End-to-end supply chain solution
Companies with complex operations historically have compartmentalized the individual functions of their supply chain, handling each step separately in what is known as a siloed approach. Today, thanks to modern technology, many companies have big-picture visibility into their supply chain operations, from the procurement of raw materials and manufacturing through product delivery and post-sales services. Businesses with the ability to view their complete end-to-end supply chain can identify improvements and operate more efficiently than their competitors, especially in the highly competitive and customer-driven ecommerce world.
What Is an End-to-End (E2E) Supply Chain?
An end-to-end (E2E) supply chain integrates a business’s supply chain functions into one continuous workflow, from procurement of raw materials through delivery of finished goods to customers. This is in stark contrast to the series of loosely connected operations in a traditional siloed supply chain. An E2E supply chain focuses not only on the operations involved, but also on how they interact with one another to create a holistic view of a company’s supply chain, where each function is optimized in a way that emphasizes connectivity and integration. By having visibility across its entire supply chain, a business can identify optimizations to create a more streamlined and efficient operation, leading to cost savings, reduced waste and increased customer satisfaction.
Blockchain for End-to-End Supply Chain
End-to-end supply chains often require communication among several different parties, including suppliers, logistics service providers (LSPs), shipping agencies and more. Many companies use blockchain technology to maintain an open line of communication among all entities involved. This modern technology helps create a system of data exchange that is both secure and transparent. Blockchains also provide parameters that let parties share only the information necessary to create an efficient E2E supply chain and maintain data security.
Key Takeaways
- End-to-end (E2E) supply chains integrate a business’s operations into a continuous workflow by analyzing all steps in the supply chain and how they interact and influence one another.
- E2E supply chains encompass every function in a business’s supply chain, including procurement, manufacturing, distribution, storage, shipping, delivery, sales and customer service.
- E2E supply chain management can be complex, but modern technology has made it more accessible and affordable for small and midsize businesses than in the past.
End-to-End Supply Chain Explained
An end-to-end supply encompasses the entirety of a business’s supply chain operations, including procurement, forecasting, demand planning, manufacturing, distribution, storage, shipping and delivery, sales and customer service, and provides visibility across all processes. This visibility is a necessity for businesses to effectively communicate, solve problems and provide service to partners and customers Any change made to one operation should be analyzed from two perspectives: How does this impact the operation itself, and how, if at all, does it impact any other operations in the supply chain? The goal of E2E supply chain management is to optimize each function without negatively impacting the rest of the workflow.
For example, a siloed procurement operation may emphasize finding the lowest price for raw materials. An E2E supply chain, on the other hand, will weigh the benefits of paying a lower price against the time added to manufacturing if the lower-cost raw materials are inconsistent or of lower quality. Inferior raw materials may require more hands-on quality control to ensure that the components operate effectively, thereby increasing labor costs and the potential for wasted material in the manufacturing process. E2E supply chain analysts and managers must balance the pros and cons of reducing costs as much as possible without compromising quality or impacting later steps in the supply chain.
End-to-End vs. Traditional Supply Chain
End-to-end and traditional supply chains have the same overall goal of reducing costs and providing customers with goods or services. Both types of supply chains involve many of the same functions, such as manufacturing, shipping and customer service. However, a traditional supply chain primarily looks at each function of a business’s operation as an individual, stand-alone process with its own needs and goals, whereas an E2E supply chain views each function as a single step in a larger integrated process.
A traditional supply chain typically focuses on downstream information, with managers optimizing output based on the inputs they receive from earlier steps in the supply chain. Basically, downstream visibility is focused primarily on how a business’s products are traveling down the chain to the customer. In an E2E supply chain, decision-makers also focus on upstream information, which provides visibility into how all the parts necessary to make those products are moving through the supply chain. Downstream and upstream information together create end-to-end supply chain visibility.
Here’s a comparison for perspective: A manufacturing manager in a traditional supply chain operation may have little information on the procurement process aside from the inputs of raw materials they receive from their procurement colleagues. That same manufacturing manager in an end-to-end supply chain operation will have all the information they need from procurement, manufacturing and the functions that follow, such as customer delivery, to properly optimize manufacturing. To maintain that top-down perspective, E2E supply chain managers typically need access to large amounts of data and frequently turn to modern technology like cloud-based software to maintain an up-to-date and accurate look at the complexities of their business’s entire supply chain.
