End to end (E2E) supply chain involves an integrated entire process. From product design and procurement of raw materials then scheduling, production and then final delivery of finished product to the customer. It is further extended to after sales service and reverse logistics depending on the nature of the business.
The traditional supply chain focuses on each function where every step in the process is siloed and handled separately which results in an inefficient and limited overall performance.
Whereas, E2E is a holistic view of a supply chain that integrates all supply chain functions. It provides greater customer experience and process efficiency by having visibility across the supply chain.
As discussed above, the E2E supply chain starts at product design and can go until the product returns. However, this is depending on the nature of the business. In order to understand where the supply chain ends, it would be better to break it down into the main components of Supply Chain Management (SCM).
The main components of an end to end supply chain management are:
In order to optimize the E2E supply chain, the above components need to be well integrated. It requires an enterprise resource planning (ERP) system that provides real time information with visibility across the supply chain. The following approaches can help to optimize the supply chain:
With an integrated E2E supply chain design and visibility across the supply chain, businesses can better serve customers and the benefits are:
When dealing in an E2E supply chain environment, it is very important to understand how one decision can impact the performance of the other. Supply chain management involves complex interactions between many factors and trade off analysis is required to find a balance to achieve the business objective.
Simulation is a very useful technique to evaluate the impact of changes to the E2E supply chain due to decisions being made at one function of the supply chain. Often, businesses think that achieving functional goals can lead to the overall business goal. But this is not a case when it comes to supply chain. Each functional decision in supply chain comes with trade off. For example:
Finding a cheap supplier to lower the raw material cost may impact the material availability due to low supplier reliability.
Bad quality sourcing to reduce costs can impact the production plan due to higher defection rate impacting machine downtime.
Due to lower supplier availability and bad quality, safety stock of both components and finished products needs to adjust to counter the low-cost strategy at first. But increase in safety stock will eventually increase the overall cost due to holding, handling and possibility of damage and obsolescence.
Increase in promised service level to customer to get higher revenue, increases the risk of customer dissatisfaction due to inability to deliver in full on time (DIFOT).
Improving the cash to cash cycle may result in procuring material at a higher than usual cost, as the supplier will take away any discount due to paying them late. This is the same when it comes to the customer side where business asks them to pay early as a result of giving some customer incentive which will impact the overall revenue.
To increase sales, promotion is one of the strategies. However, it comes with a cost of creating disruption in production and inventory due to volatility created by intermittent demand.
Experience the trade-offs in the end-to-end supply chain yourself. In our business simulation you need to manage the end-to-end supply chain with a team of four. The trade-offs are often cross functional. You will be forced to communicate and discuss the trade-offs in the team. Aligning the team around the trade-offs is an important success factor in all our business simulations games.
Now you know everything about the end to end supply chain and its trade-offs. Would you like to experience this in Inchainge’s business games? Have a look at our business games page and learn more by doing. Furthermore, you can read more about different types of topics in our articles. For instance, read more about supply chain risk management, data analytics, logistic footprint or omnichannel.