Supply Chain - Definition, Importance & Process
What is Supply Chain ?
Supply chain represents the phases through which suppliers provide raw materials to manufacturers, who then manufacture the product which go via the distributors to finally reach the customers. Supply chain is a chain of steps which take the final product or service from the the manufacturer to the customer. During the supply chain process, the natural resources, raw materials etc are converted into a finished good and are transported from the company to the end user.
Importance of Supply Chain
Managing a supply chain, known as supply chain management (SCM), is an integral part of every business as it helps the business to achieve its targets in a systematic way, in a timely manner and helps in the reduction of cost as well. A well though out supply chain process is important to improve efficiency of any business. It clearly defines the role for everyone in the system i.e supplier, manufacturer, distributor and customer. Supply chain ensures that inventory flows from the supplier to the manufacturer through the physical channel and reaches them on time. The raw material is converted into finished goods by the manufacturer and is transported & delivered to the customer through a distributor. Thus, having a systematic supply chain process is beneficial.
Supply Chain Process
The below diagram shows the flow of materials and resources from the supplier to the manufacturer and finally to the customer via the distributor
Supply chain process carries the materials from supplier to manufacturer, who then creates the finished goods and that is transported to the distributor and ultimately the customers. The role of each is mentioned below:
Supplier: Provides the raw material to the manufacturer through the physical channel.
Manufacturer: The manufacturer decides upon the production planning ,scheduling , stock levels to be maintained etc.
Distributor: It could be a warehouse, retailer, wholesaler to facilitate the delivery of the product/services to the end consumer
Hence, this concludes the definition of Supply Chain along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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