Supply Chain is a collaboration of a group of three or more entities, which may be in the form of individuals or organizations, in the upstream and downstream movement of finances, products, services, and or information among their respective source to their customer. Supply chains are complex and multi-tired. Raw materials are sourced from all regions of the world, manufacturers are often located in different regions and the end-product is then shipped to multiple destinations. According to a research, the worldwide supply chain market is worth $15.85 billion. The global supply chain market is expected to experience a high rise. This means that the market value will increase from $15.85 billion to $37.41 billion.

What is Supply Chain Mapping? How Can it Help Your Business?

Supply Chain Mapping is the process of observing, tracking and recording across every producer, supplier, manufacturer, distributor, and seller of every shipment, and every packaging that is involved in delivering the final products into the market for the consumer’s purchase.

It is a process of documenting information across companies, suppliers, and individuals who are involved in a company’s supply chain to create a global map of their supplying network. For instance, tracking the sourcing, manufacturing and movement of materials in all shipments that will be used to reach the end consumer.

Key Benefits of Supply Chain Mapping

1. Supply Chain Visibility and Transparency

This is one of the best benefits of supply chain mapping. Without full supply chain information and transparency, companies have less control to prevent or respond to failures which can have serious costs and consequences. Obtaining deeper insight into your supply chain is the solution.

By undertaking supply chain mapping, you will learn more about the suppliers and where they are located as well as information about their suppliers. The visibility can help you understand risk within your supply chain and gives you the information to make commercial decisions.

Research shows that many buyers have no idea of their supplier’s names and addresses and don’t even know where to begin finding this out. By showing buyers exactly who and where their suppliers are based, supply chain mapping takes away these concerns, improving visibility of their wider industry.

Without visibility, transparency, traceability and mapping initiatives, you will find it difficult to do things like: 

• Promptly respond to disruptions in the supply chain.
• Balance supply and demand .
• Improve organizational workflow and processes.
• Establish good working relationships with partners.
• Customer Satisfaction.
• Enhance safety.
• Make real-time adjustments.
• Ensure compliance across the entire supply chain.

2. Risk Mitigation

Uncertainty is one of the major issues businesses face and the associated risk can be high. How much diligence does your business undertake to counteract these risks?

Identifying risks to your business such as global events, suppliers, market, sanction routes, company operations and ownership information, can ensure this due diligence is met.

Supply chain mapping manages risks and it should be viewed as a source of strategic competitive advantage. This enables you to identify and mitigate these risks. Supply chain mapping helps to identify the supply chain risk factors and helps to deal with them with the best of capabilities.

3. Regulatory and Legislative Compliance

Finished products face a number of complex regulatory requirements before they can be placed on global markets. To meet these requirements, companies must conduct due diligence across the supply chain. This process is known as product compliance.

The activities involved in product compliance vary accordingly to the nature of each product and the regulatory requirements they are in scope of. These requirements may include materials and chemical reporting, product certification, and extended producer responsibility obligations. 

For example, Compliance with the EU registration, evaluation, authorization and restriction of chemical regulation requires companies to disclose the presence of hazardous chemicals above the certain threshold in the products and components they manufacture and sell in the EU.

Similarly, the EU Registration of Hazardous Substance Directive and its global counterparts impose substance use restrictions and reporting requirements on producers of electrical and electronic equipment.

Demonstrating transparency in compliance and social responsibility is demanded by internal and external stakeholders for businesses to reach and maintain acceptable standards.

Businesses must consistently demonstrate a sense of integrity for not only legal and ethical reasons, it’s also a crucial component of competitiveness. Ensuring your organization complies with regulations and work towards the highest level of corporate social responsibility is paramount.

4. Value Management

The purpose of supply chain mapping is to add value to production and distribution. Efficient logistics contributes to added-value in four major interrelated ways : Production costs, Derived from the improved efficiency of manufacturing with appropriate shipment size, packaging, and inventory levels.

Value can be simply seen as ‘worth’ of the product or service. Value can be measured by the cost for the organization to produce and by the customer’s willingness to pay for it.

When we manage value in the supply chain, it refers to the worth of a product or service by marketing, design production, customer service, distribution, and maintenance. We can manage value by supply chain mapping through:

• Value Engineering

Analyzing the design of the product towards improving design and cost minimization in design, with the involvement of cross functional teams and external suppliers.

