SUPPLY CHAIN: Meaning, Examples, Types, Management & Issues

Are you interested in improving the efficiency of the operations at your company? Knowing and understanding the supply chain can give you an advantage over your competitors. A supply chain refers to the network of businesses, such as suppliers, manufacturers, distributors, and retailers, that are engaged in the production and distribution of a good or service. However, it’s important to get familiar with the different types of supply chain examples and management strategies to enable you to recognize and handle issues within the supply chain, which will result in a more consistent delivery of products and services to end users. This article will help you understand more about the meaning, examples, types, and management issues of the supply chain.

What is a Supply Chain?

A supply chain is a network of individuals, businesses, and organizations involved in the creation and delivery of a product to the consumer. The chain starts with the raw material producers and ends when the van delivers the final product to the ultimate user.

A supply chain might also include activities like production, shipping, warehousing, and inventory management. Each link in the SC is critical to ensuring that the product or service is delivered efficiently, effectively, and on schedule. However, a well-managed supply chain can save costs, improve customer happiness, and increase profitability for all parties involved.

Supply Chain Management 

Supply chain management refers to the coordination and management of all activities involved in the supply chain. This includes planning, sourcing, production, and logistics. Moreover, effective supply chain management can help optimize operations, reduce costs, and improve customer satisfaction. It involves collaboration and communication between all entities within the SC to ensure the efficient flow of goods and services. Additionally, technology and data analysis play a critical role in modern SC management, providing real-time information to support decision-making and improve performance.

What Are the 5 Components of Supply Chain? 

The following are the five components:

#1. Plan 

This entails creating a plan, which includes determining demand, obtaining raw materials, and also establishing manufacturing schedules.

#2. Source

This component entails sourcing suppliers, negotiating contracts, and managing vendor relationships to ensure the timely and cost-effective delivery of goods and services.

#3. Make

The make component is responsible for the actual creation of goods or services, which includes manufacturing, assembly, and testing.

#4. Delivery

Manage transportation, logistics, and inventory to ensure timely and effective delivery of the finished product to clients.

#5. Return

The return component entails managing reverse logistics such as returns, repairs, and recycling in order to reduce waste and maximize the value of returned items.

What Is the Supply Chain Process? 

The process refers to the steps involved in developing and delivering a product or service to the end user. However, this procedure usually consists of planning, sourcing, production, delivery, and returns. The planning phase entails defining an SC strategy, such as determining demand and creating a manufacturing schedule. Sourcing includes selecting suppliers and managing vendor relationships. The actual manufacturing of the product or service is referred to as production, whereas delivery includes managing transportation and logistics to assure timely and effective delivery to the consumer. Finally, returns entail handling reverse logistics, such as returns, repairs, and recycling, in order to reduce waste and maximize the value of returned items.

The SC process is a never-ending loop, with each stage building on the one before it. However, effective SC management is critical for ensuring that the process operates smoothly and efficiently, resulting in lower costs, improved customer happiness, and increased profitability.

What Are the 4 Pillars of Supply Chain? 

The four pillars are:

• Planning
• Sourcing 
• Making 
• Delivering

These four pillars are interrelated and must work together seamlessly to create an effective supply chain. Effective SCM can result in lower costs, increased efficiency, and improved customer satisfaction.

What Are the 4 Main Areas of the Supply Chain? 

These are the four main parts of the SC:

#1. Procurement 

Procurement is the process of getting the things and services that are needed to make a product or service. However, it includes finding a supplier, making a deal, negotiating, and buying.

#2. Operations

Operations are the things that need to be done to make and send the product or service. However, it includes making, putting together, checking, packing, and sending the product.

#3. Logistics 

Logistics is the control of the flow of goods and materials. However, it includes things like shipping, storing, and keeping track of inventory.

#4. Customer Service

Helping people before, during, and after a sale is what customer service is all about. However, this means taking care of things like questions, orders, returns, and issues from customers. Together, these four key parts of the SC are important for making sure that products and services get to customers quickly and well.

What Is the Difference Between Logistics and Supply Chain? 

Logistics and supply chains are two distinct ideas. The administration of the actual movement of goods and commodities, including transportation, warehousing, and inventory management, is referred to as “logistics.”

Supply chain management, on the other hand, involves a broader variety of activities, including planning, sourcing, production, and customer service, in addition to logistics. However, the goal of SC management is to create and provide value to clients by utilizing an efficient and integrated network of suppliers, manufacturers, distributors, and retailers.

