What is a Supply Chain? How to Create a Supply Chain?

The supply chain is one of the various factors that affect the quality of a business. In particular, the delivery process is chief among the items that influence the brand's quality. If there are disruptions and problems during the delivery process, the quality of your products loses its significance.

Therefore, having knowledge about the supply chain carries great importance for brands. By analyzing what the supply chain is and what stages it consists of, you can apply it to your own delivery process.

What is a Supply Chain?

The supply chain is the entirety of processes that any product or service undergoes from its supplier to the end consumer. A term used in the field of logistics, the supply chain encompasses the efforts regarding how products can be delivered to customers in an appropriate manner. Storage network, communication, and transportation alternatives lie within the scope of the supply chain.

The goal of the supply chain is to deliver the product to the consumer seamlessly. In order for the product to arrive without issues, attention must be paid to various stages and key points. For example, during the shipping stage, carefully packaging the product holds great importance.

Additionally, keeping delivery times as short as possible increases the chance of receiving positive feedback from customers. By looking at the supply chain processes, you can gain ideas about what you can do to improve your delivery process.

What Processes Does the Supply Chain Encompass?

The supply chain contains many different processes within itself. Simple supply chain stages can generally be listed as follows:

• Management of requests and complaints

• Procurement process

• Planning

• Production process

• Inventory management

• Warehouse management

• Shipment

At each stage, there are points to consider. Let's look at the supply chain processes and their details together.

Management of Requests and Complaints

The first stage of the supply chain is the effective management of requests and complaints. Requests from customers must be taken into account, and production quantities should be determined accordingly. For instance, if product X is in higher demand among your company's products, you need to produce product X in larger quantities.

Evaluating complaints as much as requests provides a major advantage. If there are issues that your customers complain about regarding your products or services, you can carry out improvement efforts.

Procurement Process

The procurement process covers the fast and high-quality sourcing of materials required for manufacturing the products you sell. Disruptions in the procurement process lead to delayed deliveries to the customer. In this case, customers' trust in your company decreases. Keeping track of the inventory of materials needed in the manufacturing stage prevents such problems from occurring.

Planning

Planning is among the most crucial stages of the supply chain. For the process to run smoothly, it is only possible with accurate planning. Planning everything from cost estimation to the shipping process with the support of experts in the field provides a major advantage.

Production Process

It encompasses translating the purchased materials into products within the specified timeframe. Planning and speeding up the production process as effectively as possible allows the supply chain process to be completed in a shorter period.

Inventory and Warehouse Management

Properly conducting inventory and warehouse management is one of the most critical stages of the supply chain. Materials in the warehouse need to be regularly checked, and missing supplies must be procured. In addition, especially for those run e-commerce businesses, tracking inventory and determining product stock accordingly is of vital importance.

Shipment

During the shipping stage, products are packaged and attempts are made to deliver them to the customer as quickly as possible. During packaging and transportation, the type of product and storage conditions must be considered. For example, if meat products are to be transported, appropriate temperature conditions must be maintained.

How to Build a Supply Chain?

The supply chain generally consists of 6 different stages. First of all, the materials used in production or products to be sold must be sourced. If production is to take place next, the relevant materials are processed and turned into a product. As the third stage, completed products are stored in a warehouse. It is highly important that the warehouse is suitable for the storing conditions of the product.

In the following stage, products that are sold are dispatched for distribution when the time comes. At the fifth stage, inventory management must be done in detail. The final stage of the supply chain processes covers relations with customers. The more positive feedback received from customers, the more sales increase in the same proportion. Especially when designing a supply chain in e-commerce, care should be taken during this stage.

What Should Be Considered When Building a Supply Chain?

To build a successful supply chain, attention must first be paid to conducting planning activities accurately and effectively. The planning phase is needed for products to reach the customer without experiencing any issues. For instance, if there is a risk of a product you sell breaking, you need to pay extra attention to the packaging phase.

Another point to consider when designing a supply chain is budget management. How much budget is needed in the production stages of the product must be calculated. Labor costs should not be forgotten while calculating. After the calculations, the profit margin can be added, and the retail price of the product can be determined.

What Are the Advantages of a Supply Chain?

If a supply chain is planned and executed successfully, it provides various advantages to the firm. The advantages it offers can be listed as follows:

• Ensuring the timely and seamless delivery of the product

• Efficient and effective utilization of resources

• Shortening the procurement process and increasing the profit margin

• Ability to adapt to market changes more quickly

• Effective cash flow management for the business

• Easier inventory tracking for the company

You too can utilize the advantages provided by the supply chain to take your business one step further. Thus, you can achieve more effective results with a smaller budget.

How Is a Supply Chain Disrupted?

In a globalized world, the supply networks of particularly large corporations are spread across the entire globe. The purpose of this spread is to deliver the right product, at the right time, in the fastest way possible, and of course, to reduce costs.

