Supply Chain
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Supply Chain
When we talk about supply chain, we mean a network that flows within a company that originates from its suppliers. Upon reaching the company, the products are distributed until they reach the final buyer. The company’s whole process of acquiring the products from the supplier or producer, storing, transporting them until the product reaches the final buyer is the supply chain. In the network, several entities are included, information, resources, people, activities and entities. It can also be said to be how a product is changed from its original state to the customers’ preference and taken to the customers (Kenton, 2020). The purpose of supply chain management to companies is to reduce the costs and ensure the companies make profits. As a result, making the firms remain competitive in the market. Apart from that, it ensures the production cycle is faster. In this essay, the concern will be about some of the elements of the supply chain. The elements include the value chain and flow of structure, inputs, outputs, including customer service structure, inventory points and forecasting, sourcing activities, risks, locations, and logistics.
Value Chain and Flow of Structure
A value chain is a combination of various systems that businesses use to make money. These combinations are also subsystems that create products and services from the start to the end. The value chain subsystems are into two that are the primary activities of the value chain and the secondary activities of the value chain, which are also the flow of structure (Tarver, 2019).
Value Chain Primary Activities
Inbound logistics- is concerned with receiving products from the supplier and storing the products. Therefore the major activities in inbound logistics are receiving, inventory control and warehousing. The products are stored as the company plan to sell them(Tarver, 2019).
Operation- is concerned with converting the received products or raw materials into finished products that can be sold. The operations will have activities such as labelling, branding, packaging and packaging the product in bulk to add value to the products (Tarver, 2019).
Outbound logistics- is the opposite of inbound logistics, and it involves distributing the final products to the consumers. The activities prevalent here are storage, transportation and shipping of the products to consumers (Tarver, 2019).
Marketing and sales is another primary activity that involves ensuring the consumers know about the company’s product. This can be done through promotion or digital marketing, which is advertising the goods through the internet and ensuring sales are made (Tarver, 2019).
Services- are the actions the company does to ensure customer satisfaction. Things like offering discounts, warranty, maintenance, refund, exchange, customer service and replacements. These activities ensure the products are maintained, and consumer experience is improved, resulting in loyalty (Tarver, 2019).
Value Chain Secondary Activities
Procurement is one which can be said to the acquisition of inputs recured to make the product. Human resource management is also essential in the value chain as it involves acquiring employees to conduct all the value chain activities. Infrastructure covers the support system of the company, such as warehousing and offices, to conduct business. Finally, technological development is all about research and development to improve the value chain process by automating everything in the company and saving on cost (Tarver, 2019).
Inputs
Inputs in the supply chain can be termed as the company’s raw materials from the suppliers for resale after conversion (Dominick, 2019). The suppliers provide raw materials, which are the company’s inputs to process them into finished goods. It is essential to note that not all companies process their products, and some buy finished goods for resale. These finished goods are also inputs once they are purchased from the suppliers. Other companies process their goods, and therefore the raw materials are the inputs.
Outputs
Outputs are the finished products that are processed by the company for the consumers. Once the goods are processed, they are branded, labelled, packaged and distributed to them (Dominick, 2019). These finished goods are the outputs. On the other hand, goods bought from suppliers after being processed are inputs, but when resold to consumers, they become outputs.
Inventory Points and Forecasting
Inventory points and forecasting are essential in the supply chain. Inventory points determine when to store up the inputs to avoid the high cost of warehousing. Forecasting helps determine when is the right time to store the products as there will be a demand for the goods to the consumers (Victor, 2019).
Sourcing
Sourcing is determining whether it appropriate for the company to produce the outputs, or it should outsource the process. The determination is done by ascertaining the cost of production versus that of outsourcing. When outsourcing becomes cheap, then it is appropriate for the company to outsource to minimize costs for the company.
Risks
In a supply chain, there are many risks, and therefore forecasting plays a crucial role in determining the right time to distribute or purchase outputs and inputs, respectively. Some of the risks include a shortage of raw materials, cargo theft during transportation, bad climate or weather and harsh regulations by various governments.
Location and Logistics
Location in the supply chain refers to the location in which the products are stored or distributed. For example, once inputs are purchased, they have to be received in a warehouse, and the same applies to outputs once they are processed. Logistics refers to transportation from the suppliers to the company or from the company to the consumers.
Conclusion
The supply chain is an essential part of the company, and is responsible for making money for the company. Therefore enough planning and consideration should be done to ensure the whole process is smooth for the company to make enough profits.
References
Dominick, C. (2019). What is supply chain management, anyway? NLPA. https://www.nextlevelpurchasing.com/articles/what-is-supply-chain-management.php#
Kenton, W. (2020). How supply chains work. Investopedia. https://www.investopedia.com/terms/s/supplychain.asp
Tarver, E. (2019). What are the primary activities of Michael porter’s value chain? Investopedia. https://www.investopedia.com/ask/answers/050115/what-are-primary-activities-michael-porters-value-chain.asp
Victor, R. (2019, November 26). Demand forecasting: How to forecast your supply chain. Hollingsworth. https://www.hollingsworthllc.com/demand-forecasting-how-to-forecast-your-supply-chain/