Supply Chain Analysis

Supply Chain Analysis

The analysis of supply chains considers several factors:

  • Stages: There are four functional stages involving a wide variety of activities from the production of commodities through the extraction of raw materials, the manufacturing and assembly of parts and finished goods to their distribution to markets.
  • Locations. A primary issue of freight supply and demand which reveals comparative advantages, locational preferences, and market size. A supply chain is commonly organized as a sequence of locations, from the extraction of raw materials taking place in resource regions to the locations of final consumption, forming a network. For complex products, a multitude of origins, intermediary stages, and destinations imply the setting of global supply chains—intermediary locations where activities such as warehousing take place also need to be considered.
  • Distribution channels. Supply chains are articulated through channels supported by logistical service providers interfacing with manufacturers and retailers. It also considers the nature and the level of control shipping companies have over the supply chains they use through agreements, mergers, and alliances. In many cases, distribution activities are subcontracted to third-party logistics service providers. Channels are regulated by national regulations and transnational agreements, including compliance to regulations and standards.
  • Modes. The nature of the transport chains is used to accommodate the supply chains in terms of modes, terminals, and freight forwarders. The goal is to improve the connectivity of the supply chain.
  • Load units. Considers how the material flows in the supply chain are circulating, often related to how fragile, perishable, or valuable a product is. While raw materials tend to be distributed using bulk shipping, intermediate goods are more reliant on container shipping, and city logistics is reliant on less than truckloads shipments using vans.
  • Cost function. Evaluates the costs incurred to the activities taking place along the supply chain such as procurement costs, manufacturing costs, distribution costs, and retailing costs. The whole is commonly expressed as total logistics costs.
  • Added value. The consideration of which parts of the supply chain contributes the most to added value. This is an important strategic goal as added value is linked with profit margins. The organization of supply chains thus seeks to increase added value through locational and organizational strategies.