Intro to Supply Chain 101: How it Works

Every product that has been produced touches supply chain. Everything from the deodorant under your arms to the shirt on your back, has embarked on the long and windy journey known as the supply chain.

In layman’s terms, the supply chain can be defined as:

“A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. This network includes different activities, people, entities, information, and resources. The supply chain also represents the steps it takes to get the product or service from its original state to the customer.”

The goal of an optimized supply chain is to provide customers our customers with what they want, when they want it. Easy right? Not quite.

The supply chain involves a series of key steps needed to get a product to the customer. These include the moving and transforming of raw materials, identifying and working with manufactures, transporting the finished products to warehouses and distributing them to the end user. Different actors in the supply chain include producers, vendors, manufacturers, warehouses, 3PLs, and retailers themselves. The supply chain starts when a company receives an order, and ends when a customer has that order in their hands.

Effectively managing the supply chain, or “supply chain management,” is a critical component of any business. Managing the supply chain requires skill and organizational tactics but if done effectively, it can dramatically optimize a business bottom line and become a key competitive advantage over other companies operating in the same space.

If one link breaks in the supply chain, your business can suffer dramatic consequences. This is why supply chain management software is so critical to ensuring an effectively optimized supply chain.