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Supply Value Logistics Chain

Supply Value Logistics is the supply chain, value chain and logistics model we use, our goal is to create an easy to understand format for our members to use.

Supply Value Logistics is a model we use that incorporates the supply chain, value chain and logistics into an easy to understand format. This simplified format allows entrepreneurs to quickly understand where they fit into their industry. Our goal is to create a framework for our members to follow and tailor our information around this framework.

A supply chain is defined as “the sequence of processes involved in the production and distribution of a commodity”; think of it like a pipeline that provides efficient and effective movement of materials, products services or information from a suppliers supplier to various organizations to a customers customer. Supply chains (and value chains) differ from industry to industry, and even from company to company in the same industry (and is often used as a competitive advantage). There is no set definition as to how a supply chain looks like.

The same thing can be said for value chain, which is also defined as a “linked set of activities/nodes/segments that bring a product through the process of conception, production and delivery to final consumers”.

That is why if you look up supply chain and value chain on the internet you will get a lot of different information, explanations and diagrams going in all directions, primary, secondary, input, output this and that. People study years to understand it and some industries indeed have a need for that complexity. We use a simplified concept that suits our purpose; we have distilled into simple diagrams suitable for small businesses to use. It is important to see this in our context to see the big picture: Our goal is to create a framework for our members to follow and tailor our information around this framework. You can read Semantics below where I delve into the semantics.

Logistics: The commercial activity of transporting goods to customers this includes Transport, Warehousing & Distribution.

We use the simple definition: Supply chains link Value chains using Logistics

Here is how our model looks:

As you can see we have the suppliers who provide raw materials and other services used to build products, the manufacturers, the wholesalers, retailers and the consumers that buy the product. We have added recyclers right at the end after the consumer – the most common place, but a recycler can be anywhere in the chain.

We have broken it down into the following, one thing to remember, as stated before this is how it can be, not all industries or products will use all the steps:

Supply Chain
Supply of raw materials
Manufacturer
Wholesaler
Retailer

Value Chain
Skills
Equipment
Materials
Products and/or Services

Logistics
Transport, Warehousing & Distribution

So let’s pick this apart step by step. Based on our simple example what does this mean?

It means that each “link” in the supply chain has a value chain and this is linked using logistics.

Example:

1. The supplier of raw materials acquires or extracts and processes it (value addition) and ships it to manufacturer (logistics).

2. The manufacturer takes the raw material and turns it into a product (value addition) and ships it to the wholesaler (logistics).

3. Wholesaler buys in bulk from the manufacturer to sell to retailer (value addition) and ships it to retail store (logistics).

4. The retailer brings the goods close enough to the consumer to acquire it at the right price (value addition).

Now you have the picture. Try not to over think things, especially when it comes to “value addition” as this can take on many forms (see Semantics below).

This is one example, but this can be more complex. Here are a few examples. Let’s look deeper.

Supply Chain
Supply of raw materials
Manufacturer
Wholesaler
Retailer

Value Chain
Skills
Equipment
Materials
Products and/or Services