No matter how optimized all processes are on paper, supply chains can break in some way. Even though a break seems like a major problem, the formed break must be repaired as soon as possible. Although this repair process may not be directly visible to consumers when looking at the bigger picture, it can create issues from the manufacturer's standpoint.

Well, under what conditions can supply chains break?

Geopolitical Conditions

A country's geopolitical location is one of the vital factors in the supply chain, especially considering the production of companies. A problem occurring inside or outside a country providing any production in the supply chain means a short-term or long-term break of the entire chain.

To give an example, the impact of the Russia-Ukraine War on the supply chain has been massive. Similarly, the Chip Crisis in automobile production serves as an example showing how countries' geopolitical locations affect the supply chain.

Movement and Travel Restrictions

As is known, during the COVID-19 period that the world has still not fully overcome, the world entered a long-term lockdown. During a period when the entire world closed inside their homes, we can say that the physical labor of companies entered a complete standstill stage as well. No matter how autonomous production processes have become with the advancement of technology, it is not possible to overlook the control process provided by human labor.

Likewise, during COVID-19, because travel processes between countries fell under certain restrictions, the supply chain was also disrupted. Apart from this, the very recent Russia-Ukraine war has also caused the supply chain to get caught in travel restriction barriers.

What Are Examples of Successful Supply Chains?

Having knowledge about successful supply chain examples allows you to get ideas regarding the chain you will create in your own company. Large corporations like Amazon, Coca-Cola, and Zara have successful supply chains. The contribution of planning their supply chains effectively is major in the growth of companies.

It is possible to address a successful supply chain through Amazon. One of the world's largest e-commerce sites, Amazon stands out by delivering products to customers quickly. In addition, properly tracking inventory and having high product diversity allow it to attract more customers.

What Is an End-to-End Supply Chain?

The end-to-end supply chain is a concept that includes all processes from production to the delivery of the product to the customer. Its goal is to ensure all stages of the supply chain run flawlessly. In addition, reducing costs and increasing efficiency are targeted with the end-to-end supply chain. Conducting end-to-end supply chain efforts provides an abundance of advantages for companies in terms of efficiency.

What Is Supply Chain Resilience?

Regardless of business size, the supply chain is the name given to the process of tracking and managing the movement of produced goods or general resources. The transformation of measures taken by companies or individuals against any problem that might occur unexpectedly in the supply chain into action is called supply chain resilience.

To simplify, supply chain resilience is the name given to the process of optimally meeting customers' demands with minimum loss of time and interruption across the operational process, and being able to flex and recover from all problems that have occurred or might occur.

Why is the Supply Chain Important in E-Commerce?

Companies that want to grow in the e-commerce field need to pay attention to customer satisfaction. And customer satisfaction comes from delivering the product to the customer within a short period. Additionally, it is also important that the product reaching the customer has not sustained any damage or spoiled. Because the supply chain allows delivering the product in a short time and without damage, it provides an advantage in e-commerce.

By building a strong supply chain, you get the opportunity to stand out with the positive reviews you receive. Positive reviews are the most important factor in the growth of companies engaged in e-commerce. Another significance of the supply chain in the e-commerce field is that it provides operational efficiency. If you want to save on budget and increase efficiency, you can plan your supply chain stages by paying attention to certain points.

Manage Your Supply Chain with Navlungo

Navlungo has a system that will support you in all processes of your international trade.

Regardless of country or region, Navlungo is ready to be your solution partner with its most suitable and competitive rates to optimize your supply chain management all over the world.

You can contact us for our supply chain solutions and carry out your overseas operations smoothly and flawlessly.

Frequently Asked Questions About the Supply Chain

You can find the answers to frequently asked questions about the supply chain below.

What Does the Supply Chain Do?

A supply chain is a system used for the management and coordination of all stages from the design of a product or service to its production, distribution, and sale.

This system brings together all actors in the creation of the product or service (such as raw material suppliers, manufacturers, distributors, and sellers) and enables communication among these actors. Thereby, the supply chain plays an important role in increasing the quality of a product or service and its delivery speed to customers.

What is Risk in the Supply Chain?

Risk in the supply chain is the name given to the negative impact that occurs when any actor in the supply chain falls below expected performance or when an unexpected event (such as an earthquake, flood disaster, or health crisis) takes place.

Risk in the supply chain can negatively affect the quality of the product or service and the speed at which it reaches customers. Therefore, managing risks in the supply chain is important for the efficiency and success of the supply chain.

How Many Parts is the Supply Chain Divided Into?

Supply chains are generally divided into the following four main parts:
Raw Material Suppliers: Raw material suppliers are the first stage in the supply chain, and they provide the raw materials to be used in the production of the product or service.

Manufacturers: Manufacturers are the second stage in the supply chain, and they realize the product or service by using raw materials.

Distributors: Distributors are the third stage in the supply chain, and they are tasked with delivering the product or service to customers.

Sellers: Sellers are the final stage in the supply chain, and they sell the product or service to customers.

With that said, retailers and logistics companies can also be involved in this process.