{"id":188479,"date":"2024-09-03T06:30:00","date_gmt":"2024-09-03T05:30:00","guid":{"rendered":"https:\/\/liora.io\/en\/?p=188479"},"modified":"2026-02-06T07:55:24","modified_gmt":"2026-02-06T06:55:24","slug":"all-about-the-supply-chain","status":"publish","type":"post","link":"https:\/\/liora.io\/en\/all-about-the-supply-chain","title":{"rendered":"Supply Chain: What is it? How does it work?"},"content":{"rendered":"<style><br \/>\n.elementor-heading-title{padding:0;margin:0;line-height:1}.elementor-widget-heading .elementor-heading-title[class*=elementor-size-]>a{color:inherit;font-size:inherit;line-height:inherit}.elementor-widget-heading .elementor-heading-title.elementor-size-small{font-size:15px}.elementor-widget-heading .elementor-heading-title.elementor-size-medium{font-size:19px}.elementor-widget-heading .elementor-heading-title.elementor-size-large{font-size:29px}.elementor-widget-heading .elementor-heading-title.elementor-size-xl{font-size:39px}.elementor-widget-heading .elementor-heading-title.elementor-size-xxl{font-size:59px}<\/style>It is vital for all businesses, irrespective of their size, to optimize the Supply Chain. This often complex chain extends from the raw material source to the final product delivered to the end customer. Mastering the supply chain can be the deciding factor between a thriving business and one at risk of failing. So, what exactly does it entail?\n<h3>A Complex Supply Chain<\/h3>\nThe Supply Chain encompasses all the processes and stakeholders involved in transforming raw materials into finished products and delivering them to customers. It includes an entire <b>network of producers, suppliers, warehouses, transportation companies, distribution centers, and retailers<\/b>.\n\nThe process starts with raw material producers and concludes when the merchandise reaches the <b>final consumer<\/b>. It\u2019s a complex process as it sometimes involves sourcing components or raw materials <b>from abroad<\/b>. The Supply Chain also involves managing the associated information and financial flows.\n\nThe concept was theorized by American electronic engineer <b>Jay Wright Forrester<\/b> in 1958. Occasionally, the term is translated as &#8220;supply chain.&#8221;\n<h3>The Difference with the Logistic Chain<\/h3>\nThe term &#8220;Supply Chain&#8221; is sometimes translated as <b>logistic chain<\/b>, but this designation is overly restrictive. In reality, the logistic chain is just a segment of the Supply Chain. It becomes relevant when a company receives a customer&#8217;s order and continues beyond the delivery with <b>follow-up \/ quality control<\/b> actions. Improving each segment of this chain is the aim of <b>Supply Chain Management<\/b>.\n\n<style><br \/>\n.elementor-widget-image{text-align:center}.elementor-widget-image a{display:inline-block}.elementor-widget-image a img[src$=\".svg\"]{width:48px}.elementor-widget-image img{vertical-align:middle;display:inline-block}<\/style>\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"900\" height=\"556\" src=\"https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-1.jpg\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-1.jpg 900w, https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-1-300x185.jpg 300w, https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-1-768x474.jpg 768w\" sizes=\"(max-width: 900px) 100vw, 900px\">\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex is-content-justification-center\"><div class=\"wp-block-button \"><a class=\"wp-block-button__link wp-element-button \" href=\"\/en\/courses\/data-ai\/\">Discover our courses<\/a><\/div><\/div>\n\n<h3>Supply Chain Management (SCM)<\/h3>\nIn 1982, Keith Oliver, a consultant at Booz Allen Hamilton, coined the term &#8220;Supply Chain Management&#8221; in an interview with the Financial Times. The 90s saw the emergence of numerous articles and books on the subject.\n\n&#8220;Supply Chain Management&#8221; (SCM) aims to optimize the relationships within the supply chain, reducing costs and streamlining the <b>production cycle<\/b>. Thus, supply chain management is a critical process.\n\nSCM systems continually strive to enhance processes and speed. They promote <b>collaboration<\/b> among various stakeholders in the chain and integrate systems that measure the success or failure of every step within the Supply Chain.\n<h3>What Are the Steps of a Supply Chain?<\/h3>\nTypically, the key steps of a supply chain include:\n<ul>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Planning inventory and manufacturing processes to balance supply and demand<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Procuring or producing materials needed for the final product<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Assembling parts<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Testing the product<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Packaging the product<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Potentially storing it in inventory<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Transporting the product to the distributor or consumer<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Customer follow-up<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Handling potential customer returns.<\/li>\n<\/ul>\n<h3>Three Types of Flows<\/h3>\nSCM integrates the management of three types of flows.\n<ul>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Physical flows<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Information flows<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Financial and administrative flows<\/li>\n<\/ul>\n<img decoding=\"async\" width=\"1000\" height=\"927\" src=\"https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-2.jpg\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-2.jpg 1000w, https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-2-300x278.jpg 300w, https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-2-768x712.jpg 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\">\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex is-content-justification-center\"><div class=\"wp-block-button \"><a class=\"wp-block-button__link wp-element-button \" href=\"\/en\/courses\/data-ai\/\">Find a course<\/a><\/div><\/div>\n\n<h3>Physical Flows<\/h3>\nThese correspond to the movement and storage of goods, primarily covering logistics activities. Physical flows include:\n<ul>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">The <b>storage<\/b> of materials both upstream and downstream.