man pressing on supply chain

The Five Entities That Make Up the Basic Supply Chain

Entrepreneurship may appear to be an uncomplicated endeavour to those who have never participated in it. To them, the business process goes as follows: the company produces quality goods or services and then, the consumers pay for them.

This process is factual, but it only plays a small part in the entire mechanism that goes into running businesses. Before anything reaches the final part of the equation — the consumers — items go through a slew of other steps first. And all of these comprise what is known to be the supply chain.

The chain is made up of a number of elements, one of which is the participants that make the flow happen on a daily basis. Without one or the other, there is a risk of the chain failing and resulting in no items being pushed through the market.

Manufacturers

Otherwise known as producers, manufacturers have two main purposes to choose from. One type of manufacturing company is in charge of gathering various raw materials for construction. The other takes these raw materials to create the finished products that sell in the market.

The raw materials gathered are dependent on the industry that the company is a part of. A few of the more famous choices are the industrial, mining, farming, and marine industries. But nowadays, it is also possible for manufacturers to create items that are intangible, such as music and software.

Distributors

Distributors are companies that purchase the final products in bulk. They make a profit by selling these items on a wholesale price — that is a large number of items individually priced lower than the market value.

Distributors usually choose a single industry or various types of one finished product to deal out to retailers. An example is a firm that handles clothing items and purchases clothes for every season from manufacturers. Others venture into the selling of different types of cables, like marine-grade wires and power cables.

Retailers

Compared to distributors, retailers have lower amounts of stocks and tend to sell to regular, everyday consumers. The kinds of products they have on-hand also depend on the kind of business they sell. There are some establishments who have a mix of different products, like a supermarket. Some are more specialised, like technological departments or clothing stores.

Customers

These are the people who buy the finished products either from distributors or retailers. Customers come in two forms. One is the final consumer who uses the products as is. The other is any individual or organisation who incorporates the products into their own creations to sell to other consumers.

Additional Service Providers

Additional service providers are entities that do not lie within the formal flow of the chain. Instead, the companies that take up the task of providing other services can amalgamate with any participant in the chain itself.

There are companies that provide customer service, in case consumers run into any trouble with the products. Financing is also a popular choice, allowing organisations to focus on making a profit as financial experts record their earnings.

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