• Lean Supply

Close collaboration with all in the supply chain to eliminate waste activities and processes like wasting time, excess inventory, unnecessary operations, movements and costs.

• Agile Supply

Close collaboration with all to increase speed and flexibility in a shorter time according to market demand.

• Value adding Negotiations and Relationships

Close collaboration with the suppliers to find easy ways of continuously improving and adding value with mutual benefits to all the parties.

5. Responsible Sourcing

Sourcing is about buying a raw material in which the buyer assesses the quality and price. Responsible sourcing means introducing a new variable of respect for the environment and respect for people when you are doing your purchase.

It is about the quality of the raw material by considering environmental aspects, and social aspects in making decisions. It means that maybe the supplier you would have bought from, is not the one you are going to buy from after looking at his sourcing.

For instance, When we purchase a product, we analyze its actual cost from every angle over the entire course of its life cycle from purchase to maintenance, end of life disposal and energy consumption. A responsible sourcing policy guides a company’s actions in two main areas:

• Choice of Suppliers

Do they comply with international labor organization standards? Do they uphold the rights of their employees? Do they guarantee a safe workplace? Do they comply with the company’s ethics rules? Do they care about the environment?

• Choice of Eco-Design Products

What materials are used? What components are getting into it? What are the manufacturing conditions and how are the products delivered?

6. Competitive Advantage

A well-designed supply chain mapping can be a powerful competitive weapon. Companies who do network optimization really well can see a gross margin increase by 6-10% points. However, there are myths that we see that keep leadership teams from achieving their full potential:

• The first myth is that companies think that network optimization is really only necessary following a big disruption or a merger. But we see that the best companies really are able to use this as a continuous improvement tool. They are constantly looking for opportunities to optimize their network.

• The second myth is that if you’ve invested in the tools and technology, that you’re set. But the tools and technology are often necessary but never sufficient to get the full benefit. You need business acumen, judgement, creative ideas and additional insights to drive the full benefit from these tools.

• Third myth is that the primary benefit of this is reducing cost. But it actually benefits customer satisfaction and revenue. So this is something that drives the benefit here. Increasing service levels, becoming more reliable, reducing quality issues are the real benefits of doing true network optimization.

• The last myth is that this is all about longer-term improvements. But in reality most of the benefit that the clients see from network optimization is realized within the first 12 months.

Look at things like customer NPS, unpredictable service levels, high cost of quality, unexplained downtime, longer lead times than industry average. If any of these are symptoms that you’re seeing, network optimization can be a great lever to unlock value in your company and drive a competitive advantage.

7 Key Supply Chain Risk Factors

1. National or Local Regulations

As you can imagine this type of risk is not under your control. Despite that it can influence you quite a bit, which is exactly why you need to consult the regulations very often.

The last thing you want to do is to go over some laws. It’s very important and it can make a whole lot of difference.

2. Raw Material Prices and Labor Concerns

Every supply chain focuses on a certain raw material price, if that price goes up, you can face major issues. Obviously, when you do manage risk, you have to focus on raw materials.

Labor problems can appear at all times for any supplier. So, it’s crucial to deal with them to the best of your capabilities as fast as possible. It will not be easy to do that, right from the start but with the right approach, you will see that nothing is impossible.

3. General Economic Conditions

Economic problems affect the country’s stability and thus supply chains will be affected. This is one of the supply risks you have to tackle early on if you want to reach the very best success and results.

4. Security Breaches

Security problems like hacks and privacy concerns theft or computer crime are quite common. These can also affect the supply chain. This is also you have to focus on doing supply chain mapping if you want to get the very best results and the utmost experiences.

5. Currency Problems

Currency problems can also be seen as a supply chain risk, especially since they tend to appear very often when a certain currency is fluctuating. Unfortunately, this is one of the risks that you have no control over. A good institute of supply chain management might be able to help. 

6. Lower Demand of Products

Obviously if the demand is low, you will see that the supply chain will also get affected by this type of problem as well. It’s a very good idea to focus on studying the market at all times to avoid any potential losses at all times.

7. Business Interruption

There are many factors which can cause business interruptions starting with terror attacks, war, conflicts, and natural disasters among many others. Most of the time, these issues can’t be controlled or dealt with. So, a proper way to eliminate the problem has to be found by each company.