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Supply Chain: Definition, Purpose, and Categories

It's no secret that supply chain is a major part of business—but how do you do it right if you haven't mastered it? Check out this article to find out the definition, purpose, and categories of supply chain systems.

If you want your business to succeed, it's not enough just to sell a great product or service—you also have to be able to deliver it on time.

And therein lies the role supply chain leaders: helping companies ensure that they can deliver what they promise when they promise it.

Supply Chain can be tricky, but important because it ensures that businesses have what they need to run smoothly.

The following is a complete explanation regarding supply chain leaders.

Definition of Supply Chain

Supply Chain or supply chain is a system that connects suppliers, distributors, and customers. It is the flow of goods, services, information and funds throughout the supply chain.

The supply chain can be divided into two main parts: upstream (suppliers) and downstream (customers).

This involves planning, organizing, and controlling the flow of goods from their point of origin to their final point of destination to maximize efficiency while minimizing waste.

It is important for companies to ensure that their supply chain meets their current and future needs, and is reliable, efficient and flexible enough to cope with changes in demand or seasonal fluctuations.

Supply Chain Goals

The purpose of supply chain leaders is to ensure that the right amount of product is made at the right time and place, with minimal wastage. This system works by maximizing efficiency at all stages of production and distribution.

The following are some of the objectives supply chain leaders:

Increase Efficiency

Supply Chain helps companies improve their efficiency by enabling them to use the same set of standards, processes and metrics for their suppliers.

This allows for more efficient communication between the company and its suppliers, which results in more efficient production and less waste.

Reduce Costs

When companies can communicate with their suppliers more efficiently and effectively, waste is less likely to occur in terms of material or labor costs.

This means you'll spend less money on things like shipping, storage, inventory, and other things that can be detrimental if they turn out to be unnecessary expenses.

Increasing Customer Satisfaction

By using supply chain leaders, your products can be delivered faster and more efficiently than ever before. This will make it easier for you to provide good customer service, especially if you own a business E-commerce.

The faster your product gets to your customers, the more likely they will be satisfied with their purchase and return in the future.

Supply Chain Category

Supply Chain it's not as easy as it sounds. You have to track multiple steps in the process, and each step can be broken down into several parts, which it may have input and output alone or not.

The following are 6 (six) categories or stages supply chain leaders commonly found in companies:

Raw material

The raw material category refers to any materials that will be used in the production of your product. This can include things like wood, paper, plastic, or metal.

Raw materials are usually sourced from suppliers who have been vetted by your company and who have proven that they can consistently produce high-quality products at competitive prices.


Manufacturing is the process of converting raw materials into finished goods and involves the transformation of raw materials into ready-to-use goods for users.

This is one of the important categories because it determines whether your product will be able to help customers solve their problems or not.

Distribution and Transportation

The distribution category is where the product is received and stored, while the transportation stage is where the product is moved to another location.

Distribution involves receiving the goods that have been produced, packing them into boxes or other containers, and sending them to the retailer or wholesaler. Transportation is when goods are physically moved from one place to another.


Warehousing is the storage and collection of goods, including raw materials, semi-finished products, parts and finished goods. It involves activities such as receiving, storing, packing and shipping.

Warehouses are used to store goods that will later be used in the manufacturing process or sold directly to customers. For example, if you buy shoes from a factory in China, they might be stored in a warehouse before they are shipped to your door.

Sales and Marketing

Sales and marketing is one of the most important parts of a business because it's what drives revenue. It is also important because without it the company will not have customers.

This can be done in a number of ways, but one of the most common ways is through advertising. Advertising can be done through television, radio, magazines, newspapers, social media sites such as Facebook or Instagram, even billboards on the roadside.

Customer Service

Customer Service is one of the most important stages in supply chain leaders because it is the only point where companies can see and react directly to the needs of their customers.

If you haven't confirmed that team Customer Service you know how to handle complaints effectively and efficiently, you will miss the opportunity to improve business.

Thus the full explanation regarding Supply Chain, Hope it is useful.

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