What Is A Supply Chain In Manufacturing?

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[et_pb_column type="4_4"][et_pb_text admin_label="Text"]In the manufacturing sector, the term “supply chain” is a popular one. But what exactly does it refer to? Here’s one way to define it. A supply chain is the network of steps, people, resources, information and processes that together turn raw materials into finished goods. It also involves getting those goods into the hands of customers.

What does a supply chain include?

In manufacturing, a supply chain typically includes suppliers of raw materials or components, as well as part or component manufacturers or subcontractors. OEM is also a big part of a supply chain. Standing for Original Equipment Manufacturer, it assembles or integrates components into a product.

A supply chain also involves distribution and logistics (such as warehousing, transport and packaging), retailers or end customers and feedback loops, returns, maintenance and recycling where relevant. It’s not just physical goods moving. There are also flows of information (such as orders and forecasts), money (via payments and/or credit) and often services (including maintenance, warranty and quality inspections). Regulatory compliance and certifications are included as well.

What are the key dimensions of a strong supply chain?

It all starts with efficiency. Extreme importance is placed on minimizing waste, whether it’s time, materials or effort. Focus is also placed on reducing cost per unit, optimizing inventory and minimizing delays. Resilience and risk-management come next. This is the ability to withstand disruptions which can occur due to weather, political issues, raw material shortages, logistic interruptions and/or pandemics.

Flexibility is key as well. The ability to respond to changes such as market demand shifts, design changes, custom orders and expedited orders is important. Quality control is another key dimension. It ensures that, at every stage, components and final products meet specifications. Traceability and transparency are also key parts. It’s important to know where things come from and how they were processed.

Sustainability is a component that looks at environmental and social factors. We’re talking about carbon footprint, labour practices, waste and ethical sourcing. Finally, integration and visibility assures a good flow of data among suppliers and manufacturers.

Why does the supply chain matter so much for manufacturing?

It is foundational. If any part breaks or is inefficient, costs rise, delays increase and quality suffers. This means the reputation and profitability of the manufacturer is at risk. A supply chain also enables cost control and margin protection. Raw materials, components and logistics often represent a large portion of the total product cost. Efficient sourcing and inventory management reduce carrying costs, avoid overstock and avoid expedited shipping costs.

A supply chain also assists with getting products to market quicker. In fast-moving industries or ones with rapid innovation, like electronics, solar and telecom, getting the product to market fast is a competitive advantage. Delays in components or logistics can kill product launches. A supply chain also promotes customer satisfaction and reliability. If parts or products are late, or quality is inconsistent, customers lose confidence. For manufacturers supplying medical or safety-critical industries, failure is not just a business risk. It can be a liability risk.

Connect with Flux today!

Flux Connectivity’s manufacturing and supply chain expertise delivers greater value to your outsourcing needs. Our Contract Manufacturing services are designed to optimize your supply chain by lowering costs, reducing risk and maximizing product lifetime. We partner with you to understand your challenges and present solutions that provide a competitive advantage.

For more information, please don’t hesitate to give us a call at 1-800-557-FLUX or email us at connect@fluxconnectivity.com. You may also fill out the form on our Contact Us page![/et_pb_text][/et_pb_column]
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