There are a number of different stages involved within the supply chain, each of which needs to be managed and organized properly in order to achieve efficiency. These different stages are always the same for any business, and efficiency in the supply chain will determine how well a business can meet the demands of its consumers and manufacture and distribute products accordingly. While focus on each of these stages can often be overwhelming, nowadays there are software platforms and other forms of assistance which makes organization and tracking easier than ever. It is possible to manage this process through the use of these technologies and ensure the output of your business is up to scratch. If you are new to business or do not understand how the process works, it may seem complicated at first. This article will aim to outline some of the different stages of the supply chain to help understand the process better.
Sourcing and manufacturing
Sourcing and manufacturing refers to a stage in the supply chain (usually the first one) where the business owner must source the materials required for their products and manufacture the products. This is an integral part of the supply chain, as of course to be a viable business, you need a product. A product must be manufactured, and this process can cost money and time. Furthermore, you must have a reliable supplier of materials used for the manufacturing of the products. Often, demand for your products will change, and therefore the number of materials you need may change, as well as the pace of your manufacturing. It is easy to see why this is important as if your demand increases and your materials do not, your manufacturing will suffer, and you will not be able to meet the new demand for products. If demand decreases and you continue to source the same amount of materials and manufacture the same output, you will have an oversupply of products.
Storage is an important component of the supply chain. Once your products have been manufactured, they need somewhere to be stored. While this may sound simple, storage is often where many businesses will overspend and incur a lot of costs for the business. Many businesses will spend over what they actually need and be paying for space they are not using. They may do this as they need to upgrade space, but the next step is too large, or they want to prepare. Regardless of what it is, it can incur a lot of unnecessary costs for a business. This component of the supply chain can be managed by outsourcing storage to other companies, in which you only pay for the storage you are actually using. Thereby, you are getting your money’s worth without needlessly spending.
Distribution is one of the most important parts of the supply chain. Distribution is defined as the component of the supply chain dealing with the sending of products to consumers based on demand. Distribution encompasses shipping, packaging and the sending out of products, and it is vital to get this component right. Getting it right means that all technicalities to do with sending out products through freight or plane are properly organized and being able to ship out products based on demand, on time. Meeting deadlines is important to customer satisfaction, and as such, distribution is an important part of the supply chain as it directly correlates to customer satisfaction with your business.
The supply chain is made up of many components, however each needs to be looked at closely and managed effectively to produce an efficient operation which satisfies the wants of the customer.