What Are the Main Parts of a Supply Chain?

Manufacturers, distributors, wholesalers, importers, exporters and similar businesses depend heavily on the smooth functioning of a supply chain. Understanding how the supply chain works is critical for business success. The better each link in the chain runs, the better the overall revenue obtained. What are the key parts of supply chain management?

Planning Business Goals

The first step in the supply chain is one of the most important; ironically, it’s also one that many manufacturers skip. To grow a business financially, it’s vital to establish clear targets. That’s where planning comes into play.

Companies need to establish several factors in their overall plan for the supply chain: customer needs, realistic manufacturing capabilities, seasonal changes and market conditions. The first is arguably the most vital. Knowing what customers expect and how often they order is key to ensuring production and supply deliver on promises. That way, it’s possible to make clients happy and build the business’s reputation positively.

Seasonal demand also needs to be factored in because it often influences customer ordering habits. Manufacturers need to make sure they can keep up with increased demand by sourcing sufficient raw materials ahead of time. Planning allows the business to distribute capital wisely and prioritize the most important areas to keep all clients happy and satisfied. That way, business sales operations can be maximized in the most cost-effective way possible.

Building Supplier Relationships

The next step is to source goods for business operations. This step matters because suppliers influence many aspects of the finished product, including total manufacturing costs and product quality. Choosing the right supplier can also help businesses keep manufacturing operations going smoothly, without interruptions from lack of raw materials or defective materials.

How can a business know which suppliers are worth their time? Doing some research is helpful. Vendors that have a good track record — especially if they’ve worked with the manufacturer in the past — should be prioritized as they’ve shown trustworthiness. This is especially true for vendors that are willing to go the extra mile in emergencies, going above and beyond to make sure manufacturers get what they need to keep operations going.

After these considerations, price comes into play. Saving money can help businesses reduce total costs and increase profit margins. That said, it’s not usually worth going with the lowest price if it means sacrificing quality or delivery consistency. Long-term vendor relationships are more important and profitable in the long run because of how they keep the supply chain working smoothly.

Manufacturing Products

This part of the supply chain is one of the only ones manufacturers have direct control over. It’s here where efficiency and productivity can be maximized and where production time can be minimized. Raw materials, equipment and human talent come together to create finished goods that meet client specifications.

Every organization should have a separate plan for maximizing the output and quality of manufacturing. The supply chain interacts with this step, however, should relevant department heads should always be involved in any discussion related to production. After all, the business’s goal isn’t only to cut costs and produce the highest volume of goods; it’s primarily about customer satisfaction and meeting client expectations on time and on budget.

Distributing Finished Goods

The end of production isn’t the end of a company’s operations. Not by a long shot. The supply chain takes over to facilitate getting finished goods to their intended destination. Some organizations turn this step over to third-party businesses, which can be profitable, but careful consideration is needed to make sure the outside entity delivers the quality that manufacturers expect. This outside party must represent the manufacturer positively, leaving customers with a great impression by ensuring they receive goods promptly and in excellent condition.

Whatever method of delivery is used, it’s vital to have one or more backups. This matters to avoid distribution being halted by unexpected problems, such as severe weather, governmental control changes or rising costs in specific types of distribution, such as gasoline prices.

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