How is the Supply Chain underdstood?
In today’s economy, we are sure that you have heard a lot about the term “supply chain.” No matter what field you work in, a trading company, or a production company, there is a supply chain at your workplace.
For many people, the term “supply chain” is quite particular, but to others, it may be new and unfamiliar. However, we know that very few people have complete and deep insights into the “supply chain.”
So in this article, we will introduce the supply chain and take specific models to help you understand that supply chain. When you have the necessary knowledge, you will quickly understand the nature of the supply chain
So what is the supply chain?
First of all, you need to know the most basic concepts of the supply chain.
“Supply Chain” is an organized system, including people, activities, resources related to product transportation, and management from raw materials to customers (consumers). Also known as shipping operations from B to C (from Bussiness to Customer).
Currently, many people are confused between Supply Chain and Logistics. However, these 2 terms are completely different: – Logistics: be planning and managing the facilities, human resources, and supplies to support or ensure forwarding activities in business.
– Supply Chain: be planning, coordinating such that the flow of products, services, finance, and information from the manufacturer to the hands of consumers in the fastest and most effective way.
In genneral, Logistics is an integral part of the Supply Chain.
Where is the role of the supply chain?
Currently, the supply chain has a massive role for every business; it directly affects the production and business activities of the company. A sufficient supply chain operation will create a great competitive advantage and create the ability to reach further for businesses.
A well-managed supply chain will ensure the input and output of the product. At the input, goods are forecasted following the market’s need, reducing inventories, and risks for businesses. At the output, goods provide enough for the needs of the market, quickly delivered goods, minimize costs, and increase profits for companies.
In general, a well-managed supply chain will bring the following benefits:
- Building a production and business apparatus with a strict and unified process
- Minimize unintended risks of businesses
- Affirming the brand with product lines that always ensure quality and are delivered to consumers in the right product, at the right time
- Save the expenses lost due to lose control process
- Improving profits, helping businesses reach out further
Practical examples of supply chain models
The concept is very brief, but in order to properly understand the nature, role of the supply chain, we will give an example of specific supply chains of very famous dairy brands.
In the current market, dairy brands such as TH True Milk, Vinamilk, Dutch Lady, … certainly are no stranger to us. So, have you ever imagined that how these businesses would bring products to consumers?
To be able to create products for consumers, the main starting point is fresh milk. Currently, fresh milk is usually obtained from dairy farms. To achieve this amount of fresh milk, companies have to go through many different stages from feeding, health care to milking cows.
Supply chain model of dairy companies
Above is the model of the supply chain of dairy companies. At this point, we are sure that you can imagine without the close coordination between the parts, what happens in the supply chain stages, which is a bad scenario that no business wants to meet.
According to recent research, well-managed supply chains can help businesses reduce inventories by 25% – 60%, reduce SCM costs by 25% – 50% and increase 20% of profit after tax. With these numbers we are sure that you have a better understanding of the supply chain and its importance.
From now on, you should start building a unified workflow for business, including inventory, distribution, information technology, and transportation processes, which will help you determine if your strategy and tactics Are your business effective or not.
Building the ability to identify and solve supply chain problems – as well as improve planning speed. This can ensure that your entire supply chain not only responds quickly to changes in the market but is also more flexible when it comes to disruptions.
The Blue Yonder (formerly known as JDA ) understood what is happening with all supply chains from basic to complex. Therefore, TSL will provide solutions for all supply chains: Demand Forecasting, Warehouse Management System, Transport Management System, all will bring a new step for your businesses.
References: Lina.Network; Logistics4vn.