<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">The management of <b>transport<\/b> from the production site to the supplier&#8217;s warehouse,<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Transport from this warehouse to a <b>store<\/b> or other <b>distribution<\/b> location,<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Delivering merchandise to the customer.<\/li>\n<\/ul>\nMore physical flows increase the need for effective Supply Chain management. There are <b>TMS (Transport Management System)<\/b> software solutions and <a href=\"https:\/\/liora.io\/en\/crm-customer-relationship-management-how-does-it-work\">CRM (Customer Relationship Management)<\/a> systems that assist in managing customer demands, limiting stock-out risks, and avoiding excessive inventory, etc.\n<h3>Information Flows<\/h3>\nIt\u2019s important to track logistics activities in a database. This database groups data such as:\n<ul>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Customer personal data<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Supplier data<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Customer reviews<\/li>\n \t<li style=\"font-weight: 400;\" aria-level=\"1\">Etc.<\/li>\n<\/ul>\nThis data contributes to the company&#8217;s <a href=\"https:\/\/liora.io\/en\/big-data-definition-technologies-uses-and-training\">Big Data<\/a> and includes information on a given article, the means used for its availability, and the stakeholders involved. The database provides crucial information for forecasting required inventories. There are IT tools that anticipate demands, process orders, and manage supplies.\n<h3>Financial and Administrative Flows<\/h3>\nThis involves documents related to orders, payments to suppliers and subcontractors, raw material purchases\u2026 All the <b>financial movements<\/b> generated by the Supply Chain circulate between its various actors (suppliers, subcontractors, customers, and others). This also includes delivery schedules, payment control, etc. These documents are managed by the purchasing, commercial, sales, and finance departments.\n\nMonitoring <b>financial flows<\/b> helps maintain good cash management. These flows must be processed timely to avoid blockages and processing errors.\n\n<img decoding=\"async\" width=\"1000\" height=\"667\" src=\"https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-3.jpg\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-3.jpg 1000w, https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-3-300x200.jpg 300w, https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-3-768x512.jpg 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\">\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex is-content-justification-center\"><div class=\"wp-block-button \"><a class=\"wp-block-button__link wp-element-button \" href=\"https:\/\/liora.io\/en\/\">Learn all about Liora<\/a><\/div><\/div>\n\n<h3>What Are the Main Supply Chain Models?<\/h3>\n<h4>Continuous Flow Model<\/h4>\nThis traditional model works well for companies that produce essentially the same products with minimal variation. Managers can optimize production times and maintain stringent control over inventory.\n<h4>Fast Chain Model<\/h4>\nThis model suits companies selling trend-based products, prioritizing quick market delivery.\n<h4>Flexible Model<\/h4>\nThis model is ideal for companies experiencing demand peaks followed by extended demand lulls. Their profitability hinges on accurate forecasting.\n<h3>A Competitive Advantage<\/h3>\nSupply Chain tools make a company&#8217;s products accessible anytime, at the best price, while ensuring customer satisfaction. SCM helps <b>balance the cost of supply, transportation expenses, and delivery times<\/b>. A well-managed Supply Chain offers a competitive advantage, enabling the company to meet its commitments in the long term.\n\n<img decoding=\"async\" width=\"1000\" height=\"803\" src=\"https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-4.jpg\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-4.jpg 1000w, https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-4-300x241.jpg 300w, https:\/\/liora.io\/app\/uploads\/sites\/9\/2024\/08\/supply-chain-4-768x617.jpg 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\">\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex is-content-justification-center\"><div class=\"wp-block-button \"><a class=\"wp-block-button__link wp-element-button \" href=\"\/en\/courses\/data-ai\/\">Become an expert in Big Data<\/a><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>It is vital for all businesses, irrespective of their size, to optimize the Supply Chain. This often complex chain extends from the raw material source to the final product delivered to the end customer. Mastering the supply chain can be the deciding factor between a thriving business and one at risk of failing. So, what [&hellip;]<\/p>\n","protected":false},"author":74,"featured_media":188481,"comment_status":"open","ping_status":"open","sticky":false,"template":"elementor_theme","format":"standard","meta":{"_acf_changed":false,"editor_notices":[],"footnotes":""},"categories":[2435],"class_list":["post-188479","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-digital"],"acf":[],"_links":{"self":[{"href":"https:\/\/liora.io\/en\/wp-json\/wp\/v2\/posts\/188479","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/liora.io\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/liora.io\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/liora.io\/en\/wp-json\/wp\/v2\/users\/74"}],"replies":[{"embeddable":true,"href":"https:\/\/liora.io\/en\/wp-json\/wp\/v2\/comments?post=188479"}],"version-history":[{"count":1,"href":"https:\/\/liora.io\/en\/wp-json\/wp\/v2\/posts\/188479\/revisions"}],"predecessor-version":[{"id":205669,"href":"https:\/\/liora.io\/en\/wp-json\/wp\/v2\/posts\/188479\/revisions\/205669"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/liora.io\/en\/wp-json\/wp\/v2\/media\/188481"}],"wp:attachment":[{"href":"https:\/\/liora.io\/en\/wp-json\/wp\/v2\/media?parent=188479"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/liora.io\/en\/wp-json\/wp\/v2\/categories?post=188479"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}