Daisy the cow lives on a 500-hectare dairy farm in South Africa. Her typical day starts off being walked to the sheds to be milked early in the morning (otherwise her milk spoils) and spends the rest of her day grazing in the fields.
Farmer Brown then hops in his truck and takes his milk to be pasteurised, which is then sold to supermarkets. Simple! No not simple! There is a whole process behind from getting the milk from Daisy to your supermarket. Daisy needs to eat to produce milk. No, that green grass she munches on each day in the field is not sufficient enough. (How would you like to eat bread only each and every day?) Daisy and her friends are fed special pellets. Where do they come from? Another farmer of course. How did it get to Daisy? Well that is another whole story!
Daisy has been fed and is producing 14 litres of fresh milk a day! Which is mmmmarvelous! Her milk is then loaded onto a truck and taken to the pasteurisation plant. Here the milk is pasteurised and chilled. The milk is then sent to laboratories to test for any harmful bacteria that may be harmful to human consumption. If there are any bad bacteria present, the milk is sent back to the farmer. This is known as reverse logistics. But do not worry, her milk is pretty clean and the pasteurisation plant is given the thumbs up. From the pasteurisation plant, the milk is sent for processing and finally distributed to supermarkets.
That is quite a process! And it is the summarised version as well! There is a term for this whole process. The supply chain. This does not only apply to the milk industry, but to everything that you eat, use or wear!
So what exactly is supply chain? The Council of Supply Chain Management Professionals defines Supply Chain Management as: “The planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.”
The supply chain in this case will be the entire process from Daisy all the way to the milk bottle in your fridge.
Then you may have heard the term logistics. Same thing, right? No. CSCMP defines logistics as: “That part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements.” That will be all the work Farmer Brown does on his farm.
The main difference between logistics and supply chain management is that supply chain management is an integrating function, integrating all business functions and business processes within and across company boundaries. The supply chain, therefore, extends beyond a company’s borders to include supplier and customer relations, as well as other possible supply chain partners such as 3rd party logistics providers. Logistics forms part of the supply chain and coordinates and optimises all logistics activities within a company’s borders in order to satisfy customer requirements.
As you can see that there are a lot of people involved in this process, even people orchestrating how things are done. Did you know that there are areas of trade in supply chain and logistics you can specialise in? It is a fairly unknown industry and only in recent years has it started to become more popular.
Pop in next week to read up on my next blog on what careers you could go into in the supply chain world.