7 Supply Chain Activities You Need to Know

Supply chain management is the process of planning, coordinating, and executing the flow of goods and services from the source to the end user. Supply chain activities include everything that is involved in producing and delivering a product or service to the customer. In this article, we will explain what are supply chain activities and why they are important for any business.

Key Takeaways

A supply chain is a network of individuals and companies who are involved in creating a product and delivering it to the consumer.

Supply chain activities include sourcing, product development, manufacturing, logistics, distribution, marketing, and customer service.

Supply chain activities are important because they determine the efficiency, effectiveness, and quality of the supply chain.

The main supply chain activities are sourcing, product development, manufacturing, logistics, distribution, marketing, and customer service.

To improve your supply chain performance, you should use appropriate strategies, metrics, and tips.

What Are Supply Chain Activities?

According to Investopedia, a supply chain is “a network of individuals and companies who are involved in creating a product and delivering it to the consumer”. The components of a supply chain include producers, vendors, manufacturers, transporters, distributors, retailers, and customers. The functions of a supply chain include product development, marketing, operations, distribution, finance, and customer service.

Supply chain activities are the specific tasks that each component performs to fulfill its function. For example, a producer may source raw materials, a manufacturer may assemble parts into products, a transporter may move goods from one location to another, a distributor may store and distribute products to retailers, a retailer may sell products to customers, and a customer may use or consume the product.

Supply chain activities can be classified into three categories: upstream, downstream, and internal. Upstream activities are those that involve sourcing and procuring materials and components from suppliers. Downstream activities are those that involve delivering products and services to customers. Internal activities are those that involve transforming materials and components into finished products within the organization.

Why Are Supply Chain Activities Important?

Supply chain activities are important because they determine the efficiency, effectiveness, and quality of the supply chain. By performing supply chain activities well, an organization can achieve the following benefits:

Lower costs: By reducing waste, inventory, transportation, and production costs, an organization can improve its profitability and competitiveness.

Faster delivery: By optimizing the flow of goods and services, an organization can reduce lead times and meet customer expectations.

Higher quality: By ensuring that materials and components meet specifications and standards, an organization can enhance product quality and customer satisfaction.

Greater flexibility: By adapting to changes in demand, supply, and market conditions, an organization can respond to customer needs and opportunities.

Improved collaboration: By communicating and coordinating with suppliers, partners, and customers, an organization can build trust and loyalty.

What Are the Main Supply Chain Activities?

There are many supply chain activities that vary depending on the type, size, and complexity of the organization and its products or services. However, some of the most common supply chain activities are:

1. Sourcing:

This is the process of finding, evaluating, selecting, and contracting with suppliers that provide raw materials or components for the production of goods or services. Sourcing involves activities such as market research, supplier qualification, negotiation, contracting, ordering, payment, and performance evaluation.

2. Product Development:

This is the process of designing, developing, testing, and launching new or improved products or services that meet customer needs and expectations. Product development involves activities such as market analysis, idea generation, prototyping, testing, validation, feedback collection, launch planning, and marketing.

3. Manufacturing:

This is the process of transforming raw materials or components into finished products that are ready for distribution or consumption. Manufacturing involves activities such as production planning, scheduling, material handling, machining, assembly, quality control, packaging, and labeling.

4. Logistics:

This is the process of planning, coordinating, and executing the movement of goods or services from one location to another. Logistics involves activities such as transportation planning, routing, loading, unloading, tracking, delivery confirmation, and reverse logistics (returns).

5. Distribution:

This is the process of storing and distributing goods or services to customers or intermediaries (such as wholesalers or retailers). Distribution involves activities such as warehousing, inventory management, order fulfillment, picking, packing, shipping, receiving, and inventory replenishment.

6. Marketing:

This is the process of creating and communicating value propositions to customers or potential customers. Marketing involves activities such as market segmentation, targeting, positioning, branding, pricing, promotion, advertising, sales, and customer relationship management.

7. Customer Service:

This is the process of providing support and assistance to customers before, during, and after they purchase or use a product or service. Customer service involves activities such as inquiry handling, order processing, complaint resolution, feedback collection, loyalty programs, and after-sales service.

