Supply Chain: Concept, Model and How it Works 

Operate supply chain Efficiency is crucial to the success of any business as it affects the cost, quality and delivery of the product to the customer. A well-managed supply chain can help reduce costs, improve productivity, enhance customer satisfaction, and ultimately lead to increased profits. Let's Johnson's Blog Learn about supply chains in this article.

What is supply chain?

Supply chain refers to the network of businesses, individuals, organizations and resources involved in the creation and delivery of a product or service to the end consumer. It includes all activities involved in sourcing raw materials, manufacturing or manufacturing products, storing and distributing, and delivering products to customers.

The supply chain begins with the suppliers of raw materials and ends with the final customer purchasing the finished product. It includes all the intermediate steps and processes involved in moving products from one stage to another, such as transportation, storage and logistics.

Supply chain in English is called Supply Chain, it is considered a system or a set of activities related directly or indirectly to the process of transporting products (including goods and services). ) from the producer to the supplier and finally to the consumer.

In the supply chain there will be actors such as manufacturers, suppliers, carriers, carriers, retailers and consumers. For a company, the supply chain will be departments, each of which undertakes a separate function such as sales department, service department, marketing department, logistics department, etc. These departments will combine with to meet the needs of customers, promote business efficiency, create more profits for the company.

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Understanding the supply chain

Understanding a supply chain involves identifying all the steps involved in creating and delivering a product or service and how they are interconnected. Here are the key components of the supply chain:

• Supplier: The first step in the supply chain is to purchase raw materials or components from a supplier. This can be local or international, and the procurement process can include negotiation, contracting and quality assurance.

• Manufacturing production: After obtaining the raw materials, the crafting or production process begins. This may include several stages, such as assembly, fabrication, handling or packaging, depending on the nature of the product.

• Storage: After the product is manufactured, it can be stored in a warehouse or distribution center. This can involve managing inventory levels, tracking product movement, and ensuring efficient use of space.

• Logistics and Transportation: After warehousing, the product must be shipped to its final destination, which can be a retailer, wholesaler or final customer. This may involve managing shipping schedules, coordinating with carriers, and tracking shipments.

• Retailers and customers: Finally, the product is sold to the end customer through a retailer or wholesaler. This may involve managing customer orders, delivering products, and providing after-sales service.

Effective supply chain management involves optimizing each of these steps to ensure efficiency, cost savings, and customer satisfaction. This may involve using technology, such as inventory management systems, logistics software, and data analytics, to improve decision-making and streamline.

What are the main supply chain models?

There are several major supply chain models, each with their own characteristics and benefits. Here are the four main supply chain models:

• Continuous flow model: This model is used for products with constant demand, such as electricity, water or gas. The production and distribution of these products is ongoing and independent of specific orders or needs.

• Fast Moving Consumer Goods (FMCG) Model: This model is used for products with high demand and short shelf life, such as food, beverage and personal care items. Supply chains are designed to minimize inventory and lead times to ensure freshness and availability.

• Agile model: This model is used for products with unpredictable demand or short product lifecycles, such as fashion or electronics. Supply chains are designed to be flexible and responsive to changes in demand, with fast production and delivery times.

• Lean Model: This model is used for products with stable demand and long product life cycle, such as automobiles or home appliances. Supply chains are designed to minimize waste and maximize efficiency, with lean manufacturing operations and inventory management.

In addition to these models, there are also hybrid models that combine elements of two or more mainstream models to suit the specific needs of a particular product or industry. Choosing the right supply chain model is critical to the success of a business, as it impacts the cost, performance, and efficiency of the supply chain.

Continuous flow model

A continuous flow model is a supply chain model used for products that have a constant demand, such as electricity, water, or gas. These products are typically delivered through pipelines or the grid and are produced and delivered continuously regardless of specific orders or needs.

In this model, the supply chain is designed to maximize efficiency and minimize waste, with a focus on cost reduction and process optimization. The production process is highly automated and standardized, with little variation in output.

Key features of the Continuous Flow Model include:

• Continuous production: Product production is ongoing and not dependent on specific orders or needs. Products are produced and delivered continuously through pipelines or power grids.

• High volume: High production volume, focus on maximizing efficiency and reducing costs.

