Supply chain

What the supply chain covers

The supply chain is the sequence of suppliers, stock levels and transports up to the customer. It starts with the raw material or pre product and ends with the return, which is either restocked or disposed of. For an online shop the part from the finished product onwards matters most, meaning the question of where the goods sit, how quickly they are available and what they cost up to the customer.

The chain consists of decisions, not just contracts. How many suppliers per item. Where the stock sits. Who carries the storage risk. How fast a reorder is possible. Those questions decide availability more than transport speed does.

Which risks make it fragile

• Single suppliers: anyone sourcing an item from one place has no replacement when that place fails. That applies to pre products and packaging as well.
• Long transport routes: every extra day widens the buffer a shop has to plan and ties up capital.
• Concentration on one region: ports, strikes and duties hit all deliveries at once when they come from the same area.
• Unclear supplier stock: anyone selling without a link to the partner's warehouse system sells what is not there.
• Dependence on one person: when only one person knows procurement, that person's absence is an operating risk.

How suppliers are chosen

Three criteria are enough for a first assessment. First reliability: is the promised quantity delivered on the promised date. Second responsiveness: how fast does the partner deliver on short notice. Third effort: how much work does an item cause in procurement, from the order through invoice checking to a complaint.

For every item it should be clear which role it plays in the chain. An item that carries the revenue must not come from an unreliable partner. An item with a small volume, by contrast, can be sourced from a single provider when the downtime is bearable.

What helps against disruption

Four measures work together. Safety stock covers fluctuation within the delivery time and is sensible for A items, expensive for slow moving goods. A second supplier as a reserve is the most effective protection for important items. Transparent stock at the partner prevents selling into the void. And documented procurement with a cover arrangement prevents knowledge from sitting in one person.

One further point is often overlooked: the return is part of the chain. Anyone checking and restocking returns quickly has the goods available again sooner. That is measured through the turnaround of returns, not through the return rate.

Frequent questions

• How much safety stock is right? It depends on demand fluctuation and delivery time. Both can be measured.
• Is a second supplier worth it for everything? No, the price falls with volume. A tiering by importance of the items is sensible.
• What marks good procurement? That it is predictable and does not live on individual emergencies.