The Importance of Knowing Your Supply Chain for Your Business!

Some of you might already be familiar with the term supply chain. In this article, you will get an overview of an optimal supply chain example for a business. The supply chain is one of the most important fields in the business world because its scope is directly connected to the company's competitiveness. Nowadays, more and more businesspeople realize the importance of a good supply chain for smooth business operations.

From small-scale to large-scale businesses, the supply chain plays a crucial role in managing and overseeing the cycle from raw materials, payments, and information from suppliers to manufacturers, wholesalers, and finally to consumers. Its vital function makes implementing the supply chain in business activities indispensable.

Various vendors from IT companies make the supply chain much easier. But before you decide which vendor to use, you need to understand the definition of the supply chain, its importance, and some examples.

So, read this article to the end!

Definition of Supply Chain

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Before discussing too much, let's understand the meaning and principles of the supply chain itself. In simple terms, the supply chain is a series of flows of goods/physical items, information, and processes used to deliver products or services from the source (supplier) to the destination (customer or buyer).

Related to that, supply chain management itself becomes a tool, method, or system for managing the implementation of the supply chain and requires understanding good supply chain management to achieve its functions.

Here are two strategies you can implement to build good supply chain management:

Building Relationships with Suppliers, this is crucial because building good relationships with suppliers is the key to a successful supply chain. A good company will be selective, choosing only the best suppliers to collaborate with.

Enhancing Customer Responsiveness, this strategy keeps you competitive and focuses on the supply chain to improve customer service. One way to enhance customer service is by increasing the frequency of quick product deliveries, ensuring customers are satisfied with timely shipments.

The success of the supply chain in the business heavily depends on strong and effective interactions between ingredient vendors, contact packaging providers, re-packers, co-manufacturers, intermediaries, and other suppliers.

Example of a Supply Chain

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After understanding the definition of a supply chain, let's look at an example. Take a coffee shop business, one of the popular ventures. Supply chain management in a coffee shop needs attention to ensure your business runs smoothly.

The coffee shop supply chain involves managing each stage, from harvesting to the coffee being ready for customers. Here are the steps:

• Coffee beans are harvested for production. Managers monitor the quality and type of beans harvested.
• Beans are shipped for roasting, brewing, and packaging. Supply chain managers set the locations for these processes.
• Coffee beans are prepared. Whether at a centralized or local roaster, supply chain managers ensure the beans are distributed to maximize freshness and flavor while minimizing travel time to store shelves.
• From central roasters to individual stores. Supply chain managers decide how to distribute the finished products, considering various options like the amount of coffee beans used for brewing or sold in take-home packages.

The Importance of the Supply Chain

After understanding the definition and examples of supply chain implementation, how important is the supply chain in business management? Here are some benefits and goals of the supply chain for your business:

1. Enhancing Customer Satisfaction

In any business, including F&B, customer satisfaction is the primary goal that must be achieved and maintained to ensure long-term customer loyalty. To achieve customer satisfaction, a business must be able to produce high-quality products, in this case, food or beverages, that meet consumer demands. Through a good supply chain mechanism, business owners can know what products their customers want and when the right time to deliver them is.

2. Increasing Revenue

The more loyal a customer is to our F&B business, the more it will increase the business's revenue in the future. Additionally, a growing business can generate more overall income.

3. Reducing Costs

Through the supply chain, the integration of product flow from suppliers to the company and from the company to consumers becomes organized, which can reduce costs in production and distribution lines. In the past, companies had to spend a lot on procurement, production, and distribution processes. Now, with a supply chain management system, a company can cut the costs of these processes.

4. Optimizing the Use of Company Assets

In implementing the supply chain in a company, it often collaborates with software providers that support the supply chain mechanism. By utilizing this technology, the company is also required to improve the performance of employees as executors. Employees, as one of the company's biggest assets, will certainly strive to enhance their skills and understanding to implement supply chain management effectively. Thus, it is hoped that the utilization of the company's assets will also be maximized.

5. Increasing Profits

Supported by increased customer loyalty, operational cost efficiency, and asset optimization, it is hoped that in the long term, this will significantly increase the company's profits. If this can be maintained, the company can achieve above-average profits.

To become a winner in the company's supply chain mechanism, the company needs to provide products that are not only affordable but also high-quality, varied, and timely.

Therefore, for business owners, it's important to wisely choose a software provider that supports a supply chain system that fits the company's needs. Just like ESB, which offers a B2B marketplace service called ESB Goods supported by a digital supply chain system and connected with other ESB technologies, such as ESB Core.

ESB Goods itself has various capabilities that are beneficial for managing your business's supply chain, including:

• Ensuring consistent availability and quality of raw materials (especially during religious holidays).
• Business owners don't need to worry about delays in raw material deliveries that disrupt restaurant operations.
• Features for monitoring and managing raw material stocks to avoid stock losses, so you don't have to constantly balance warehouse inventory.

Looking at the examples of supply chains discussed earlier, if you use ESB Goods, there's a Closed-Loop Supply Chain feature that ensures efficiency and transparency throughout the supply chain from upstream to downstream in your coffee shop business. This is especially advantageous for managing coffee shop businesses with more than 2 branches, allowing you to maintain the quality of coffee beans at each outlet.

By using ESB products, your business can achieve a transparent and efficient procurement process, significantly reduce fraud risks, and avoid losses due to uncontrolled purchases. For more complete information, please visit the ESB website!