• Standardized production: The production process is highly standardized, with little variation in output. This helps to reduce waste and optimize production efficiency.

• Automated production: The production process is highly automated, with little or no manual intervention. This helps to reduce labor costs and improve efficiency.

• Long life: The product has a long service life and does not require frequent replacement or maintenance.

The continuous flow model is widely used in industries such as energy, water and gas, where product is delivered continuously to the customer. Supply chain management Efficiency is critical to ensuring efficient and cost-effective product delivery, with a focus on reducing waste and optimizing production efficiency.

Fast Moving Consumer Goods (FMCG) Model

The Fast Moving Consumer Goods (FMCG) model is a supply chain model used for products with high demand and short shelf life, such as food, beverages, and personal care items. Supply chains are designed to minimize inventory and lead times to ensure freshness and availability.

In this model, the supply chain is highly responsive to changes in demand, with a focus on speed and efficiency. The manufacturing process is designed to be flexible and adaptable, with fast turnaround times and regular inventory replenishment.

The key features of FMCG Models include:

• High volume: Large volume of production, focused on meeting product demand.

• Short shelf life: The product has a short shelf life and needs to be replenished regularly to ensure freshness and availability.

• Fast turnaround time: Manufacturing processes are designed to be fast and efficient, with a focus on speed and the ability to respond to changes in demand.

• Efficient distribution: Supply chains are designed to minimize inventory and lead times, focusing on getting products to customers as quickly as possible.

• Demand forecastSupply chain: The supply chain relies on accurate demand forecasting to ensure the right amount of inventory is available to meet customer demand.

The FMCG model is widely used in industries such as food and beverage, personal care and household goods, where product demand is high and shelf life is short. Effective supply chain management is critical to ensuring efficient and cost-effective product delivery, with a focus on minimizing waste and optimizing inventory management.

Agile model

The Agile model is a supply chain model used for products with unpredictable demand or short product life cycles, such as fashion or electronics. Supply chains are designed to be flexible and responsive to changes in demand, with fast production and delivery times.

In this model, the supply chain is highly adaptable and can quickly respond to changes in customer needs or market trends. The manufacturing process is designed to be flexible and can be quickly adjusted to respond to changes in demand.

Key features of the Agile Model include:

• Flexibility: Supply chains are designed to be flexible and adaptable, with a focus on responding quickly to changes in market demand or trends.

• Fast response time: The manufacturing process is designed to be fast and efficient, with a focus on reducing delivery times and getting products to market as quickly as possible.

• Cooperating Relationship: Supply chains are based on close working relationships between suppliers, manufacturers and retailers to ensure effective communication and coordination.

• Modular design: Modular or component designed products that can be easily customized or modified to meet the ever-changing needs or preferences of the customer.

• Planning according to needSupply chain: Supply chain relies on demand planning to ensure that the right amount of inventory is available to meet customer needs.

The Agile model is widely used in industries such as fashion, electronics, and consumer goods, where product needs are highly volatile and can change rapidly in consumer preferences or market trends. school. Effective supply chain management is critical to ensuring efficient and cost-effective delivery of products, with a focus on maximizing flexibility and responsiveness to changes in demand.

Lean Model

The Lean Model is a supply chain model used for products with predictable demand, such as automotive or industrial equipment. Supply chains are designed to minimize waste and optimize efficiency by reducing inventory, lead times, and production costs.

In this model, the supply chain is highly focused on continuous improvement and waste elimination. The manufacturing process is designed to be highly efficient, with a focus on reducing lead times, improving quality and minimizing costs.

Key features of the Lean Model include:

• Reduce inventory: The supply chain is designed to minimize inventory levels, with a focus on timely delivery of materials and components.

• Reduce waste: Manufacturing processes designed to minimize waste, focus on eliminating non-value-added activities, and optimize efficiency.

• Continuous improvement: Supply chain is highly focused on continuous improvement, focusing on identifying and eliminating inefficiencies in the manufacturing process.

• High Quality: The manufacturing process is designed to ensure high quality, with a focus on improving product performance and reliability.

• Efficient supply chain: The supply chain is designed for efficiency, focusing on reducing lead times and optimizing delivery times.

