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Supply Chain
What is a Supply Chain?
A supply chain is an entire system of producing and delivering a product or
service, from the very beginning stage of sourcing the raw materials to the final
delivery of the product or service to end-users. The supply chain lays out all
aspects of the production process, including the activities involved at each stage,
information that is being communicated, natural resources that are transformed
into useful materials, human resources, and other components that go into the
finished product or service.
Supply Chain
Mapping out a supply chain is one of the critical steps in performing an external
analysisExternal AnalysisExternal analysis means examining the industry
environment of the company, including factors such as competitive structure,
competitive position, dynamics in a strategic planning processStrategic
AnalysisStrategic analysis refers to the process of conducting research on a
company and its operating environment to formulate a strategy. The definition.
The importance of clearly laying out the supply chain is that it helps a company
define its own market and decide where it wants to be in the future. In developing
corporate-level strategiesCorporate StrategyCorporate Strategy focuses on how to
manage resources, risk and return across a firm, as opposed to looking at
competitive advantages in business strategy, a company often needs to make
decisions on whether to operate a single line of business or enter into other related
or unrelated industries.
Each stage of a supply chain is essentially a different industry, for example, raw
material extraction and manufacturing. The supply chain enables a company to
understand others that are involved in each of the stages, and thereby provides
some insights on the attractiveness or competitiveness in industries the company
might want to enter in the future.
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09/03/2021 Supply Chain
The generic supply chain begins with the sourcing and extraction of raw
materials. The raw materials are then taken by a logistics provider to a supplier,
which acts as the wholesaler. The materials are taken to a manufacturer, or
probably to various manufacturers that refine and process them into a finished
product.
In this example, the e-commerce company operates a website, and that website
sells various products. When a customer places an order for a product, the product
order is being processed by technology such as a checkout cart, an order system,
or a third-party product such as Shopify. The payment processors then come in
and deal with payment transactions for the order, which actually opens up a new
supply chain.
The payment processors use their own systems but, in most cases, third parties
such as PayPalPayPal HoldingsPayPal Holdings, Inc. is one of the largest online
payments companies that allow parties to make payments through online funds
transfers. The online payment system offers electronic alternatives to traditional
payment methods such as money order and checks. PayPal provides a platform
for online vendors, auction sites, and Stripe are employed, and they involve banks
and other providers. When a product order is placed, the warehouse receives the
order and ensures the product is ready for delivery. The warehousing company
can be either in-house or a third-party logistics provider.
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09/03/2021 Supply Chain
The order then goes from the warehouse to the shipping company. Once again, the
shipping may be in-house or a third-party shipping company. After shipping, the
package arrives at the customer’s door and the customer receives it.
Thank you for visiting our resource on supply chains. To learn more about
external analysis and how to perform strategic analysis, enroll in our Corporate &
Business Strategy course today!
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