The term supply chain refers to all the actions involved in the manufacture of a product or the provision of a service, from planning to consumption, all the activities of acquisition, production and distribution between raw materials and delivery to the end customer.
It thus comprises multiple steps: from finding raw materials and transforming them into products, through all intermediate operations such as sourcing, marketing, distribution and sales, to the consumer. The supply chain is also known as the value chain, since products become more valuable as they progress through its different steps.
The stages of the supply chain vary according to the company and the products or services it offers. But we can say that the main functions are:
– Purchasing: procurement of raw materials and other resources to be used.
– Operations: planning, forecasting and anticipating demand.
– Logistics: ensuring that the goods reach the distribution points in the necessary time and manner.
– Resource management: Assigning resources in order to optimise production at reduced costs.
– Information flow: Necessary for communication and proper management of all phases.
Globalisation adds a great deal of complexity to the supply chain, as it requires a high degree of synchronisation of all operations to avoid bottlenecks. The strategy must extend beyond the limits of the company and involve the different stakeholders involved in the process: companies, customers, suppliers…
What is logistics and supply chain?
They are often mistakenly used as synonyms, but logistics is not the same as supply chain.
Logistics focuses on one of the areas covered by the supply chain: the delivery of products under the conditions agreed with the customer (time, quantity, price, quality and location). It therefore includes the transport of goods, warehousing, handling, order picking, etc.
Logistics can be defined as the set of operations of planning and execution of the transport and storage of goods.
Differences between logistics vs. supply chain
– As we have explained, the main difference lies in the fact that logistics is part of the global whole that is the supply chain. Thus, while the supply chain also plans all the steps before and after logistics, logistics focuses on the storage of products, inventory management, transport and distribution.
– Unlike logistics, which involves a single organisation, the supply chain is a broader concept that involves different individuals, organisations, resources, activities and technology, from the acquisition of source materials to their final delivery to the customer or end user. End-to-end.
– While the goal of logistics is to ensure that the product or raw material arrives on time, the goal of the supply chain is to optimise costs and achieve a substantial competitive advantage.