approach not only enhances their credibility but also indicates that they are worthy of investment, ultimately leading to a positive brand reputation.
The challenges
By now, it should be clear that knowing each of the various entities along your supply chain has far-reaching implications, from quality control to regulatory compliance. However, obtaining the correct level of information on these entities is not without difficulty.
Most organisations have information on their direct (Tier 1) suppliers, but occasionally obstacles can arise due to an issue with these suppliers’ suppliers. Remember how COVID-19 put a spanner in the works for so many companies? And herein lies the problem: it can be costly, time-consuming and generally tricky to acquire and maintain data on indirect (lower tier) suppliers.
Now, think about how each firm or step in a multi-regional, multi-tiered supply chain could be connected with the global supply network – that’s a massive amount of work untangling a dense web of intermediaries. For this reason, it is always recommended that you do your due diligence when introducing new organisations to your operations, or perhaps even look towards supply chain mapping software that will do the bulk of the legwork for you.
This mind-blowing map shows how complex the supply chain is for our day to day items. pic.twitter.com/bYrXTPNxcP
— Parag Khanna (@paragkhanna) March 22, 2016
Figure 1 – Examples of contemporary global supply chains – Credit Parag Khanna
What to include in your supply chain map
A supply chain map can be as detailed as you wish, but it’s true that those with more in-depth information tend to simplify decision-making later down the line. Here’s a brief overview of the insights you may want to include:
- A complete inventory of all suppliers and where their offices and/or factories are located.
- Information on all known subcontractors or agents and how they are connected to your suppliers.
- Product/services insights, from what is being provided by whom and its value within your processes.
- The data passed between yourself and your suppliers, and its significance to your organisation.
- Evidence of any certifications, e.g. transport accreditation, audits and assurance assessments.
A supply chain mapping example: The role of SCM in food distribution
To put what you have just learnt into perspective, here is a simple example of a supply chain map for a British bakery.
- Raw material supplier: The initial stage involves sourcing the raw materials. In this example, these will be ingredients such as flour, dairy products and edible oils.
- Manufacturer: With the ingredients sourced, they will be sent to a manufacturing facility where they are processed and packed.
- Wholesaler/distributor: Now, the finished food products will be transported safely to wholesalers or distributors in appropriate food-grade tankers. For more complex, time-or temperature-sensitive goods, they might employ temperature controlled logistics strategy.
- Retailer: The retailer purchases the goods from the wholesaler or producer to sell them to the final consumers at the bakery.
- Consumer: The bakery customers are the final link, completing the supply chain as they purchase and consume the goods.
How to get started
If you are ready to embark on the process, here is a simplified to-do list to get you on the right track.
- Look to your existing procurement systems to build up a comprehensive list of your known active suppliers. You may wish to order them by descending importance to your business.
- Decide which insights to capture and how to store this information securely.
- In larger distribution networks, it is recommended that you establish how far down the chain of subcontractors and intermediaries you go – of course, the more information you acquire the longer it will take; however, your operations will be made more robust.
- Continue to reach out to your stakeholders and collect information from them directly and from their websites and invoices, looking for any discrepancies.
- Strengthen your supplier and distributor relations and update your contracts to reflect the level of information you require to work with them.
- Evaluate the cost-efficiency and value each agent brings to your business and evaluate any risks.
- Consider using a software tool that visualises the network in an accessible format and automates part of the process. Over the last decade, the supply chain management software and procurement market has more than doubled, so there are plenty of options available.
Is Your Supply Chain Addressing Your Top Priorities?
If you are in the logistics business or at least outsource your distribution to ensure your products get from A to B, having an iron grasp on the status of your supply chain is a must. Without a clear picture of the supply network, it’s nigh impossible to expand or improve the efficiency of your operations with the precision required for optimal results – but supply chain mapping will get you closer. And, remember, it’s an ongoing process, so do take care to revisit your supply chain map as your business develops.
For more detailed logistics insights from the experts, acquaint yourself with the rest of the Dennis Distribution knowledge hub.