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Supply chains , no doubt, are expensive and
complicated at times. Yet because they leverage the over all
efforts of reaching out to the ultimate customers in a cost
effective and smooth manner that they've real benefit to have
one or many.
There could be a situation where a supplier may satisfy the
ultimate customer directly, for example a vegetable vendor
reaching out to his customer by the road side.
This may not need any supply chain to work but suppose the
same supplier meeting the needs of many customers spread
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the length and the
width of his city , needing vegetable around the same time.
Obviously , they may be needing one or many delivery outlets
from the supplier, some stocking by the supplier and thus a
small but suitable warehouse by the supplier.
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Supply chains
exist to overcome the gaps created when suppliers are
distance away from the customers. They help in
conducting operations that can be done only at a
distance from the customers.
Benefit of supply chain can be understood by a simple
imagination of a service that passes through various
modes, covering various regions to finally reach the
ultimate customers needing that service in yet another
and various locations. It involves moving materials in
geographically separate locations and meeting usually a
mismatched demand of that material.
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For example, let
us say that a firm operating from four
factories has to supply materials to eight
customers. If all the factories supply to all
the customers directly then there would be in
all 32 routes !!
However, if all the materials from the 4
factories are offloaded in a warehouse that
caters to the need of the 8 customers then
only 4 inward and 8 outbound routes , that is
4+8 = 12 routes shall be
required.
A well designed supply chain shall provide the
following benefits :
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Operations can be located in the best
locations irrespective of customers locations
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Bigger facilities can be created and hence
economies of scale can be thought of
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Large stocks need not be kept at the
producer's end as the same can be kept with
wholesalers near the customers
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Retailers carry less stocks as whole sellers
provide them the materials whenever needed
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Lead times for retailers are short
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Uninterrupted availability to customers
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Transport is simpler and routine
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