Breaking Down the Meaning Of Supply Chain

As consumers, we take for granted the fact that products will always be available to us whenever we decide we want to get them. We hardly think about the entire process that took place so that cereal box that we are buying made it to the grocery store. In fact, we decide to buy things from one retailer instead of the other because they can offer us what we need exactly when we need it.

Nevertheless, David Kiger knows that wondering about this kind of things is actually important since it will help us understand how the market works and how to deal with its behavior and timing. Regarding this process of delivering things in time, there is a crucial concept that needs to be acknowledged which is Supply Chain.

What is the Supply Chain?

Imagine that you want to buy something online. You get to the website, take your time to choose the best possible option that suits your needs (and your budget), and finally make up your mind about the product you want to get. Then, what’s next?

Even though many people like to think that products are simply shipped after they are ordered and payment is processed. In reality, a consumer’s buying decision has a great impact on several individuals that will need to get their hands in the matter so it can actually receive its order.

This entire process of delivering a product from the seller to the consumer is called Supply Chain. Furthermore, this process starts even before the consumer decides that it wants to get the product since sellers need to have a stock prior the buying decision.

In other words, a supply chain is the networks that involve the cooperative, organized and sequential work of several entities that are all oriented to serve the consumer’s needs. These entities can be directly related to the consumer (like the retailer) or indirectly related to it (like the raw material supplier).

Who takes part in the Supply Chain?

Well, many different entities and individuals take part in the Supply Chain, for this reason, it is considered to be a network.

An average supply chain will include vendors, raw material suppliers, producers and manufacturers, warehouse suppliers, transportation companies, distribution centers, packaging facilities, and retailers. Each one of these entities can actually be subdivided into more units depending on how rigorous the supply chain needs to be in order to deliver a specific good to the final consumer.

It is important to keep in mind that every entity involved in the supply chain process plays an important role. Another way to explain this would be by understanding the supply chain as an actual chain, where if you miss a link you won’t be able to have a continuous unit. In this case, if one of the entities working for the same supply chain fails in doing its tasks properly, the supply chain will also fail.

On the other hand, if all the parts involved in the supply chain work synchronically and are able to do their job spotlessly, they supply chain will succeed, customers will be happy, the economic results will be positive, and all entities involved in the process will be more competitive.

Supplies_logistics_supply chain
Image courtesy of Steve Bremer at Flickr.com

So, what is Supply Chain Management?

Well, it has already been said that a supply chain is a network that involves all the processes related to the way a product is moved from the vendor to the final consumer. This process involves different entities and business units that are in charge of giving proper results so the commercial transactions are successful and consumers remain happy.

But, how does it all get along? How do companies manage to handle the supply chain in a way that is both sustainable and effective? The answer to this is by using a concept known as Supply Chain Management.

Supply Chain Management is what gives companies a competitive advantage over other organizations. It is the managing process that actually allows businesses to do their best along the supply chain. Every entity is controlled, every step is calculated, there are no things left unsolved because the final results need to be under control all the time.

This management concept covers everything and everyone involved with the supply chain. It actually makes it economically possible for manufacturing companies to exist and operate in a successful way since it helps to keep an eye on the things that matter to properly develop a product, store it, pack it and finally distribute it and handle it to its final consumer.

To sum it up, supply chain management is the entire process that actually makes it possible for customers to find their most- wanted items at the grocery store and buy them at a reasonable price exactly at the moment when they want to buy them.

* Featured Image courtesy of Kevin Krejci at Flickr.com

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