Understanding how supply chains work

With the COVID-19 pandemic spreading worldwide, one major impacting factor is the supply chain of necessary goods and services. The media heavily reports on this issue. Moreover, it’s crucial for hospitals and healthcare centers that are in desperate need of supplies. However, one must wonder what exactly makes up the supply chain.

The role of supply chain management

A supply chain is an organizational system of people, activities, information, and resources moving a variety of things from the company to the consumer. This includes products, services, resources, or raw materials.

Each step in the supply chain is crucial to proper product delivery to their intended locations.

There are five stages to supply chain management: planning, sourcing, manufacturing, delivery, returns and enabling.

Planning

The planning stage involves management and development to meet customer demand efficiently. This allows the supplier to design their supply chain accordingly to meet business demands.

Sourcing and manufacturing

In the sourcing and manufacturing stages, companies create products and monitor supplier relations to ensure smooth shipments.

Delivery

In the delivery stage, the supplier schedules proper deliveries and dispatches. This includes the scheduling of loads using a fleet of vehicles and a variety of distribution methods to transport products to their destination.

Returns and enabling

Finally, in the returns and enabling stages, the supplier analyzes the process and adjusts for future operations.

Supply chains in the digital age

With improved communication and rapid response, supply chain management is more efficient today than before. Customers can directly contact distributors, which reduces the supply chain length and eliminates intermediaries. As a result, there’s a cost reduction, as well as a stronger collaboration between customers and suppliers.

Similarly, blockchain technology allows for a secure, public ledger and provides easy access to information. The internet further improves reporting and identification of any flaws or other issues within the supply chain.

Common challenges

Nonetheless, there are some common challenges regarding supply chains today. This includes a lack of transparency, lost or damaged goods, increased waste, insufficient planning, and unsatisfied customers.

The lack of transparency in the supply chain leads to tracking and planning difficulties in transporting goods. This leads to lost or delayed goods, which increase waste pollution from additional shipping. Lastly, if products get delayed or misplaced, customers will become unsatisfied and may seek a new supplier or distributor.