The Lean Model is widely used in industries such as automotive, aerospace, and industrial equipment where product demand is predictable and manufacturing processes can be standardized. High. Effective supply chain management is critical to ensuring efficient and cost-effective delivery of products, with a focus on minimizing waste and optimizing efficiency.

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Supply chain role

In production and business activities, supply chain model plays a huge role. For businesses to grow and succeed, the supply chain must be efficient. Supply chains help managers in:

• Operate the production and business process in the right way, in order, with common unity.
• Ensure that no risks occur in the management and production of goods and services.
• When goods and services reach consumers, they will receive a warm welcome and response.

• From the supply chain, managers can come up with the right business strategy for their business, know how to use human resources, use raw materials in the right place and in the right place. Promote business activities of enterprises to grow and gain a foothold in the market.
• Supply chains help link departments and departments in the business together. If everyone is strong enough to do it, there is no way, there is no unity, the business is likely to go bankrupt.

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What are some supply chain risks?

Supply chain risk is a potential disruption or threat that could affect the flow of goods, services, or information in the supply chain. These risks can arise from a variety of sources, including natural disasters, geopolitical events, technology failures, and supplier performance issues. Some common types of supply chain risks include:

• Natural disaster: Natural disasters like hurricanes, earthquakes, and floods can disrupt transportation networks, damage facilities, and cause delays in supply chains.

• Geopolitical events: Political turmoil, trade disputes and regulatory changes can affect global supply chains, leading to trade barriers, price fluctuations and supply shortages.

• Supplier performance issues: Issues such as quality problems, delivery delays and financial instability can affect supplier performance and disrupt supply chains.

• Technology errorTechnology failures such as system outages, cyberattacks, and data breaches can disrupt the flow of information in the supply chain, leading to delays and increased costs.

• Fluctuation of demand: Sudden changes in demand patterns, such as an unexpected increase or decrease in demand, can affect the ability of suppliers to meet customer demand, leading to shortages or excesses. inventory.

• Disruption of transportTransport disruptions such as port congestion, capacity limitations and driver shortages can affect deliveries and lead to delays and increased costs.

• Environmental and Social Risks: Environmental and social risks such as climate change, labor issues and concerns about supply chain transparency can affect companies' reputations and lead to regulatory risks and regulations.

Risk management An effective supply chain involves identifying potential risks, assessing their likelihood and impact, and developing strategies to mitigate or respond to them. This can involve implementing risk management tools and processes, diversifying suppliers, building resilience in the supply chain, and maintaining strong relationships with stakeholders. official

How do supply chain organizations work?

Supply chain organizations are responsible for managing the end-to-end flow of goods, services, and information from supplier to final customer. These organizations often include multiple functions and stakeholders, including purchasing, logistics, operations, quality assurance, and customer service.

The following are the main activities that supply chain organizations typically perform:

• ShoppingProcurement: Procurement involves sourcing materials, goods, and services from suppliers. This involves identifying the right supplier, negotiating contracts, and managing supplier relationships.

• PlanningPlanning: Planning involves forecasting demand, developing production schedules, and managing inventory levels to ensure that the right products are available at the right time.

• Manufacturing: Manufacturing involves converting raw materials and inputs into finished products through manufacturing, assembly, and packaging processes.

• Logistics: Logistic deals with the physical movement and storage of goods, including transportation, warehousing, and distribution.

• Quality assurance: Quality assurance involves ensuring that products meet quality standards and customer expectations through testing, inspection, and quality control processes.

• Customer service: Customer service involves managing customer orders, resolving customer inquiries and complaints, and providing after-sales support.

Supply chain organizations also use a variety of tools and technologies to manage their operations, including enterprise resource planning (ERP) systems, transportation management systems (TMS), warehouse management systems (WMS) and supply chain analytics.

Effective supply chain organizations prioritize collaboration, communication, and continuous improvement across all functions to ensure that the end-to-end supply chain operates efficiently and effectively. They also continuously monitor and measure key performance indicators (KPIs) to identify opportunities for improvement and drive performance.

Digital supply chain

Digital supply chain refers to the use of digital technologies to improve the efficiency, transparency, and flexibility of supply chains. This involves integrating various digital technologies, such as the Internet of Things (IoT), cloud computing, big data analytics, artificial intelligence, blockchain, and robotics, to increase strengthen supply chain processes and decision making.

