The process of delivering goods and services has become more complex over the last century. Very few products are actually produced in the country where they are sold, and the supply chain is comprised of so many interlocking mechanisms that it’s difficult to say where something actually comes from. This enables companies to deliver products at lower prices because they’re able to hire laborers and buy materials from the regions where the things they need are cheap and plentiful. The modern world exists because of globalization, and it’s a process that everyone should be somewhat familiar with.
Where it Starts
Most supply chains begin with the regulation of various resources. While each element is at least somewhat important, the key thing is the political aspect. Local politicians need to be on board with what companies want to do before anything else is possible. Once that hurdle has been overcome, laborers can extract and refine the raw materials that will eventually become consumer products. This stage can have dozens of different parts to it depending on the materials in question, and sometimes companies will trade with each other in order to simplify certain parts of the process. The materials are then shipped to various storage units across the globe, and then they are finally transformed into products and delivered to stores.
The Different Kinds of Supply Chains
Different methods work better for different processes and products. Sometimes cost efficiency isn’t the only goal; economic growth in a particular area can serve as motivation for companies to utilize a supply chain that’s either less efficient or less lucrative. When profit is the sole concern, a globalized supply chain is usually the most favorable option, and even supply chains that focus on manufacturing items in specific locations may still involve imported materials.
The aim of all supply chains is to accomplish the stated goals in the most efficient way possible with the least amount of inventory. The incentives for choosing particular models are almost always wholly economic, but certain companies opt for more roundabout methods if they can gain something else of value for doing so. Since the push for globalization has destroyed a lot of manufacturing jobs in America, items that are produced within the US are very popular within the country, and the goodwill that’s earned by moving jobs into US communities can help ensure a business’ long-term viability. Sometimes the loss of efficiency can also be offset by raising prices, and that makes it so there’s no downside to establishing factories in areas with a higher standard of living.
Supply Chain Obstacles
As with any long and complex process, there are a lot of things that can go wrong between gathering materials and getting them to the final recipients. The fact that such errors are routine and yet no one ever notices is a testament to how stable the system is. Of course, sustainability is a big question going forward; there are plenty of issues with the current methods of production that could be problematic as resources dwindle, but the beauty of the supply chain model is that it’s extremely adaptable. It takes a lot of careful management to keep things moving as smoothly as they should, but at least the process keeps going even in sub-optimal conditions.