What are Supply Chains?

Supply chains are defined as the collection of resources necessary to carry a good or service from the supplier end all the way to delivery to the customer. Sometimes referred to as logistics network, supply chains will include all the resources needed from the raw materials necessary for production to getting the finished product into the hands of the client. While the exact components of a supply chain will vary from one industry to the next, there are a few general components that always apply.

When defining supply chains, just about all types of businesses will begin with a need to observe the regulation of some type of resources. This regulation could be in the selection and use of raw materials, as in the production of a finished good. At the same time, the starting resources related to a service would be the components that make it possible to offer the service. For example, a teleconference provider could consider the starting point of the supply network to be the audio connections provided by a long distance carrier or VoIP service provider.

Most supply chains will also include what is known as a component construction element. This is essentially the means whereby the good or service is given form and function. When it comes to goods, the manufacturing process that produces the finished products may represent this element. This phase may include sub-phases such as assembly of components or structuring of services. Within service based businesses, this may be the use of materials to shape the function of a given service. In the production of both goods and services, the component construction element tends to involve the labor associated with creating the end product.

Along with creating and producing the good or service, a supply chain will also address the issue of storage and delivery. With finished goods, it is not unusual for the products to be placed in a warehouse until purchase by a customer. With intangible services, there is no need to store goods in anticipation of purchase, as long as the service platform is maintained. However, the creation of all types of goods and services do include a delivery phase. This may be the activation of an account leading to the delivery of a service to a customer, such as activating telephone services, or shipping finished goods to the customer.

Evaluating the efficiency of supply chains can help a company to maximize profits by reducing operation and storage costs. However, before any business can realize rewards by tightening the supply chain, it is necessary to identify and analyze each phase of the network. The goal is to identify enhancements that will help the elements function in the most cost-effective manner, without creating delays or inconvenience to the customer.