5 Examples of Supply Chain Activities That Add Value to Your Business
Supply chain activities are the processes and tasks that transform raw materials into finished products and deliver them to customers. Supply chain management is the practice of optimizing these activities to reduce costs, improve quality, and increase customer satisfaction. In this article, we will look at five examples of supply chain activities that can add value to your business.
Key Takeaways
Supply chain activities are the processes and tasks that transform raw materials into finished products and deliver them to customers.
Supply chain management is the practice of optimizing these activities to reduce costs, improve quality, and increase customer satisfaction.
Product development, sourcing, manufacturing, distribution, and customer service are five examples of supply chain activities that can add value to your business.
1. Product Development
Product development is the process of creating new or improved products or services that meet customer needs and preferences. Product development involves researching the market, designing the product, testing the prototype, and launching the product. Product development can add value to your business by increasing your competitive advantage, enhancing your brand image, and generating more revenue.
2. Sourcing
Sourcing is the process of finding, evaluating, and contracting with suppliers who can provide the raw materials, components, or services needed for your product or service. Sourcing involves selecting the best suppliers based on criteria such as quality, price, delivery time, reliability, and sustainability. Sourcing can add value to your business by reducing your costs, improving your quality, and ensuring your supply continuity.
3. Manufacturing
Manufacturing is the process of transforming raw materials or components into finished products or services using machines, tools, labor, and energy. Manufacturing involves planning, scheduling, executing, monitoring, and controlling the production activities. Manufacturing can add value to your business by increasing your productivity, efficiency, and flexibility.
4. Distribution
Distribution is the process of moving finished products or services from the point of production to the point of consumption. Distribution involves transporting, storing, handling, and delivering the products or services to customers. Distribution can add value to your business by reducing your inventory costs, improving your customer service, and expanding your market reach.
5. Customer Service
Customer service is the process of providing support and assistance to customers before, during, and after they purchase your product or service. Customer service involves answering questions, resolving issues, providing feedback, and building relationships with customers. Customer service can add value to your business by increasing your customer loyalty, retention, and referrals.
Tip
To optimize your supply chain activities, you should always strive to balance efficiency, effectiveness, and responsiveness to meet customer expectations and achieve operational excellence.
Supply Chain Activities and Global Demand: An Example
Supply chain activities are the processes and functions that are involved in transforming raw materials into finished products and delivering them to the customers. Some examples of supply chain activities are sourcing, production, distribution, logistics, customer service, and reverse logistics. In this report, we will use an example of a consumer goods company that produces and sells trendy clothing items to illustrate how supply chain activities can affect the global demand in this industry.
Sourcing
Sourcing is the activity of finding and acquiring the raw materials, components, and services that are needed for the production of a product or service. For example, a consumer goods company that produces clothing items may source cotton, wool, silk, synthetic fibers, buttons, zippers, dyes, and other materials from various suppliers around the world. Sourcing can affect the global demand in this industry by influencing the availability, quality, cost, and sustainability of the inputs. For instance, if there is a shortage of cotton due to drought or pest infestation in some regions, this may reduce the supply and increase the price of cotton-based clothing items. Alternatively, if there is an innovation in synthetic fibers that makes them more durable, comfortable, and eco-friendly, this may increase the demand for synthetic-based clothing items.
Production
Production is the activity of transforming the inputs into outputs through various processes such as cutting, sewing, knitting, dyeing, printing, embroidering, etc. For example, a consumer goods company that produces clothing items may have different production facilities in different countries or regions to take advantage of lower labor costs, tax incentives, or proximity to markets. Production can affect the global demand in this industry by influencing the efficiency, quality, variety, and customization of the outputs. For example, if a production facility can produce clothing items faster and cheaper than its competitors, this may increase its market share and profitability. Alternatively, if a production facility can produce clothing items with higher quality and more variety than its competitors, this may increase its customer satisfaction and loyalty.
Distribution
Distribution is the activity of moving the outputs from the production facilities to the customers through various channels such as wholesalers, retailers, online platforms, etc. For example, a consumer goods company that produces clothing items may distribute its products through different types of stores such as department stores, specialty stores, discount stores,
Frequently Asked Questions
Q: What are the benefits of supply chain management?
A: Supply chain management can help you reduce costs, improve quality, increase customer satisfaction, and gain a competitive edge in your industry.
Q: What are the challenges of supply chain management?
A: Supply chain management can face challenges such as demand uncertainty, supply disruptions, global competition, environmental regulations, and ethical issues.
Q: What are the best practices of supply chain management?
A: Some of the best practices of supply chain management are aligning your goals with your partners, integrating your processes and systems, adopting lean and agile principles, leveraging data and analytics, and fostering a culture of collaboration and innovation.
Q: How can I measure the performance of my supply chain?
A: You can measure the performance of your supply chain using key performance indicators (KPIs) such as inventory turnover ratio, fill rate, order cycle time, on-time delivery rate, and customer satisfaction score.
Q: How can I improve my supply chain management skills?
A: You can improve your supply chain management skills by taking online courses or certifications in supply chain management topics such as logistics, operations management, procurement, and supply chain analytics.
References:
https://dspace.lib.cranfield.ac.uk/bitstream/handle/1826/377/SWP0103.pdf
https://corporatefinanceinstitute.com/resources/management/supply-chain/
https://www.investopedia.com/terms/s/scm.asp
https://www.ibm.com/topics/supply-chain-management
https://www.supplychainmanagement.in/supply-chain-management/supply-chain-activities.htm
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