If you’re new to supply chain, it can be difficult to understand where it begins and where it ends, especially when people start talking about manufacturing and production. Is manufacturing part of the supply chain or not?
Manufacturing from the Supply Chain Perspective
To test the question of manufacturing and its place in supply chain, try thinking about it this way:
What happens if you exclude manufacturing from the supply chain?
Let’s try answering that question right now, by assuming you work for a fashion retail company. You have clothes for sale in your high street stores, but where do those clothes come from?
Either your company has factories somewhere that produce the clothes from some textiles or else you buy the clothes from elsewhere to resell.
If you buy the clothes from say, a wholesaler, where does the wholesaler get the clothes from, in order to supply your stores? The wholesaler must also be a manufacturer or must buy clothes from one or more manufacturers.
If the wholesaler buys clothes from manufacturers, those manufacturers are suppliers to the wholesaler; hence they are part of the supply chain. So where do those manufacturers get the textiles from?
The manufacturers must either produce the textiles from raw materials or buy them from a supplier. That supplier may be a wholesaler, but is more likely to be a textile manufacturer. In order to produce textiles that can be turned into clothes, the manufacturer must receive raw materials, either from within its own organisation or by buying them from producers, which might be cotton farmers, for example.
No Producers, No Manufacturers, No Supply Chain
If you were to take away any of the aforementioned elements from the supply chain, what happens? The supply of clothes to the high street fashion retail stores will cease. There will be no availability. Customers will not come.
The bottom line: You can’t divorce manufacturing from the supply chain, especially since it’s often not even the first link in the chain.
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