Supply Chain - What is it?

The "Supply Chain" term is very well known and used in the market. More and more the term is popularized replacing the old areas of "Logistics", "Expedition" and "Purchases", which are nothing more than parts of an even more comprehensive system. But what exactly is the Supply Chain? What makes up and why it should be seen in a unique way.

To the JM team, Supply Chain means the combination of strategies, tactics and operations that make it possible to meet customer demands ranging from the relationship with material and service suppliers until fulfilling customer satisfaction.

The interesting thing about this definition is precisely the view that Supply Chain goes far beyond a specific area of ​​the company, or an activity, and serves not only physical goods and products, but also applies to services providers.

Supply Chain is, in fact, a chain of processes that combine multiple areas and activities, forming a chain of processes that goes beyond a company sector and goes even beyond the company itself.

It is important to understand how much the term "chain" is in fact very consistent with what the Supply Chain does. Each part of this process is a chain link and they are mutually dependent. That is, if one of the links fails, or is weakened, the supply chain breaks and does not deliver, causing major problems.

Going further, this chain should include even partners (suppliers and subcontractors) and customers. Below we have a simplified overview diagram of the Supply Chain, how materials and information flow in this chain.

Simplified Overview of the Supply Chain

In this figure we see traditional areas of the company, such as procurement, production, storage and distribution, areas that make up the Supply Chain and define the operational standards of companies.

Despite the traditional understanding of these activities restricted to the production sites of large industries, with large volumes of objects to be loaded, big, along production lines and many engineers involved, Supply Chain is present in almost every type of company, that provide different types of products and services, with deliveries made in different forms and the most diverse technical and financial complexities.

Let us see, in the following list some examples of different kinds of companies and where the Supply Chain is present in their organization:

• Capital goods production industry: raw materials supply, agreements and negotiations with suppliers, import of parts, storage, distribution, production control and monitoring of each activity, stocking of final products and delivery to the customer. In addition, after-sales support to customers, including replacement parts for service  repair execution, in addition to the process of removing the machine from the customer for repairs.
• E-business retailer: Agreement with vendors of merchandising products, whether consigned stock (when the product is stored in the retailer but still belongs to the supplier), whether it is purchased and delivered only after a firm sale (PTO) or purchased to stock (PTS). Stock control and reporting of available products for sale. Customer firm orders processing, separate the products requested by these customers, pack and ship the products to customers, issue the necessary documentation, deliver the product and, if necessary, seek the product later in case of need of exchange or repair.
• Local pizza restaurant: All commercial agreement for the purchase of raw material from suppliers, storage of semi-finished products (pre-prepared pizza dough, pre-grated cheese, diced tomatoes, sliced ​​pepperoni, etc.). Purchasing and storing wood for the oven, cooking utensils and even tableware and staff uniforms. In addition, the dimensioning of the deliverery crew and the control and verification of  actual deliveries.
• Dental clinic: Agreement with several suppliers of hygiene products, prosthetics, supply of material used in care. Storage of this material in adequate quantity.

From these four quick examples, we see how Supply Chain includes a wide range of the companies activities and should be applied and studied in the most diverse types of company, regardless of the industry in which it operates, its size and service provided.

In addition to being such a broad part of the company, the information exchange and interaction with other areas and suppliers is fundamental to its proper operation.


There are several well known strategies to ensure the full fulfilment of the Supply Chain, which will be exposed in this blog over time in next posts. These are tactics that have as common ground the internal communication inside the Supply Chain, with other areas of the company and even with suppliers; controls and visualization of various indicators and quality assurance, in addition to providing faster performance; Identification of bottlenecks to allow well targeted solutions; Among many other tactics.

This systemic global view of the Supply Chain of the companies is deeply understood and applied in everything done in J.Manguino Consultoria We are aware that only with this global vision can we deliver good results to our customers and we know a great amount of tools and strategies to improve their performance.

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