What is a supply chain?

2 min read

A supply chain is a network of suppliers, individuals, technology, organisations, activities and resources of a business for delivering a product or service. All these entities could be a part of the sourcing, procuring raw materials or equipment, manufacturing, selling or logistics that ultimately help deliver finished goods to end-users.

How does supply chain work?

A supply chain is a network that involves a series of steps involved to provide a product or service to the customer. These steps include procuring and transforming raw materials into finished goods and distributing them to end-users.

The basic elements of the supply chain process consist of product development, marketing, operation, distribution and customer service. The stakeholders involved in this process include producers, vendors, warehouses, transportation companies, distribution centres and retailers.

If the supply chain management is efficient, it helps in reducing the cost of production and increases profits. If one of the links in this process fails, a company may have to bear an increased cost.

What are the different types of supply chains?

Typical of manufacturing companies, the supply chain now also extends to other business models. The type of supply chain and its complexity, however, depends on the nature of a business. For instance, a company operating on a made-to-order model does not store finished products. Its warehouse thus consists of raw material. Similarly, a company operating in the assembly model requires managing different types of stock.

Considering these requirements, the supply chain (SC) has evolved into several different models. Here is a brief synopsis of different types of SC models.

Supply chain with a continuous flow

Manufacturers who use this supply chain technique usually manufacture a single line of products in bulk. This type of supply chain ensures the stability of supply during high demand.

  • Fast supply chain
    Businesses that manufacture or sell popular products with a short life cycle find a suitable supply chain with a faster manufacturing model.
  • Efficient model of supply chain
    The efficient model of a supply chain is implemented where supply chains require end-to-end efficiency. Businesses operating in highly competitive markets opt for this SC type.
  • Agile supply chain
    The agile supply chain model best suits businesses producing or manufacturing items in a particular order, with speed and responsiveness to market conditions.
  • Custom configured supply chain
    Businesses involved in assembling and production lines implement a custom configured supply chain, a hybrid of the continuous flow and the agile model.
  • Flexible chain of supply
    A flexible supply chain allows businesses to find a balance between periods of high demand and low-volume movement.

Supply Chain Management (SCM)

Supply Chain Management (SCM) thus is the management of supply chains to increase operational excellence and improve customer value.

With supply chain finance up to Rs. 45 lakh from Bajaj Finserv, your SME can solve cash flow problems, fund blocked payments from debtors, take up new orders in bulk and ensure smooth functioning.

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