Introduction
Supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer (Anna, 2006). It is also defined as a set of linkages providing goods and services to end users and to intermediate customers (Chartered Institute of Purchasing & Supply, 2009). It is a complex dynamic supply and demand network which is also regarded as part of the overall value chain, which has both demand and supply components that need to be balanced dynamically at levels of uncertainty and risk, and which focuses on optimizing net value added at each linkage, as well as in total to the end user (Wieland & Wallenburg, 2011). A linkage is defined as a connection or relationship between two or more parts; a part that connects two or more things (Merriam Webster, 2013).
According to the definition provided by Business Dictionary (2013), linkage refers to the relationship and interaction between tasks, departments, and organizations that facilitate the flow of information, ideas, and integration to achieve shared objectives. In supply chains, the shared objective is to ensure customer satisfaction by delivering the right product in the right condition on time (Coyle, Bardi & Langley, 2003). This emphasizes the importance of supply chain linkages.
Supply chain is composed of different linkages, which include upstream linkages (also known as sources of supply), internal linkages within organizations involved in supply chains, and downstream linkages that involve distribution and ultimate customers (Hugo, Badenhorst-Weiss & van Rooyen, 2002). Upstream Linkages
The upstream linkages include both suppliers and manufacturers/producers, with suppliers being responsible for supplying materials and necessary goods to producers. This is crucial for ensuring the effectiveness of upstream linkages (Baltzan, 2008). These linkages encompass not only suppliers but also their own suppliers, in order to maintain a seamless flow of materials.
In accordance with Saungweme’s (2009) findings, the suppliers within the supply chain have the responsibility of delivering various goods and capabilities. These include raw materials, transportation and logistics services, as well as professional services like accounting, legal assistance, and contracts management.
Assessing the core or strategic competencies of suppliers is essential to identifying appropriate suppliers that align with the overall supply chain arrangement (Saungweme, 2009). Making accurate sourcing decisions is crucial in this process. It is important to establish a proper supplier selection mechanism to ensure that chosen suppliers for goods or services are consistent with the strategic vision of the current supply chain arrangement. The importance of suppliers to present-day businesses cannot be underestimated.
Suppliers are required to have knowledge of product regulations and stay updated on any changes that may occur. They are responsible for checking the list of mandatory standards and bans in the supply chain. Additionally, suppliers must obtain and provide copies of relevant standards and documents, assess product risks, and identify hazards. Factors such as the end user, place of use, possible misuse, and hazards related to supply, end product, shipment, and storage effects should be taken into account.
To ensure compliance with legal requirements and provide safer materials/products within the supply chain, suppliers must implement an effective safety compliance program. This program includes quality assurance systems and staff training. Non-compliance with supplier requirements can lead to penalties and negative consequences for the entire supply chain.
Suppliers play a crucial role in evaluating each product based on its individual merits. They consider factors such as the reliability of raw materials and suppliers, the impact of environmental changes on material types used, necessary storage conditions for safety purposes, compliance history of the product, design and production tolerances, as well as associated risks.The Australian Competition Consumer Commission (2013) emphasizes the importance of suppliers conducting material testing to assist in ensuring product safety and compliance with mandatory standards. It is the responsibility of suppliers to ensure that all products covered by these standards or bans comply with regulations. To demonstrate their commitment to adherence, suppliers must establish an effective compliance program to gather evidence. Suppliers also play a critical role in monitoring and resolving customer complaints, which can be achieved through implementing a complaint handling system to identify any issues or trends related to their products. Furthermore, suppliers collaborate with other suppliers and trade customers in managing and promoting their products, as manufacturers rely on them for these essential duties.
Manufacturers are an integral part of the supply chain upstream linkages. They aim to achieve their goals by implementing lean production methods, which involve avoiding excessive stock accumulation and adapting to changing consumer demands. Automation is often used in the production process for repetitive tasks, while quality control plays a crucial role. Nowadays, many companies empower all employees to conduct quality control activities at any stage of the process. Manufacturers share similar responsibilities with other upstream suppliers and are also subject to compliance and other requirements within the supply chain. Internal linkages exist within organizations involved in the Supply Chain.
