What is a supply chain?

When you use a packet of hundreds and thousands; or you may call them sprinkles; or jimmies, to decorate a cake, or sprinkle on a sandwich, or your ice cream, you don't think where they came from until you open the cupboard and they are gone. Somebody else consumed them and your demand is unsatisfied.

Imagine that the brand of sprinkles you have in your cupboard is also purchased by many homes in your suburb. Several retail stores stock the sprinkles, and they need to know the demand and who distributes them to maintain supply to their customers.

The wholesale distributors need to know who retails them and who manufactures them to replenish stock for the consumers using the retail stores. Manufacturers depend on wholesalers and retailers to sell their products to a wider consumer base. Equally the wholesalers and retailers depend on the manufacturer to maintain supply so consumer satisfaction is always met and their loyalty is maintained.

These sprinkles are made from several ingredients and packaged in different amounts and containers to make them more attractive or desirable to the consumer, so the manufacturer of the sprinkles must purchase from different types of raw material and packaging suppliers to make the finished product.

Most ingredients or their raw materials are harvested by farmers and distributed by other traders that can be associated with other supply chains, e.g. grapes for wine, fruit juice, desserts, grapes dried or freshly eaten or as ingredients, can move through different processes and supply chains to the consumer. Transport, warehousing, consignment consolidators, marketing and many other services support the freight and storage of products through the supply chain.

That demand for sprinkles has formed a supply chain from the raw materials to the ingredient suppliers, to the sprinkle manufacturer, out through the wholesale distributors to the retail stores and their consumers.

Visual Supply Chain

Supply chains range from the small and simple to the large diverse multiple supply chains of globally based major manufacturers totalling thousands of traders ranging in size and importance to the core business. TradeFox currently provides knowledge and methods to set up supply chains and analyse trade rules related to cross border compliance, however organising supply chains can lead to other logistic and market spin offs.

Mapping out the number of supply chains in place and the types of traders utilised helps to plan and review objectives and to examine aggregate spend to total revenue down to specific types and levels of traders, e.g. the price difference of fruit purchased direct from the farmer level or from wholesale marketers or from multiple traders or from a single negotiated long term volume contract. It can also show the trading zones of sales or purchasing spend to plan for new markets or review alternative resources and zones to lower supply chain risk.

Visual Supply Chain methods can be in-house but adoption of global standards can add a level of transparency to local and overseas governments and identify your company to traders who supply or buy from similar traders. It is one further reason why local traders should adopt TradeFox.

Transparency of your total supply chain can help lower your risk assessment in terms of compliance and security by governments as not all products fall under scrutiny. It is in the interest of local traders to also consider alignment with global trade standards and rules, especially where they feed into import and export trading zones, where increased global pressure is on importers and exporters to include their indirect tiered traders into their compliance assessment.

The small trader is equally subject to compliance controls and should at least consider a TradeFox ISIC report related to their industry. Larger firms are more prone to non compliance due to the range of traders used and should consider the full benefits of mapping their supply chain and monitoring trade rule compliance internally and externally.

Both small and large traders are equally subject to non-compliance penalties.