Manufacturing and supply chains go hand in hand, as the products that traverse supply chains of course have to be brought into existence. While supply chains feature unique specializations depending on the type of product, manufacturing is one key link consistently included in just about all of them. Where does manufacturing fit in? Raw materials and components from suppliers go to manufacturing facilities to be made into finished products. Those products then move through the next steps of supply chains - to distribution facilities and/or retailers - to eventually get to end customers.
Is supply chain the same as manufacturing?
While manufacturing is an important part of a supply chain, the two terms are not interchangeable. Manufacturing refers to how raw materials and parts are turned into finished products - and all the components included therein such as labor, technology, tools, machinery and other processing mechanisms. A supply chain is the network between a company and its suppliers and customers that includes all transactions involved in transforming raw goods into salable products.
Included within a supply chain are the activities, people, technology, information and resources, while the functional teams involved in the company’s network includes sales, sourcing, procurement, production, logistics and customer service. So while the terms supply chain and manufacturing have somewhat similar definitions, manufacturing activities fall within a supply chain, while supply chains add the logistics of getting products from out of the starting gate to across the finish line. Optimizing manufacturing practices has positive effects on supply chains, and optimizing an overall supply chain has positive effects on manufacturing.
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