What are supply chains?

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Supply chains are the resources needed to transport goods or services from the supplier to the customer, including regulation, component building, storage, and delivery. Evaluating supply chain efficiency can reduce costs and improve customer satisfaction.

Supply chains are defined as the collection of resources needed to transport a good or service from the supplier to delivery to the customer. Sometimes referred to as a logistics network, supply chains include all necessary resources, from the raw materials needed in production to the final product in the hands of the customer. While the exact components of a supply chain vary from industry to industry, there are some general components that always apply.

When defining supply chains, virtually all types of companies will start with a need to observe regulation of some type of resource. That regulation could be in the selection and use of raw materials as well as in the production of a finished product. At the same time, the initial resources related to a service would be the components that make it possible to offer the service. For example, a teleconferencing provider might consider the supply network starting point 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 building element. This is essentially the means by which the good or service is given form and function. When it comes to merchandise, the manufacturing process that produces the finished products can represent this element. This phase may include sub-phases, such as assembling components or structuring services. In service-based companies, this might be the use of materials to shape the function of a given service. In the production of goods and services, the component construction element tends to involve the labor associated with creating the final product.

In addition to creating and producing the good or service, a supply chain will also address the issue of storage and delivery. With finished products, it is not uncommon for products to be placed in a warehouse until purchased by a customer. With intangible services, there is no need to store goods prior to purchase as long as the service platform is maintained. However, the creation of all types of goods and services includes a delivery phase. It could be activating an account that leads to the delivery of a service to a customer, such as activating phone services or shipping finished goods to the customer.

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

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