While logistics is an important aspect of supply chain management, it is only one piece of the puzzle. Ensuring that goods and services are supplied efficiently and effectively, effective it entails controlling all parts of the supply chain, from planning to customer service.

What Are the 7 Supply Chain Functions?

Here are the seven supply chain functions:

#1. Demand Planning

Demand planning forecasts customer demand to guide corporate supply and business management. It also uses informal methods like informed guesses and quantitative ways like historical sales data, statistical methodologies, and test market data. However, demand forecasting is utilized in production planning, inventory management, capacity planning, and market entry choices.

#2. Purchasing

Any company needs to buy materials and resources to make a product. Globalization expands opportunities. This function has many roles, including these: coordinator, analyst, and corporate buying manager. These positions can also be in a plant or a corporate office. People may buy office supplies or aviation engine parts, depending on the firm.

#3. Manufacturing

As firms change production overseers, manufacturing has garnered media attention. Despite this, many jobs remain. Production planner, production manager, corporate manager of production planning, plant manager, line operator, machine operator, QA analyst, or engineer. Many US items are manufactured, thus manufacturing will always be important. Because of the trained people and natural resources, US corporations will keep making food and cars.

#4. Transportation

Transportation is where the supply meets the road. The correct goods at the appropriate warehouse at the right time won’t reach the client without transportation. Today’s global economy makes this role even more important because it’s no longer as simple as loading a vehicle and delivering a product. Before reaching the customer, it may be shipped by container ship, airplane, train, truck, or Uber. When choosing an option, companies must consider pricing, speed, reliability, and service.

#5. Inventory Management

Any manufacturer domestic or foreign must manage inventory. Without a physical inventory, a corporation cannot sell. Inventory also helps to ensure the correct product, position, and pricing. Products can be made and sold anywhere in the world, making inventory management more crucial and difficult.

#6. Warehousing

Warehousing is more than just storing items, as many people think. In mass customization, the warehouse has become a distribution center and a place to repack, label, or otherwise alter the final product.

#7. Customer service

Customer service appears at the end of the supply, but it is not. This function is crucial because it meets clients’ needs and delivers what they want when they want it. This job is often the only point of contact a customer has, so they must be able to comprehend and address consumer needs. A well-managed supply chain can also lead to lower costs, more efficiency, and enhanced profitability.

Supply Chain Issues

Supply chain issues can arise due to various factors, such as natural disasters, transportation delays, and unexpected demand changes. These issues can also cause disruptions in the supply chain, leading to increased costs, reduced productivity, and decreased customer satisfaction. This includes building robust relationships with suppliers, improving communication throughout the store chain, and also investing in technology to improve visibility and transparency. 

By proactively addressing supply chain issues, companies can also minimize their impact and ensure that they continue to meet customer demand and deliver value.

What are Supply Chain Examples 

Examples of the supply chain include:

• Supply Chains begin with the acquisition of raw materials, whether it be diamond mining, leather drying, or sheet metal fabrication.
• A retail store chain, where goods are sourced from suppliers, transported to warehouses, and distributed to stores.
• An automotive supply, where parts are sourced from multiple suppliers and assembled into vehicles.
• A food, SC where raw materials are sourced from farms, processed into food products, and distributed to retailers.
• An e-commerce SC, where products are sourced from manufacturers, stored in warehouses, and shipped directly to customers.
• A pharmaceutical SC, where drugs are manufactured, packaged, and distributed to pharmacies and hospitals.

These supply chain examples demonstrate the enormous range of SC that exists, each with its unique set of challenges and requirements in a certain industry. If you want your products and services supplied swiftly, affordably, and consistently, you need effective supply chain management.

Types of Supply Chain

There are various types of the supply chain, such as:

• A lean supply is one that focuses on decreasing waste and increasing efficiency.
• An agile supply emphasizes flexibility and reactivity to changing consumer demands.
• Sustainable supply, which prioritizes environmental and social responsibility in sourcing and production.
• Omni-channel supply, in which different channels are integrated to give a smooth consumer experience.
• Global supply management entails overseeing a complicated network of suppliers and partners spread across numerous nations and regions.

These types of the supply chain have their own distinct qualities and requirements, and businesses may employ a combination of different approaches depending on their sector, market, and strategic objectives. Understanding the strengths and drawbacks of each kind and selecting the most appropriate method for the individual situation is required for effective supply chain management.

FAQs

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References

• investopedia.com
• corporatefinanceinstitute.com