Wednesday, October 28, 2020

How Your Supply Chain Works

Maintaining a successful business depends on many factors, and one of the most important is the supply chain. Here’s what you need to know about the supply chain that will sustain your company.

The manufacturing process is where every supply chain begins, because it’s where parts and products are created. Manufacturing is typically done in an industrial setting such as a factory, and this kind of mass production depends on equipment such as an industrial mixer. However, factory workers operating an assembly line are often part of the process, as well. Manufacturing companies may sell their products directly to retailers, but they typically sell to distributors.

Distributors and wholesalers are the convenient “middleman” between manufacturers and retailers. While retailers can buy directly from manufacturers, distribution services provide incentives not to do so. This is typically done by adding value to products before reselling them, but that added value translates to a price markup. Distributors are also responsible for shipping products to retailers, while buying from manufacturers would entail arranging shipment on your own. Wholesalers tend to accrue products in bulk from a variety of manufacturers and are therefore a good option for businesses who need products en masse.

Retail is often the end of a supply chain, because it is the stage during which products are sold to consumers. Retailers depend heavily on manufacturers and distributors, because producing their own goods would require an untenable amount of additional space and equipment. By arranging a B2B infrastructure, a business can sell infinitely more than they could produce, and this is the bedrock of modern commerce. However, a retailer is ultimately responsible for partnering with the right distributors in order to keep things running smoothly.

Keeping your business supplied is crucial for keeping products in the hands of customers and making you money. This breakdown of the supply chain is sure to help you do just that.

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