: Supply Chain Management Is Primarily of Interest to Manufacturing Firms

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Overview
Supply chains are networks of organisations, information, technologies, activities and resources involved in the movement and conversion of physical goods or services from suppliers to end consumers. These different organisations are interlinked by physical, information and monetary flows. Organisations create value by transforming raw products into finished goods or repositioning of resources thru space and time, which is based on networks of supply chains. Both ways, it involves the movement and conversion of physical goods and information throughout supply chains across the world. Therefore organisations and supply chains are closely interlinked in the creation of value for its customers. Manufacturing firms produce goods for use or sale using labour, machines, technology and other materials usually on a large scale. Processing of materials into products takes place in a factory or manufacturing plant where the organisation’s labour and machines work in unison to transform raw material into a usable product, or using many components and process it into a finished product for the end consumer, just like how a baker is able to transform flour to bread thru labour, skill, machinery and tools.

Supply chain management for manufacturing firms
To achieve economies of scale, manufacturing firms needs to produce their products on a large scale. Generally the higher the production output of the firm, the lower the unit cost of their product will be. Besides output volume, the speed of production will determine the lead time from manufacture to delivery. High productivity will enable manufacturing firms to achieve shorter production cycles which equates to better competitiveness in their respective markets. Capacity management will determine how efficient the manufacturer will be in producing its goods. Over capacity will result in increased wastage and costs while under capacity will see the firm lose certain profits that it should gain. Thus...
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