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Supply chain: characteristics

The  supply chain , also famous for its English term ” Supply Chain “, is a process that indirectly affects our day-to-day lives.

In each purchase we make, in the transport of merchandise, in the warehouses of the giants of online commerce… The supply chain is a set of activities, a transversal and global term.

 

Supply chain or  supply chain

Also called  supply chain , the  supply chain  or  supply chain  is a strategic and logistical function that involves all the operations that are essential for a product or merchandise to reach the final customer.

In other words, it is the complete life cycle of a product from its raw material state to its final sale. Therefore, it ranges from the supply of raw materials for the manufacture of a product to its delivery to the final customer. The  supply chain  implies, therefore, supply, production, storage and distribution processes, and requires coordination between each and every one of the links in the chain.

It is a complex process, due in large part to globalization that has blurred commercial borders, thus involving more active parties in the process, more competition and greater demand in demand.

Added to this is the rise of  ecommerce  or online commerce, which has broken down each and every one of the geographical and time barriers, and which, in addition to this, has been reinforced by the pandemic with the change in many consumer habits. .

supply chain

Phases of the supply chain or  supply chain

Planning is the initial step that must be carried out in any industrial activity. How it is going to be manufactured, where it is going to be manufactured or what processes and tools are going to be used must be previously defined.

Depending on the type of product, convenient storage facilities and conditions, containers and packaging to be used, security measures, manufacturing processes, quality tests, etc. should be sought.

Carefully planning the elements related to the  supply chain or  supply chain  is the best way that works perfectly in terms of speed and efficiency. As in any industrial activity, aspects such as the place of manufacture, the human and material resources that will be necessary, the facilities and storage conditions, quality standards and regulations to be complied with must be taken into consideration.

 Once this phase has been passed  or the previous strategic definition has been completed, 4 major stages can be distinguished in the  supply chain .

1. Provisioning:

It is the phase focused on the activities necessary to obtain the raw materials and by-products necessary for the manufacture of the products to be sold. At this stage of the  supply chain,  it is essential to have well planned and coordinated the availability of materials, their quantity and the time they require.

2. Manufacturing/production:

This phase includes all the processes related to the creation and elaboration of the product. 

That is, the operations necessary for the transformation of raw materials into products and their mass production. The  optimization of the industrial process  plays a differential role in the standardization of operations and, consequently, in a more agile and effective cycle.

 3. Storage:

Central phase of the supply chain, storage consists of the temporary handling of goods, keeping them under quality and quantity control in a certain space so that their entry and exit flow is profitable for the company. 

 Many factors enter this phase that can make the difference between effective supply chain management  and the activity of a company or the bad drift of a business. The warehouses and/or distribution centers are the axis of this stage. 

A correct administration will anticipate possible peaks in production or fluctuations in demand and their repercussions on the stock and its management. 

At the same time,  storage management  will take into account storage and supply costs to avoid making the final product or service more expensive, guaranteeing a perfect response to different levels of demand and maintaining inventories at the levels required by the business. 

For this, the choice of the type of industrial racking to be installed in the warehouse or warehouse will be key.

 4. Distribution and delivery:

We are talking about the last stage of the  supply chain , in which the product reaches the end customer. It encompasses everything from leaving the warehouse or distribution center to the delivery of the product to the end customer. The purpose, in addition to making the delivery to the final destination, should be for the product to reach the user in good condition and within the stipulated deadlines.

 

Although the phase that closes the  supply chain cycle is  the one that corresponds to distribution and delivery, another stage could be included   . 

This is the returns stage, in which a reverse process begins in which the end user sends the product back to the company. 

The heyday that online commerce has experienced in recent years has forced  supply chains  to change.

Characteristics of the supply chain or  supply chain

The main objective of the supply chain is to deliver the articles or products in the precise quantity, quality and time at the most competitive cost throughout the entire process, from the supply stage to the final delivery stage. 

For this, the supply chain must add some features:

  • Balance : a  supply chain  is a succession of coordinated activities that, together, acquire a certain difficulty. 

The complete cycle involves many human and material resources. Thus, for the entire process to be completed satisfactorily, each and every one of the parties involved must operate correctly. 

For this reason, that each phase or stage is well planned, detailed and simplified is essential to minimize potential dangers.

  • Efficiency : reducing costs and that the execution of the phases is generated in an appropriate way at the time is a characteristic of a   well-functioning supply chain .
  • Coordination : suppliers, transport, manufacturers, customers, technology… integrate the  supply chain  or  supply chain . They must work independently but in an organized way so that the product ends up reaching the end user in a satisfactory way.
  • Flexible : it responds to criteria of agility and rapid response capacity in the face of changes in the market rhythm or global incidents that may occur, such as a health crisis, for example. 

That is, respond effectively to changes in demand and supply.

  • Transparency : that there is a continuous flow of information throughout the process, from supply to final delivery. A  supply chain  that works well is a supply chain with dynamism in communication.

Supply chain and logistics management:  are they the same?

The truth is, no. Logistics is one more link in the  supply chain . Logistics refers to the activities related to the efficient administration of the storage of products/merchandise, the organization and execution of transport, and the distribution to the client of the final service.

It can be said that while the objective of logistics is to carry out an unbeatable order management, the purpose of the  supply chain  is the comprehensive and global management of a product from its primary origin until it reaches the hands of the ultimate recipient. 

The  supply chain  integrates more operations, in addition to logistics, such as supply, manufacturing and other types of related activities such as commercial areas or marketing.