Tips

To improve your supply chain efficiency, you should optimize your inventory levels, reduce waste and errors, automate processes, and use data and analytics.

To improve your supply chain effectiveness, you should align your supply chain goals with your business objectives, collaborate with your suppliers and customers, innovate and differentiate your products or services, and monitor and evaluate your results.

To improve your supply chain quality, you should implement quality standards and controls, train and empower your employees, conduct audits and inspections, and use feedback and continuous improvement.

What Are Supply Chain Activities and How Do They Affect Global Demand?

Supply chain activities are the steps that are involved in creating and delivering a product or service to the customer. They include sourcing raw materials, transforming them into finished goods, transporting and distributing them, and providing customer service. Supply chain activities can have a significant impact on global demand, as they affect the availability, quality, cost, and sustainability of products and services.

How Supply Chain Activities Influence Global Demand

Supply chain activities can influence global demand in various ways, depending on the industry and the market conditions. Here are some examples:

In the automotive industry, supply chain activities can affect global demand by influencing the production capacity, innovation, and environmental performance of car manufacturers. For instance, a shortage of semiconductors can limit the output of cars and reduce customer satisfaction. On the other hand, a reliable supply of raw materials and components can enable car manufacturers to produce more efficient and advanced vehicles that meet customer needs and preferences.

In the food industry, supply chain activities can affect global demand by influencing the availability, quality, safety, and affordability of food products. For instance, a disruption in the supply of agricultural inputs or transportation can cause food shortages and price spikes. On the other hand, a well-managed supply chain can ensure food security and accessibility for consumers around the world.

In the fashion industry, supply chain activities can affect global demand by influencing the trends, styles, and ethics of clothing products. For instance, a fast chain model can enable fashion retailers to respond quickly to changing customer tastes and preferences. On the other hand, a sustainable supply chain can enhance the social and environmental responsibility of fashion brands and attract conscious consumers.

Supply chain activities are essential for creating and delivering products and services to customers. They can also have a significant impact on global demand, as they affect various aspects of products and services, such as availability, quality, cost, and sustainability. Therefore, effective supply chain management is crucial for businesses to optimize their operations and meet customer expectations.

Frequently Asked Questions

Q: What is the difference between supply chain and value chain?
A: A supply chain includes all the raw materials and parts that are made into a product and distributed up the chain for manufacture and sale. A value chain encompasses all the individual steps that are taken to create a marketable product, including physical components and value-adding activities such as innovation, design, marketing, and sales.

Q: What is supply chain disruption?
A: Supply chain disruption is when any link in a supply chain is not working optimally, causing delays, shortages, or quality issues. Supply chain disruption can be caused by various factors, such as natural disasters, political instability, trade wars, cyberattacks, or pandemics.

Q: What are some supply chain risks?
A: Supply chain risks are the potential threats or uncertainties that can affect the performance of the supply chain. Some examples of supply chain risks are supplier failure, demand variability, price volatility, quality defects, theft, fraud, or environmental impact.

Q: What are some supply chain strategies?
A: Supply chain strategies are the approaches or methods that an organization uses to manage its supply chain activities and achieve its goals. Some examples of supply chain strategies are lean, agile, resilient, green, or digital.

Q: What are some supply chain metrics?
A: Supply chain metrics are the measures or indicators that are used to evaluate the performance of the supply chain. Some examples of supply chain metrics are inventory turnover, fill rate, order cycle time, on-time delivery, total cost of ownership, or customer satisfaction.

References:

https://www.rieti.go.jp/jp/publications/dp/15e034.pdf

https://web.archive.org/web/20130720190504/http://www.cgi.com/sites/cgi.com/files/GTR_AcceleratingSupplyChainFinance_Starace_Quote_e.pdf

http://www.apics.org/docs/default-source/scc-non-research/supply-chain-issues.pdf

https://www.investopedia.com/terms/s/supplychain.asp

https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-supply-chain

https://www.cips.org/intelligence-hub/supply-chain-management/what-is-a-supply-chain

https://www.oracle.com/scm/what-is-supply-chain-management/