By Bineesh Mathew - May 09, 2023 7 Mins Read
Businesses need to collect information about the suppliers, their suppliers, and the individuals involved in the supply chain to create a comprehensive map of the company supply network. This data can be consolidated into a unified platform to simplify analysis and facilitate easy access.
Supply chain mapping (SCM) records information about the organizations, suppliers, and individuals involved in a company’s supply chain to create a global map of its supply network. This includes mapping the exact source of materials and all associated shipments. The resulting supply chain map can be utilized to identify potential opportunities within the company’s supply chain and to mitigate any potential risks.
Maintaining a comprehensive understanding of the supply chain is crucial in today’s world of streamlined international trade and expanding organizational networks. Supply chain mapping (SCM) involves gathering, storing, and preparing production data for reporting purposes to enhance visibility, identify areas for improvement or efficiency, and minimize the risk of interruptions, all while remaining competitive.
Mapping the supply chain is not a one-time task but an ongoing process that needs updating as the supplier base and supply chain evolves. This activity can provide valuable insights into the production, location, and origin of the products or services. It is the foundation for developing a responsible sourcing program, due diligence, and risk management plan within the company supply chain.
Supply chain mapping offers a wide range of benefits to a business, extending beyond fulfilling legal obligations and providing visibility.
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Supply chain mapping is not only essential for meeting regulatory requirements, but it also provides the necessary flexibility to monitor potential threats and reduce disruptions among suppliers.
In the event of a supply chains crisis, such as a supplier shortage, lost orders, or unexpected surges in demand, having a detailed supply chain map enables quick reaction and the development of effective plans.
By gaining awareness of surrounding expenses, timelines, and hazards, businesses can earn a competitive advantage over those without this vital knowledge.
Below Mentioned are the significant benefits of incorporating supply chain mapping into the organization:
Supplementing supply chain mapping can significantly mitigate financial, reputational, and legal risks. It is a critical component of an effective supply chain management strategy, as increasing visibility and reducing risk must work in tandem.
For instance, certain countries have higher incidences of exploitative practices, such as child labor, which poses higher sourcing risks. By identifying the location of suppliers, businesses can better assess the extent of these risks.
Acquiring comprehensive information on suppliers and workers empowers companies to grasp the human rights and environmental impacts of their decisions across the supply chain. Compliance with regulations such as the Modern Slavery Acts necessitates demonstrating the efforts made to prevent and address modern slavery.
To achieve this, firms must clearly understand their suppliers, the current slavery risk, the preventive measures implemented, and remedial actions taken in case of detection.
Environmental, social, and governance criteria (ESG) are becoming a key consideration for investors looking to assess the potential risks associated with investment opportunities.
Companies must integrate supply chain mapping into their due diligence procedures to demonstrate their understanding of supply chain risks and maintain complete transparency. It is essential to assure investors that businesses have a comprehensive grasp of their supply chains and are taking necessary measures to identify and mitigate potential risks.
Supply chain mapping aims to enhance the value of production and distribution. Efficient logistics is pivotal in adding value in four interrelated ways, including reduced production costs resulting from streamlined manufacturing processes, appropriate shipment size, packaging, and inventory levels.
The concept of value is essentially the worth of a service or product, evaluated based on the organization’s production costs and the customer’s willingness to pay for it.
Managing value in the supply chain involves evaluating the worth of a product or service across various aspects such as marketing, design production, customer service, distribution, and maintenance. Supply chain mapping is a key tool in managing value. It enables organizations to identify areas where value can be maximized and ensure that all supply chain stages are aligned toward achieving this goal. We can manage value by supply chain mapping through:
Companies can find possibilities to adopt more sustainable materials and products by using supply chain mapping. Firms are already creating eco-friendly product lines on the high street to attract more environmentally concerned customers. The number of common items manufactured from recycled materials is expanding. One can even purchase a wedding dress fashioned from ocean plastic.
Businesses can utilize the data acquired through supply-chain mapping to pinpoint where they are using materials or products that are not sustainable and where they can convert to eco-friendlier alternatives.
For instance, businesses might use eco-friendlier packaging materials or switch to renewable energy sources. Ultimately, this may contribute to lessening the adverse effects on the environment and advancing the sustainability movement.
Before conducting a supply chain assessment, it is essential to map out the business supply chain. To assess this complex chain in bite-size pieces, breaking it into smaller, more manageable steps makes evaluation easier.
To create a comprehensive supply chain map, utilize sticky notes, visual collaboration software, or flow chart tools to outline the product flow from its source to the finished product.
Next, prioritize suppliers based on expenditure, critical materials, and other important considerations. It is also essential to include the type of operation (such as manufacturing, farming, or service provision) and the specific product or service they deliver.
When creating a supply chain map, it is crucial to include relevant information such as the company name, headquarters, manufacturing locations, contact details, products or services offered, annual expenditure, and the supplier tier.
This information is essential in providing a clear and concise overview of the supply chain and ensuring a smooth and efficient assessment.
The way forward is to involve the sourcing or procurement team to organize supplier information efficiently. If the team does not collect the necessary information, creating a plan to address the gaps is essential, and this will involve gathering information from public sources or contacting suppliers to ensure all relevant data is acquired and organized effectively.
When working with sourcing teams, they commonly provide only an account manager’s contact information. However, businesses may also need to speak with compliance representatives or buyers to ensure effective communication.
Companies should add these new contacts to the supplier database to maintain a comprehensive and up-to-date list of all relevant individuals within the supply chain.
Once the firm has mapped the supply chain, businesses may want to assess each supplier’s risk based on the most critical criteria, using data collection and annual surveys.
Supply chain mapping has a long history, dating back to when maps were first created. However, traditional maps only offer a general overview and do not reflect real-time changes in supply chains.
In the modern era, supply chain mapping involves collaborating with companies and suppliers to document the origin of every material, process, and shipment that produces and delivers goods to the market. The emergence of online maps and social media has made accurate supply chain mapping possible.
Supply Chain Mapping refers to the practice of closely observing, monitoring, and documenting the journey of a product from its initial production stages through every subsequent step, involving producers, suppliers, manufacturers, distributors, and sellers. Then, companies can ensure that each shipment is tabulated and the final product is delivered to the market in the most agile and cost-effective manner
Supply chain mapping involves documenting information from all the companies, suppliers, and individuals interested in a company’s supply chain, creating a comprehensive global map of its supply network. This includes tracking the sourcing, manufacturing, and transportation of materials in all shipments intended for the end consumer.
Bineesh Mathew is an accomplished senior writer with 10+ years of experience in multiple domains. With a proven track record, he has specialized in writing for business strategies, innovations, the latest technologies, and management topics. Currently, Bineesh is working as a Senior Content Writer with On Dot Media. Bineesh is an English Literature graduate who has mastered the language with excellent editing skills. As a writer, he has contributed exciting writing pieces for various topics such as digital marketing, cybersecurity, and different latest technologies, including supply chain, management, enterprise leadership, and much more.
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