What are the Various Components of a Supply Chain?

supply chain management courses

Today’s world has a highly interconnected economy where millions of businesses operate across different areas. For the smooth functioning of this global economy, coordination is of utmost importance, which is ensured by powerful supply chain management.

A robust supply chain management provides a strong network connection between businesses with their suppliers, producers, manufacturers, and consumers. Thus, with the growth in the global economy, the expansion of supply chain management has been triggered. In 2020 the value of the worldwide supply chain management market was 15.85 billion USD, which has been projected to reach 31 billion USD by 2026.

So, if you’re planning for a supply chain analytics course here’s a guide for you. It will brief you on the definition and components of the supply chain.

Supply Chain: What is it?

best supply chain management and analytics training

A supply chain is a matrix of organisations and individuals, who create a commodity and finally deliver it to the consumers. This network begins with a producer, who generates the raw materials. It finally ends with the product reaching the consumers.

It encompasses every step involved in commodity production or providing service to the consumers. It may also include sourcing the various raw materials, moving them for production, its transportation to the retail stores or distribution centres and likewise. From producers, warehouses, and vendors, to retailers, and transportation services, all are included in the supply chains.

Basic Components of Supply Chain Management

Sales and operations planning are crucial parts of effective supply chains. However, supply chains are much more than that. The basic components are:

  • Planning
  • Sourcing
  • Inventory
  • Production
  • Delivery
  • Return

Here are the details:


Planning component begins when the companies start breaking down their operation strategy. Here the first step is to decide where to set up your shop. This is a vital decision as shop location determines your product availability and reachability, either locally or globally. It also influences your raw material outsourcing.

Another important decision that you should take at this stage if you are the manufacturer is if you should go for ready-made commodities. This choice further opens up planning for sourcing the raw materials. Furthermore, planning needs to be done carefully about what technologies are to be used for production so that the supply chain can function effectively and efficiently.


After a thorough planning stage, the next component is sourcing, specifically sourcing the raw materials and technologies required for production. This is a vital component because where you are sourcing the raw materials determines a lot of your total production cost. Thus, you should be sourcing the products at the lowest possible cost, in a sufficient quantity and at an appropriate time.

For this component, you have to ensure proper negotiation of contracts and skimming through all possible suppliers. Otherwise, you might miss out on the best value product. Another factor to consider in this stage is supplier performance. To optimise your supply chain, evaluate supplier performance, and ensure timely payments and export or import requirements. Choosing an incompetent supplier is simply an ingredient for trouble because it affects your overall supply chain functioning.


Inventory is the next essential component where you have to effectively manage your stock of products. According to a study by RetailNext 2020, 28% of sampled businesses faced supply shortages and even ran out of vital commodities.

For a smooth supply chain function, you need to have multiple suppliers who can provide you with adequate product stock. Thus, you can ensure that you never run out of materials. Maintain your inventory in a fitting location, which is both convenient and ideal in resource and material terms.


The production component incorporates assembling the raw materials, testing, making a new product and finally packing. Supply chain managers also have to ensure that all of these activities are taking place in coordination. Assessment of product quality is another vital step in this component.

This supply chain element is a test of the quality parameters to provide the best-finished commodities to the consumers. As a supply chain manager, you have to further ensure that goods are produced in the correct volumes. Once all of these factors are made sure, the finished goods can be transported from the depots to the warehouses or stores.


Supply chains are intertwined with logistics. Order coordination, packing, invoicing, scheduling the deliveries, notifying the customers, and collecting payments are extremely important areas of the delivery component.

To ensure zero delays, all of these processes must be carefully looked over by supply chain managers. Many times businesses opt for third-party delivery systems. In this case, especially, product handovers must be kept under watch, if you don’t want any delays or product misplacements.


The return of a product is another vital component of effective supply chain management. Customers would return a defective and faulty product, and for that, the supply chain managers need to ensure a hassle-free return process. It is an integral customer satisfaction parameter, and the greater the efficiency of the return process, the higher will be customer satisfaction.

The managers also have to articulate the proper way to treat these end-of-life commodities. It is the decision of the supply chain managers whether the returned products are fit for repair or should be disposed of entirely.

Now the question is which commodities can be accepted for return. To make a fine assessment, the company has to set some ground rules, which will help the representatives to monitor performance, estimate cost, maintain inventory, etc. This simply means assessing the commodity condition, scheduling the return shipments, extending refunds, etc.

Bottom Line

Being aware of the supply chain components makes it easier for novice supply chain managers to design management strategies easily. Supply chains are crucial for any venture and having a clear vision of how each component is linked to the other, understanding the contribution of each component is thus important apart from applying for a supply chain analytics course.

If your goal is to become a great supply chain manager, then your first step should be to enrol in the IIT Supply Chain Management certification offered by Imarticus. This course is offered in partnership with IIT Roorkee, where you get a learning opportunity from the renowned IIT Roorkee Faculty. The course comes with an IIT-approved advanced curriculum, and makes you prepared for an exciting upcoming career!

Explore Imarticus and find out more about your dream course!

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