The importance and activities of the Supply Chain

Tầm quan trọng và các hoạt động của Supply Chain

Supply chain is a term that describes the distribution and supply activities of companies. Currently, this term is used very commonly, but few people understand it clearly. So, what activities does the Supply Chain include? Readers, please find the answer to this problem through the following article by Ms. Uptalent.

1- Understand the Supply Chain – Supply chain
2- The importance of the Supply Chain
3- Supply Chain Activities

3.1- Planning
3.2- Search for product sources
3.3- Realization
3.4- Distribution

4- Difficulties facing the Supply Chain

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1- Understand the Supply Chain – Supply chain

Supply chain known as the supply chain. It is a term used to describe a network of connections between manufacturing companies, suppliers and distributors of products. This network involves many people, information, resources and entities with different activities to convert and translate raw materials into final products and deliver them to consumers.

A typical supply chain will start from sourcing raw materials to delivering products and services to customers. The stages of the supply chain system will be interconnected in a chain of links. In particular, the front link will be the supplier of the rear link and the value of the product will increase with each passage through a link. If the link does not create value, it will be removed from the chain.

For complex Supply Chains, used products can re-enter the chain at any time if their residual value is recyclable.

In the supply chain, suppliers will be ranked according to their “rank”. The supplier who directly delivers the product to the customer will be called the first tier. Then tier two will be the tier one supplier, tier three will be the tier two supplier,…

2- The importance of the Supply Chain

The Supply Chain includes many different activities, from purchasing goods to transportation to logistics. Currently, we can say that the Supply Chain is associated with all the most important activities of a company.

It is proven that the supply chain goes from planning production plans, procurement of goods, purchasing,… to producing finished products, finding partners, supplying products by intermediate channels to customers.

Faced with fierce competition in the market, the importance of the Supply Chain is even more obvious. This can have a direct impact on the company’s production and business activities. If good supply chain management is implemented, companies will gain a competitive advantage and occupy a certain position in the market. From there, businesses can expand their strategies to grow and expand more strongly.

We see that the Supply Chain today has a strong impact on the management of social benefits and on all production and commercial activities of companies. Therefore, effective supply chain management will bring many important benefits to businesses, including the following typical benefits:

– Minimize delays, optimize production time, storage and transport of goods.

– Increase efficiency in fulfilling customer orders.

– Supply chain helps businesses create efficient operational processes, minimizing costs and waste.

– Prevent risks and ensure the smooth running of operations from production and storage to transport, inventory management and order fulfillment.

– Optimize commercial efficiency for products with a seasonal nature and limited shelf life.

– Contribute to improving the quality of logistics operations and the distribution of goods to respond better and more quickly to customer requirements for goods.

– Ensure the novelty of goods, limit price increases.

– Increase profit after taxes.

3- Supply Chain Activities

Basic supply chain activities often include:

3.1- Planning

This activity includes all operations related to planning and organizing the implementation of the remaining activities. It is also the first activity of the entire Supply Chain.

When carrying out the planning process, you should pay attention to the following main activities:

– Forecast Demand: You will need to learn, research and determine consumer demand for products in the market, from which you can plan production accordingly, avoiding surpluses and excess inventory.

– Product pricing: Price is an important factor for businesses and consumers. If you set a reasonable price, you can ensure your product is competitive in the market. Therefore, you need to think and set the appropriate price for the product. It is best to base your pricing decision on the demand and scarcity of the product.

– Inventory Management: The main objective of a company when carrying out this activity is to manage the level and quantity of inventory appropriately. You will need to find a way to keep inventory costs to a minimum, eliminating unnecessary costs in the price of the final product.

3.2- Search for product sources

Sourcing activities can help companies compare the capacity and quality of different suppliers. From there, companies will have a basis for choosing the suppliers best suited to their production and business requirements.

There are two main activities you need to keep in mind when looking for sources of goods: buying and selling on credit.

3.3- Realization

This is the most important activity in the entire supply chain. It is similar to the quintessence of the two previous activities. At the same time, it is also an activity that actually brings profits to the company.

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To achieve the greatest efficiency during the production phase, you should pay attention to the following 3 main activities:

– First of all, the design of the product: you must ensure that the characteristics, properties, functions, etc. of the product correspond to the customer’s requirements.

– Second, establish the production process: you will need to calculate the most appropriate production time to quickly meet the customer’s needs.

– Third, vehicle management.

3.4- Distribution

The final activity in the supply chain is the distribution of products to consumers. At this point, you will need to calculate how to order, deliver and return goods smoothly, ensuring that goods are delivered to customers as quickly as possible.

Activities in the distribution process include:

– Order management: you will have to manage issues concerning the quantity, time, location, etc. of orders according to customer requirements.

– Delivery Planning: You need to plan the delivery in the most convenient way and ensure delivery on time as scheduled.

4- Difficulties facing the Supply Chain

The Supply Chain system brings many advantages to companies. But at the same time, the development and operation of the Supply Chain also faces many difficulties. Generally like:

4.1- Rapid developments in the economy

The Supply Chain is linked to logistics activities and the transport of goods within a country or between countries. Meanwhile, the economy is still evolving rapidly with a tendency to demand more and more quality and higher delivery times.

Therefore, companies are obliged to do everything possible to meet consumer demands as quickly as possible.

4.2- Fluidity of data sources

It is the time constraints in the supply chain that make data sources extremely important to business success. However, choosing the right data management toolkit is no easy task when operating the Supply Chain.

4.3- Shipping costs

An obvious reality in the supply chain is that transportation costs are always high and represent a significant portion of product prices. The reason is that companies must accept high costs to meet quality and deadline requirements.

4.4- Information gaps during the transport of goods

4.5- Strong fluctuations in customer needs

Experts say that customer demand is currently fluctuating very sharply. This makes it difficult for businesses to forecast and prepare supplies.

4.6- Human resources capacity

Supply Chain activities are always very complex. Therefore, personnel working in this field must have the appropriate knowledge, skills and qualities. This is considered a deciding factor for the efficiency of a company’s supply chain operations.

4.7- Differences and conflicts between parties in the supply chain

To thrive in today’s competitive marketplace, businesses must integrate their supply chains and engage in partnerships. However, between the departments and partners participating in the supply chain, there are many differences in objectives and some conflicts, so that the design and implementation of a global supply chain faces many difficulties. .

Above is some supply chain information that Ms. Uptalent wants to share with readers. I hope this information helped you understand what supply chain is and what activities the supply chain includes. From there, you can perform supply chain management to achieve optimal efficiency for your business. Good luck!

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