What Is a Supply Chain? (Including the Supply Chain Steps)
For companies that sell products, a supply chain is an essential network in their business infrastructure that assists in production and distribution. These systems provide many jobs. Learning more about how logistical networks operate can help you identify if you may like to work in this field. In this article, we discuss what a supply chain is and its types, explore the steps it involves and share the primary duties and average salaries of some supply chain jobs.
What is a supply chain?
When understanding the answer to ‘What is a supply chain?’, it's often helpful to consider it as an overall logistical process for manufacturing and selling products. It's the network of vendors, companies, employees and contractors that exists to assemble, ship and deliver goods to consumers.
A supply chain usually refers to tangible goods, but it can sometimes refer to digital goods and other services, depending on their delivery method. Many industries have a role in the supply chain process. For example, warehousing, shipping, manufacturing, assembly and fabrication and transportation. Supply chains serve as systems for reducing costs and optimising the company's production process for overall operational efficiency.
Types of supply chain models
There are six supply chain models, each with unique features. The models fit into one of the following general categories: efficiency focussed or responsiveness focussed. Efficiency and responsiveness are evident in all logistical models, but some may focus slightly more on one element than on the other. Below, you can discover a list of the models you might see during your supply chain or logistics career:
The agile model offers flexibility for those who may experience an inconsistent demand for their product. This is often the case for manufacturers of speciality goods, such as luxury watches, cars and yachts. Agility expresses a business supply chain's ability to acknowledge demand and respond to market volatility quickly and effectively.
The continuous flow model is often suitable for mature industries that experience continual high demand. This model can offer stability to companies who produce the same goods repeatedly with minor variations. An example of a company that may use this model is a commodity company. The continuous flow model involves continual replenishment, resulting in low on-site inventory and the ability to prioritise service.
The custom-configured model is a combination of the agile and continuous flow models. This model is often popular amongst companies that customise the structure of their processes, especially in the assembly and production phases, to meet demand. For example, a watch manufacturer that allows customers to customise their watch faces may use this model.
The fast chain model is a quick-moving supply chain that is often best for trendsetting products with a fleeting market lifecycle. Consumers of fast chain products typically care about a business's ability to update their products regularly to deliver the latest in current trends. These products are often mobile phones, clothing and health and fitness-related products. The fast chain model aims to forecast accurately and reduce the time between developing an idea and getting the final product in front of retailers.
Similar to the continuous flow and fast chain models, the efficient chain model aims to produce full-spectrum efficiency in highly competitive markets. Companies that base their production levels on expected sales for the duration of the production period often employ this model. An example of a company like this could be a technology company or a retail fashion line. The efficient chain model focuses on maximising the use of assets to reduce costs. This can be helpful in markets where price heavily affects product positioning.
The flexible model and agile model are comparable in that they give businesses the freedom to apply the parts of the model that work best for them. Adaptability is a fundamental characteristic of this model, allowing for the reconfiguration of internal processes and the ability to switch in and out of peak operational mode with ease. The flexible model is often suitable for industries with pulsing or seasonal demand. These industries generally experience production peaks, followed by extended periods of minimal output.
Supply chain steps
The exact logistical steps a business takes can vary depending on which model they employ. Below, you can find a list of general steps that occur in most supply chains, regardless of the model:
Planning: Without proper planning, all other steps in the supply chain can easily prove ineffective. Planning involves assessing demand, amongst other things, to know what to source, how much to manufacture and what delivery expectations to set.
Sourcing: This step involves companies sourcing the raw materials they require for producing consumer goods. Sourcing often includes careful vetting of vendors and negotiating of lead times on delivery of the materials, both perishable and non-perishable.
Manufacturing: At this stage, the company uses the raw materials to manufacture products or their parts. This part of the process is extensive and includes product assembling, inspecting and packaging.
Delivering: The details of this step can depend on how a company intends their product to arrive in the end consumers' possession. It can involve various delivery channels that may commonly include air, road and rail.
Returning: Reverse logistics can be a critical element of supply chain management, as it can have a significant effect on consumer relationships. Returning involves having a clearly defined policy for the return of ineffective or faulty products.
Why is supply chain management important?
Supply chain management plays a vital role in business operations. Here are some important ways supply chain management can benefit a business:
Enhanced strategy: When companies focus on logistics, they can be in a better position to work with their market competitors strategically. The synchronicity between core processes like technology, processes and people can promote business success.
Emphasis on network design: Business logistics management encourages the deliberate arrangement of networks using strategic modelling. With a focus on a network's design, a business can have a better chance at optimal efficiency.
Improved customer service: The aim of management in this field is ultimately to deliver the correct completed product to paying customers on time. This often promotes features like rapid shipping options that please customers.
Reduced costs: Successful business logistics management can increase overall efficiency. A business that runs at optimal efficiency is likely to have a cost-effective operation.
Boosted supplier performance: Seamless logistics rely on great vendor, supplier and third-party interactions. Suppliers often perform better when vetted and nurtured by a logistics manager.
Increased focus on corporate responsibility: A large part of a manager's role in production is ensuring that a business sources its materials ethically and disposes of manufacturing process hazards appropriately.
Supply chain jobs
Below, you can find a list of jobs in this field, along with their primary duties and average salaries:
National average salary: $90,506 per year
Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.
Primary duties: These professionals analyse the complete life cycle of a product to ensure the manufacturing company can meet its overall goals. From the sourcing phase to the delivery phase, these analysts evaluate each process and make recommendations, where suitable, for enhancing efficiency. They may also track product flow from manufacturing to delivery and prepare and present performance reports.
National average salary: $84,602 per year
Primary duties: These specialists manage the products between the manufacturing phase and delivering phase of the chain. Their major responsibilities include managing the development of the goods, monitoring inventory and ensuring the suitable transporting and storing of the goods. These specialists may also use various management software programs to update information in a centralised system.
National average salary: $79,348 per year
Primary duties: These logistics managers lead the entire production process from the start to finish. This includes directing the planning, sourcing, manufacturing, warehousing, delivery and post-delivery customer support. Their overall responsibility is to limit costs while enhancing accuracy, efficiency and service levels and complying with health and safety regulations.
Education requirements for working in logistics
Supply chain and logistics provide a broad range of employment opportunities across many industries. Because of the variety of roles within this field, there isn't one specific educational pathway, but several. To work in an entry-level logistics role as a supply chain assistant, for example, you may require a certificate or diploma level of education. To work in an analytical or managerial logistics role, you're likely to require a bachelor's degree.
There are many supply chain management courses available online. You could also consider a Graduate Certificate of Supply Chain and Logistics Management or a Bachelor of Business (Logistics and Supply Chain Management).
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