Linkages among supply chain partner organizations encompass various departments, such as purchase and supply, production and operations, finance and accounting, human resource, ICT, transport and logistics, public relations, sales and marketing (Coyle, Langley & Bardi, 2003). The primary aim of these departments is to attain organizational objectives which involve generating profits and meeting customer demand. It is crucial to acknowledge that any action taken by a department can have an impact on the overall department, organization, and supply chain (Coyle et al., 2003). For instance, the accounting department assumes responsibility for monitoring activities in all departments. These activities are then translated into revenue or expenses before being reported to stakeholders or managers. Such reports play a vital role in determining the organization’s profit or loss as well as its share value. Furthermore, the finance department develops funding plans for different organizational projects while ensuring adherence to the organization’s budget. On the other hand, production and operations aspire to create cost-effective products that fulfill customer demands while sales and marketing concentrate on selling and promoting these products.The sales and marketing department is crucial in conveying customer preferences to the organization, enabling necessary adjustments to meet their dynamic demands. The cooperation of all departments contributes to the overall performance of the supply chain. It is essential to acknowledge that a chain’s effectiveness depends on its weakest link. Thus, both internal and external links must be adaptable and capable of meeting business needs to thrive within the supply chain (Coyle, Bardi & Langley, 2003). This concept encompasses downstream supply chain connections as well.
The primary function of downstream supply chain linkages is to distribute products to customers and their downstream customers at all levels. These linkages, which include distributors, wholesalers, retailers, and end customers, play a crucial role in modern businesses by collecting, analyzing, and distributing transactional information to all relevant parties. Downstream supply chain systems enable effective collaboration among different entities in the supply chain. By enhancing forecasting capabilities, these linkages greatly contribute to businesses’ utilization of modeling and simulation tools, algorithms, and applications that combine information from multiple sources like distributors, retailers, and customers for generating future forecasts.
The significance of distributors in contemporary business should not be underestimated, as they have a vital role in facilitating communication between manufacturers and users, expediting response times, expanding supply chain reach, and creating value-added packages.
A robust distributor network is invaluable even for the most efficient companies, serving as a link between manufacturers and customers. This becomes especially critical in today’s globalized marketplace.
One key benefit of having a dependable distributor network is the ability for manufacturers to swiftly meet customer demands due to the localized presence and agility of distributors. Real-time responsiveness is crucial in today’s business landscape.
Manufacturers now need to adapt their businesses to fulfill customer needs that require local service, local inventory, and technical sales personnel.
Distributors not only benefit manufacturers but also offer advantages for users by representing multiple products and companies. This allows them to package different offerings together, streamlining the buying process for users and often resulting in cost savings.
Distributors also have the advantage of reducing inventory and service burdens for both the manufacturer and the user (National Association of Chemical Distributors). This is particularly important at present, as many users have had to reduce in-house inventories and service staff. In contemporary supply chains, distributors play a crucial role as service providers. They offer not only products but also aftermarket services, cost reduction and process optimization strategies, as well as inventory management. By providing comprehensive solutions for their customers, distributors create value. The significance of customers in modern business cannot be overlooked.
Customer is crucial in supply chains in contemporary business as they can determine the continued existence, success or failure of the supply chain. Hence, the role of the customer and their satisfaction is extremely important.
Customers play a crucial role in providing feedback on products supplied through various supply chains. Their preferences require all supply chain participants to adapt and meet their constantly changing needs. As a result, customer-centric supply chains have emerged as the ultimate solution in modern business.
A satisfied customer can act as an ambassador for the supply chain partner organization by sharing their positive experience with others, which helps attract new customers. Furthermore, satisfied customers are more likely to remain loyal and continue doing business. The lifetime value of a customer is determined by all transactions made over time. Offering good customer service encourages customers to stay. It is crucial for the supply chain to prioritize excellent customer service for their customers’ customers as well, making product delivery convenient and increasing the likelihood of repeat business.
Summary and Conclusion
The idea of supply chain linkages can be categorized into three groups: upstream, internal, and downstream. Suppliers and manufacturers make up the upstream linkages, while different departments within supply chain partner organizations are involved in internal linkages. Distributors, wholesalers, retailers, logistics and transport service providers, as well as customers form the downstream linkages. The success of supply chains depends on all these linkages being crucial.
References
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