Supply Chain – Three Perspectives


We can better understand, analyse and improve the supply chains through the three perspectives of a supply chain. The three perspectives are internal supply chain, broader supply chain and end-to-end supply chain. The internal supply chain is part of the broader supply chain, which is again part of the end-to-end supply chain. All the three supply chains are one and the same and the only difference is from where we are looking at the supply chain.

Let us take an analogy, you have just boarded a flight and it is taxiing on the runway for take-off. You can see only the runway. Few minutes later, the aircraft is at an altitude of 10,000 feet and you can see the entire airport and surrounding areas. And sometime later, the aircraft flies at an altitude of 30,000 feet and now you can see the entire city. The same way, the three perspectives of supply chain are looking at the same supply chain from different heights.

Supply Chain Analysis

Each of these perspectives have a boundary. Defining such a boundary will bring clarity and precision to our discussion. The internal supply chain is represented by the functions or departments that perform the material movement and transformation of the material to the finished goods. On the other hand, we can say that the physical premise of an organisation contains the internal supply chain. The internal supply chain starts with procurement department which orders and brings the raw materials and ends with the finished goods warehouse attached to the manufacturing unit. Between these two boundaries lies the two most important functions - operations and production. A process map depicting all the activities of an internal supply chain is the first step towards designing or improving a supply chain.

The suppliers from whom we are directly buying the materials and components are called the Tier-1 suppliers. And the same way, the businesses that buy the finished goods directly from our organisation are called the T-1 customers. The broader supply chain is from the T-1 Supplier to the T-1 Customer. Broader Supply Chain’s process map will show the details of all the activities minus the internal supply chain activities. In this process map, the internal supply chain will be denoted as a single node without many details. While studying the broader supply chain the focus will be on the activities between an organisation and its suppliers and customers such as the robustness of Supplier Relationship Management (SRM) and Customer Relationship Management (CRM) policies, processes, and systems.

An economy is divided into primary, secondary, and tertiary sectors. Primary sector deals with Farming, Forestry, Fishing and Mining, shortly known as 3F&1M. Secondary sector deals with all sort of manufacturing activities where the value is added on the inputs from the primary sector and primarily these inputs are transformed for more utility. The tertiary sector deals with services such as retail, banking, insurance etc.
Assume, I have a pack of biscuits in my hand. I ask the question to myself from where I got this. Of course, I bought it from the nearby store. Then I ask from where the store got this pack of biscuits. I keep asking this question to trace its source. Some of the answers will be regional distribution centre, mother hub, biscuits manufacturing factory, flour mill, wheat dealer and farmer. Think about mapping the end-to-end supply chain of an automobile manufacturer. It would look like a complex web with thousands of companies. All supply chains originate from the primary sector. So, an end-to-end supply chain refers to the network of entities or companies from the first source to the n-th company or consumer. In a way, the boundary of an end-to-end supply chains are Farmers or Miners and the Consumers.

Written by Venkadesh Narayanan

Venkadesh is a Mechanical Engineer and an MBA with 30 years of experience in the domains of supply chain management, business analysis, new product development, business plan and standard operating procedures. He is currently working as Principal Consultant at Fhyzics Business Consultants. He is also serving as President, PDMA-India (an Indian affiliate of PDMA, USA) and Recognised Instructor of APICS, USA and CIPS, UK. He is a former member of Indian Civil Services (IRAS). Fhyzics offers consulting, certification, and executive development programs in the domains of supply chain management, business analysis and new product development.

Leave a Reply

    Related Post

    Growth Is Just One Click Away

    Don't feel like calling? Just share some details about your SOP Requirements & Fhyzics representative will get in touch with you. Schedule A Meeting with our Manager [Consulting & Certifications]