Supply chains are a vital part of our economy as they produce and distribute goods or services to consumers when and where they want them. A well-oiled supply chain involves a lot of moving parts but the ultimate goal is clear: consumers order and receive their goods or services accurately and efficiently. To better understand how an efficient supply chain is run and to conceptualize the different aspects of supply chains, we will be looking at the four entities that make up the supply chain as a whole.
The supply chain begins with producers. Producers can also be referred to as manufacturers or service providers. Essentially, they are organizations that make the goods or services that will eventually be sold to end-users. Some producers may create products from raw materials while others assemble products to be sold to distributors. Producers supply the products that are needed throughout the supply chain.
Once the good or service has been made it moves on to the distributor (or wholesaler). These organizations typically sell goods or services in large quantities at lower prices. Usually, distributors sell to other businesses that are looking to purchase in bulk so that they can sell the products or services to their customers.
Distributors help to maintain proper inventory levels and are useful in determining consumer demand. Distributors may also store their inventory in warehousing facilities and manage product movement as needed. Given the changing needs of customers and product availability fluctuations, distributors track and monitor customer needs to deliver the best results.
The third entity making up the supply chain are retailers (or vendors) that sell goods or services purchased from distributors to end-users or customers. Retailers stock inventory and maintain proper inventory levels based on customer demand as well as the capabilities of their distributors. When there is a disruption in the supply chain, retailers may not be able to adequately meet the demands of their customers which can cause problems in the long run.
Customers (or consumers) purchase goods or services from retailers on an individual level. Customer demand is what necessitates the supply chain because, without it, customers would not receive their goods/services on time and would be forced to take their business elsewhere. Maintaining a well-performing supply chain keeps your customers happy and improves your business.
Due to the many different moving parts within a supply chain, supply chain management can seem like a daunting task. Many utilize a third party to provide logistics and supply chain management services that support businesses as they meet customer demands.
Given disruptions to the global supply chain, it is clear that efficient supply chain management is of the utmost importance. In order to manage a supply chain that accurately and efficiently delivers to its end-users, businesses need to have a deep understanding of their supply chain. This understanding begins with the entities that make up the supply chain. From producers to distributors all the way to retailers and customers, your supply chain needs to run as efficiently as possible for your business to be successful.