Supply Chain 101: A Brief Overview

supply chain 101 logistics overview

A supply chain is a system of organizations, activities, information, people, and resources involved in supplying a product or service to a consumer. Supply chains are used across numerous industries for many different kinds of products. Supply chains can apply to not only physical stores but digital stores as well. Different businesses can work together to form an efficient supply chain, where each industry is utilized to get the product out to the retailer or customer. 

But let’s break this down a bit further and have a look at some of the basics of a supply chain: 

Where Does It All Begin? 

Most supply chains follow a certain structure and each level has its own process and procedures to follow. Here is a list of these steps most supply chains will take to go from raw materials to a final product bought and used by a consumer. 

• Raw Materials – all product materials are purchased for items to be manufactured. 

• Production – products are made in a warehouse or factory, meeting regulations and guidelines. 

• Distribution – the products are distributed directly to the customer or to a retailer depending on the operation of the business. 

• Retail – products are placed in stores to be sold. 

• Consumption – customers purchase the product from retail stores or direct from the distributor. 

Digging into this process a little deeper, there are specific facets of a supply chain that are crucial to the overall operation and efficiency of development stages, manufacturing, distributing, and managing. You can have a look at this list of ways to optimize your supply chain management process and systems. No, let’s go through the basic principles of a supple chain: 

supply chain management scm

Supply Chain Design 

It all has to start somewhere and here is where the supplier will determine the structure of their supply chain. These design decisions include location, warehouse and production facility capacity, partner selection, means of transportation, supporting systems, and the product itself. This is a crucial stage in making sure the supply chain runs smoothly. A seamless design makes it easier for everyone involved in the process. 

Supply Chain Execution 

Then there is the actual process execution, which is the ability to effectively move the product out of the warehouse. This step alone is a big reason why solely online companies reach out for equity partnerships and wholesale suppliers and why they outsource to brick-and-mortar companies because there is no point in selling a product and having it made if you can’t transport that product out the warehouse doors. 

Supply Chain Inventory Visibility 

In order to operate a supply chain, you need to have applications and software that monitors events across the supply chain that help maintain supply chain visibility. These systems can track and trace your inventory across the globe and in-house from line to line. These systems can both notify the buyer of any information regarding the process that affects when they will receive their item, but it also allows for companies to keep track of each product, what stage it is in, and track any problems too. 

Supply Chain Management (SCM) 

Like with any company team, management plays a huge role in the overall success of the operation. SCM brings together planning and management of any and all activities involved in sourcing, conversion, and logistical management. It also manages coordination and collaboration between suppliers, third-party service providers, and customers. Essentially SCM coordinates supply and demand management within and across all companies involved in production and distribution. SCM’s primary responsibility is to link major functions and processes of business within and across companies and to create cohesion, and encourage and maintain a business model that is high-performing. This includes not only logistics and manufacturing operations but the execution too, along with marketing, sales, product design, IT management, and financing. 

Supply Chain-Related Finance And Planning Cost 

In order for a supply chain process to run smoothly, the correct finances need to be in place. The costs involved include; supply chain finance and demand and supply costs. The former is made up of costs associated with paying invoices, performing inventory accounting, auditing counts, and collecting accounts receivable. The latter involves forecasting the development and finishing goods, inventory plans, and coordination with demand/supply. 

Supply Chains Summary 

There are many different components to a supply chain and the most important aspect of this operation is probably supply chain management (SCM). SCM oversees the process and makes sure it runs smoothly from raw materials and development to it being in the hands of the customer. Getting the product to the consumer is at the center of a well-oiled supply chain system.

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