What Is the Supply Chain and How Does It Work?


Supply Chain: We live in the digital age where the market is globalized and highly dependent on technology. Consumers are much more demanding in this environment, demanding quality products, at reasonable prices and with immediate availability.

The supply chain plays a fundamental role today in order to supply the market and guarantee the availability of products demanded by consumers.

All the companies involved in the different phases and processes of the supply chain seek to improve their operation in order to reduce costs and times, and to increase their productivity and competitiveness.

What Is the Supply Chain

The supply chain or supply chain refers to the series of processes necessary to make a sale, from the supply of raw materials, through production, to the entire logistics and transport system that takes the product to the end customer. When we talk about the supply chain, we mean all the operations that are necessary for a product to reach the customer in perfect condition and in a reasonable time.

The supply chain is also known as the value chain, since as it progresses through it, the products acquire greater value.

Optimizing the supply chain has become a priority for companies today, where customers are increasingly demanding and demand the delivery of their products in the shortest possible time without this implying a significant increase in price.

What Is the Difference Between Supply Chain and Supply Chain

The supply chain includes all the operations and strategies related to the product and its delivery to the customer, while the supply chain is directly related to the logistics and transportation processes so that the products are delivered at the lowest possible cost.

The supply chain involves the processes related to logistics, while the supply chain encompasses all the processes and strategies related to the products and their delivery to the final customer.

In the supply chain, all the actors or companies come into play, such as suppliers, merchants, manufacturers and distributors, while the supply chain has a more direct relationship with customers and the logistics necessary to deliver the products to them.

Supply Chain Example

To learn what the supply chain is, let’s see a practical example through an online store of technological items. When the online store makes a sale of a smartphone, it must have an availability of the product to be able to send it to the customer in the shortest possible time. This implies a series of previous processes that guarantee this availability, from obtaining the manufacturing materials, the production processes to manufacture the mobile phone, the actions of storage and transport to the distributors and the delivery service to the stores of the store. on-line.

In addition, the supply chain International Shipping also includes the tasks carried out by e-commerce, such as the storage of smartphones in their warehouses and the order preparation process and its distribution to the final customer.

How The Supply Chain Works

The operation of the supply chain can be defined with a series of fundamental processes that are divided into three phases. Let’s see what the three phases or processes of a supply chain are:

1. Provisioning

In the first stage of the supply chain, the supply of the necessary raw materials is essential so that the factories can produce efficiently and thus supply the market with the products they demand.

2. Production or manufacturing

It is about all the necessary processes in a factory to be able to create the products, that is, the transformation of the raw materials into the final products that will reach the market.

3. Logistics and distribution

They are all the actions and tasks of logistics and transport that allow to accelerate the time necessary for the products to reach the consumer or final customer, which implies their storage, transport, distribution, sales processes, etc.

How To Optimize the Supply Chain

The supply chain is a key point in today’s market to achieve high availability, allowing any consumer to purchase the product they need almost immediately.

Optimizing the supply chain is a task that concerns all the actors involved in it, from manufacturers, through carriers and distributors, to physical stores or e-commerce.

Following the following recommendations makes it much easier to optimize all the processes that help speed up and improve a company’s supply chain:

Betting on technology

Technology plays a fundamental role in improving the supply chain, as it allows processes and tasks to be automated to speed up their execution, reduce costs and minimize or eliminate possible errors.

Some examples of the use of technology to optimize the supply chain can be found in:

» Logistics management software. To optimize warehouse management, order preparation, distribution routes, orders to suppliers…

» Robotics. To automate production processes, accelerating production processes, increasing factory efficiency, reducing order preparation time, etc.

» Online sales platforms. To make it easier for users to purchase products at any time and from any device.

Outsource logistics services

Most companies manage to improve their supply chain if they outsource it. Relying on specialized companies in the sector such as carriers or providers of specialized logistics services, costs are reduced, greater availability is guaranteed, and the entire product supply and delivery process is accelerated.

Improve communication channels

Good communication is essential to optimize the supply chain. Having contact with distributors, manufacturers, suppliers and all the agents involved in the supply chain will increase efficiency when supplying products and delivering them to the end customer.

In addition, internal communication within the company itself is key to not delaying the preparation, distribution and delivery of orders made by customers.

Other tips to optimize the supply chain

Let’s see other interesting tips that can significantly improve the operation of a company’s supply chain:

» Avoid downtime or delays when preparing orders after a sale.

» Implement processes that are flexible and scalable so that the company can adapt to the demand at any given time (for example, being able to deal with high peaks in orders on specific or special dates).

» Bet on ERP and CRM software to improve all logistics, transport, sales and customer relationship processes.

» Implement a continuous improvement system where all processes are monitored and recorded, in order to detect problems or incidents and implement improvements that raise the company’s level of efficiency.

We have seen what the supply chain is and how it works to guarantee the availability of products on the market at a lower cost for companies and end customers.

Knowing how to make a supply chain to optimize it and improve all its processes should be an objective of any company that wants to be more profitable and competitive today.

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