Debitoor's accounting dictionary
Supply chain

Supply chain – What is a supply chain?

A supply chain represents the steps it takes to move a product or service from a supplier to a customer.

As a business, you’ll need to manage your supply chain – from sourcing materials to communicating with customers. With customer and supplier lists in Debitoor invoicing software, it’s easy to keep track of your contacts throughout your supply chain.

Supply chains consist of a network of businesses, people, infrastructure, resources, and activities.

The activities involved in a supply chain depend on whether the network is moving goods or services. Supply chains dealing with goods transform natural resources and raw materials into finished products that are then sold to the end customer. Supply chains dealing with services usually involve information, money, and human resources.

Stages of a supply chain

A supply chain includes every person or company that is involved with creating, moving, and selling a particular product or service. Among others, supply chains often include:

  • A manufacturer. Some supply chains might have multiple manufacturers that are responsible for different stages of creating or assembling a product.
  • A retailer, which purchases products from a manufacturer or wholesaler to sell to the end consumer.
  • A wholesaler, which distributes products to other businesses – either smaller distributors or retailers.
  • An end customer. This can be a specific person (i.e. a consumer) or a business.

The number of stages in a supply chain can vary, depending on the nature of the goods or product, whether the end customer is a consumer or a business, and many other factors.

Managing supply chain

Supply chain management is the process of planning, controlling, and optimising a supply chain. With effective supply chain management, business are able to cut costs and improve revenues.

The goal of supply chain management is to identify where businesses can save money and be more efficient or streamlined. Supply chain management therefore looks at every aspect of a supply chain – from the way a company sources raw materials and forecasts demand to stock management and logistics.

Supply chains and the internet

Both B2B (business to business) and B2C (business to consumer) supply chains have been significantly affected by the internet.

The internet makes it easier for both suppliers and customers to find information and communicate with potential business partners. As a result, the internet has:

  • Reduced the stages in some supply chains. The internet enables customers to reach suppliers or manufacturers directly, and can therefore cut out the ‘middleman’.
  • Increased transparency. With more information available, it is easier to make informed choices.
  • Reduced procurement and logistics costs.
  • Improved the speed of transactions. By enabling better communication, transactions can be completed in less time.
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