Supply chain is the term commonly used to describe the process in which a company works with a partner community to manufacture a product and release it to the open market. But according to a recent IndustryWeek report, this is just one piece of the overall puzzle.
In addition to supply chain management, many companies also must consider a performance chain. The supply chain, according to the report, is just part of the much larger performance chain.
"Your performance chain is all the tangible and intangible elements that have to move from the split second you trigger demand to the time you have cash in the bank - all the ins and outs that have to work together to drive the performance outcome you want," the report stated.
Still, the supply and performance chains are often confused, so IndustryWeek identified several key differences that will help companies separate the two.
1. Think bigger
While the supply chain is a big deal, companies must think even bigger when considering the performance chain, the report stated. Companies' supply chain community management practices often work toward improving the effectiveness of the process. For the performance chain, a company must devise a plan for scaling, replicating and repeating the process during the course of several years.
2. Product vs. cash flow
The overall goal of the supply chain is to ensure the smooth flow of products. With the performance chain, however, companies are more concerned about the so-called velocity of cash. "Businesses live on the circulation of dollars from customers to the bank," IndustryWeek stated.
3. Goods and services
Physical goods are generally what come to mind when people think about the supply chain, according to the report, but what about firms that offer intangible services? They don't have a supply chain, but they still must maintain a performance chain. Companies like Amazon, for example, work off a complex web of relationships that must be maintained in order for business to thrive, according to IndustryWeek.
Whether talking about supply or performance chains, companies still must manage risk in order for either to run smoothly. A recent Business Continuity Institute report revealed the top causes of supply chain disruption, with 85 percent of companies in 62 countries saying weather had the most impact. Forty percent of such delays occurred below the immediate supplier, the report found.