What’s Included in End-to-End Supply Chain Management?
End-to-end supply chain management includes every step of the supply chain, beginning with product design. Once a product is designed and ready to be created and sold, the seven major tasks of E2E supply chain management are procurement, manufacturing, distribution, storage, shipping and last mile delivery, sales and customer service.
Procurement
Procurement is more than just sourcing and ordering raw materials for the best price; it also includes estimating production lead times, checking stock levels to effectively allocate supplies and managing warehouse receiving. Without a well-managed procurement operation, factories won’t have the materials they need to produce goods. E2E supply chain management looks at all these aspects of procurement to ensure that the manufacturing team has everything they need — when and where they need it — to keep production moving efficiently.
Manufacturing
Manufacturing is the bread and butter of many businesses because without products to sell, no profit can be made. Delays at the manufacturing level can leave storefronts with costly stockouts and customers with frustrating back orders. For manufacturing to be properly optimized in an end-to-end supply chain, raw materials need to be sufficiently high quality to prevent waste and delays resulting from workers having to sort and remove inferior components. Once goods are finished, they must be organized and sorted for distribution. A warehouse may have perfected its assembly process, but if goods are not properly allocated, order fulfillment can suffer from shipping delays and lost products.
Distribution
At the distribution stage of the supply chain, products are finished and ready for sale. Many ecommerce businesses contract LSPs to fulfill their distribution, storage and shipping needs and improve their customers’ experience. For companies handling their own distribution, this critical step in supply chain management requires a close eye on inventory allocation. Inefficient distribution and shipping methods can lead to dissatisfied customers or empty shelves at retail locations, cutting into a business’s margins and hurting its bottom line. End-to-end supply chain managers can allocate inventory throughout a business’s reach to ensure quicker — and cheaper — delivery by keeping items closer to customers and shipping to retailers and distribution centers in bulk, rather than scrambling to fulfill individual shipments from a centralized location.
Storage
Businesses can manage their storage operations in several ways — by storing everything themselves, renting storage facilities or outsourcing to an LSP. Smaller businesses may be able to store everything themselves, but as they grow, contracting an external partner may become more affordable. However, businesses choose to store their materials and finished products, managing inventory is crucial to keep margins high. Too much stock leads to wasted storage costs — and potentially wasted goods if shelf life is short. Too little stock leads to back orders and lost profits as unsatisfied customers turn to competitors to meet their needs. End-to-end supply chain managers have visibility into the flow of goods, from manufacturing to their final destinations, to ensure that each step in the process has the resources it needs to efficiently meet customer demand.
Shipping and Last-Mile Delivery
Efficient inbound and outbound logistics can be the difference between a loss and a gain, especially for companies selling products with small profit margins. Customers expect fast shipping — often two days or less — and achieving that can present a challenge for companies with large networks of locations or customers. Some larger companies turn to LSPs or transportation management systems to handle the complexities of freight shipping, such as route optimization and international customs, but smaller companies may find it more cost-effective to handle their shipping needs in-house. End-to-end supply chain managers should consider the costs and benefits of shipping options — and how they may impact other steps in the supply chain — to determine how to meet customers’ needs most effectively.
Sales
End-to-end supply chains, like most business functions, need to focus on the main event — selling a product. Sales teams need up-to-date data on what’s in stock and current prices, informed by production schedules, inventory records and current costs. Through E2E supply chain management, prices can be set and adjusted based on changes anywhere in the supply chain. For example, if procuring raw materials becomes more expensive because a supplier increased its rates, customer pricing can be quickly adjusted to prevent a delay that could lead to selling goods at a loss.
Customer Service
Some may consider the sale the final step in a supply chain — and for some businesses that may be the case — but many companies need to consider what happens next. Post-sales customer service is crucial to creating customer loyalty and enticing return customers. If a business offers warranties or maintenance, end-to-end supply chain managers must have comprehensive data on what services are offered and whether those services require their own material procurement or replacement items from a business’s inventory. Managers must also monitor reverse logistics (returns and exchanges), which can impact inventory levels and overall profits.