Some of the benefits of digital supply chain management include:

• Improve efficiency: By automating supply chain processes and reducing manual interventions, digital supply chains can dramatically improve efficiency, reduce errors, and increase speed.

• Enhanced visibility: Digital supply chains provide real-time data and insights, allowing for greater visibility and control of the supply chain, from supplier to end customer .

• Increased collaboration: Digital supply chains enable seamless collaboration and communication between different stakeholders in the supply chain, improving coordination and reducing delays.

• Better decision making: By using data analytics and artificial intelligence, digital supply chains can deliver actionable insights, enabling risk management and make better decisions.

• Improve customer experience: By enabling faster deliveries, personalized products, and real-time visibility, a digital supply chain can dramatically enhance the customer experience.

Digital supply chain management is becoming increasingly important in today's fast-paced business environment, where customers demand faster delivery times, more customization, and more transparency. Companies adopting digital supply chain management can gain a significant competitive advantage by improving efficiency, reducing costs, and enhancing customer satisfaction.

How does the supply chain affect sustainability?

Supply chains can have a significant impact on sustainability, both positive and negative. On the plus side, supply chain management practices that promote sustainability can help reduce the environmental impact of a company's operations, promote social responsibility, and create economic value. On the negative side, unsustainable supply chain practices can contribute to environmental degradation, social injustice and economic instability.

Some of the ways that supply chains can impact sustainability include:

• Environmental impact: The production and transportation of goods can contribute to environmental degradation through the use of natural resources, energy consumption and greenhouse gas emissions. Sustainable supply chain practices, such as using renewable energy sources, reducing waste and promoting recycling, can help mitigate this impact.

• Social responsibility: Supply chains can also impact social sustainability by promoting fair labor practices, human rights, diversity and inclusion. Companies can ensure that their suppliers adhere to ethical and socially responsible practices, such as fair labor and human rights policies.

• Economic Sustainability: The economic sustainability of supply chains can be affected by factors such as supply chain disruptions, volatile commodity prices, and trade policies. By adopting sustainable supply chain practices, companies can create economic value by reducing costs, improving efficiency, and minimizing risk.

Overall, the impact of supply chains on sustainability depends on many factors, including industry, geography and business model. However, by adopting sustainable supply chain practices, companies can not only reduce their environmental impact and promote social responsibility, but also create economic value and gain competitive advantage. painting.

What is supply chain management vs business logistics management?

Supply chain management and business logistics management are both essential functions in the operation of a company, but they have different scope and focus.

Supply chain management involves the coordination of all activities involved in the production and delivery of a product or service, from the purchase of raw materials to final delivery to the end customer. This includes managing relationships with suppliers, transportation providers, warehouses and retailers, as well as optimizing inventory levels, production schedules and distribution channels. The goal of supply chain management is to create value for customers by delivering products or services in a timely and cost-effective manner while reducing waste and improving efficiency.

Business logistics management focuses specifically on managing the physical flow of goods and materials within a company's operations. This includes shipping, warehousing, inventory management, and order processing. The goal of logistics management is to ensure that the right product is delivered to the right place at the right time, while minimizing costs and optimizing efficiency.

While supply chain management includes logistics management, it also includes more activities such as strategic planning, supplier management, and customer relationship management. Supply chain management focuses on the entire supply chain, from raw materials to final delivery, while logistics management focuses on the internal operations of a company's logistics functions.

Both supply chain management and business logistics management are vital components of a company's operations, and effective management of both functions is essential to a company's success.

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Epilogue

Supply chain management is an important function concerned with managing the flow of goods, services and information from suppliers to final customers. Effective supply chain management requires organizations to balance competing priorities such as cost, quality, speed, and sustainability, and navigate a range of risks and challenges that can impact the chain. supply. With the increasing complexity of global supply chains and the growing importance of digital technologies, supply chain organizations are becoming more strategic and collaborative, with a focus on continuous improvement. , innovate and create value across the entire supply chain.

Hopefully through the above article you can understand more about What is supply chain? and to manage your supply chain smoothly and efficiently contact Johnson's Blog for advice