Reading a supply chain diagram requires knowing the direction, the notation, and the scope of the diagram, all of which can vary. Once the basics have been understood, the physical product and the flow of information in a supply chain are important facts to have when conducting an assessment. A diagram of the supply chain can provide information about product flow, information flow, and the flow of finances.
Diagrams usually show processes in a linear or horizontal manner. Supply chains generally have a downstream and an upstream flow, meaning that products and information can flow in multiple directions on the same diagram. Data moving upstream heads toward the company’s suppliers. Information moving downstream heads toward clients.
Supply chains can cover all aspects of collection and distribution from production to inventory to customer service. When reading a supply chain diagram, therefore, keep the chosen scope of the diagram in mind. The actual supply chain can be as long as starting with the collection of natural resources, moving through various channels and means of construction, to distribution amongst smaller storage facilities or retail stores. A diagram of the supply chain is often constructed to assess particular sections of the supply chain and may therefore be limited in scope.
The supply-chain operations reference model (SCOR) is the most commonly used variety of supply chain diagram management tools. It begins with the supplier’s supplier, as opposed to starting with the collection of natural resources, and ends with the customer’s customer. SCOR uses process modeling, performance measurements, and best practices metrics to pinpoint and diagnose problem areas on a supply chain.
The signs and symbols on the diagram should be understood when reading and assessing a diagram. Supply chains do not have a set standard notation, such as business process modeling notation. The software or people creating the diagram often use their own notation.
When reading a supply chain diagram, it helps to understand the metrics used in the diagram. Supply chain metrics are often included in a diagram to track performance. Metrics include, but are not limited to, inventory turns, cycle time, and fill rate measure. Becoming familiar with diagram specific metrics, definitions, and methods for collecting will help readers most effectively read a supply chain diagram. For example, while the definition for inventory turns may be widely accepted, many metrics are industry or business defined.
Knowing whether the supply chain is shown in real time is another important aspect of reading a supply chain diagram. Supply chain management software and applications have increased the speed of supply chain evaluation. Certain programs allow for supply chain management information to be accessible by all parties in the supply chain, thereby greatly increasing information input.