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 In sales, commerce, and economics, a customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service, product, or an idea, obtained from a seller, vendor, or supplier via a financial transaction or an e ...

through the manufacturing and delivery of products. It comprises the general state of business affairs in which all kinds of material (

raw material A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods, finished goods, energy, or intermediate materials/Intermediate goods that are feedstock for future finished ...

work in process Work in process or work-in-process, (WIP), work in progress (WIP), goods in process, or in-process inventory refers to a company's partially finished goods waiting for completion and eventual sale, or the value of these items. The term is used in ...

and finished products) are transformed and moved between various points to maximize the

value added Value added is a term in economics for calculating the difference between market value of a product or service, and the sum value of its constituents. It is relatively expressed by the supply-demand curve for specific units of sale. Value added ...

for customers. In the

semiconductor industry The semiconductor industry is the aggregate of companies engaged in the design and fabrication of semiconductors and semiconductor devices, such as transistors and integrated circuits. Its roots can be traced to the invention of the transistor ...

, 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. A

supply chain A supply chain is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them to end consumers or end customers, while supply chain management deals with the flow of goods in distri ...

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. John Mills ''et al''. have suggested that the addition of the term "network" to the concept of

supply chain management In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management, logistics and marketing channels, through which raw materials can be developed into finished produc ...

has extended supply chain management into a more strategic orientation. In their analysis, internal connections such as links between a company's

purchasing Purchasing is the procurement process a business or organization uses to acquire goods or services to accomplish its goals. Although there are several organizations that attempt to set standards in the purchasing process, processes can vary gr ...

department and the staff responsible for

new product development New product development (NPD) or product development in business and engineering covers the complete process of launching a new product to the market. Product development also includes the renewal of an existing product and introducing a product ...

would form part of a supply network, alongside the connections to players within the supply chain.Mills, J., Schmitz, J. and Frizelle, G.
A strategic review of "supply networks"
''International Journal of Operations and Production Management'', Vol 24, No. 10, 2004, pp. 1014-1015, accessed on 3 July 2024 A supplier association can also be seen as a form of supply network.

Resilience in supply networks

A resilient supply network effectively aligns its strategy, operations, management systems,

governance Governance is the overall complex system or framework of Process, processes, functions, structures, Social norm, rules, Law, laws and Norms (sociology), norms born out of the Interpersonal relationship, relationships, Social interaction, intera ...

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 their strategies and operations to adapt to risk that affects network capacities. There are 4 levels of supply chain resilience: #reactive supply chain management. #internal supply chain integration with planned buffers. #collaboration across extended supply chain networks. #a dynamic supply chain adaptation and flexibility.

Strategic resilience

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 focus on delivering

customer satisfaction Customer satisfaction is a term frequently used in marketing to evaluate customer experience. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number ...

. Strategic resilience 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.

Operational resilience

In terms of operational resilience, the supply networks must respond to the ups and downs of the

business cycle Business cycles are intervals of general expansion followed by recession in economic performance. The changes in economic activity that characterize business cycles have important implications for the welfare of the general population, governmen ...

or to quickly rebalance product-service mix, processes, and supply chain, by bolstering enterprises agility, flexibility and robustness in the face of changing environments.

Research

There are two distinct types of supply network research: * descriptive studies of industrial supply networks *prescriptive research into supply chain management focussing on strategic and operational management questions. Early supply network descriptive research looked at the

automotive industry The automotive industry comprises a wide range of company, companies and organizations involved in the design, Business development, development, manufacturing, marketing, selling, Maintenance, repairing, and Custom car, modification of motor ve ...

, comparing the Japanese

Keiretsu A is a set of companies with interlocking business relationships and shareholdings that dominated the Japanese economy in the second half of the 20th century. In the legal sense, it is a type of business group that is in a loosely organized al ...

with western manufacturing networks. Recent research also considers how buyers address social responsibility in supply networks, finding that audit strategies can be optimized by prioritizing the "least valuable unaudited supplier" based on its contribution to overall production value and network structure.

References

External links