Supply chain is a word that is foreign to most, yet is an interwoven part of how we live today. It is responsible for all the ‘stuff’ that surrounds us.
As an example, take a look at your outfit. Do you know where it was made? Have you given a thought to the raw materials that make up your suit and where they originate? Your shirt, socks and shoes? Let’s not even get started on the pieces needed to make up your watch.
If you can imagine the intricate web of raw materials supplied to make up a product that itself becomes a raw material for another product, which in turn is manufactured for a more intricate product. Now think of the shipping and logistics for each piece of the puzzle. From the time the raw materials were manufactured and converted into final items for sale to the wholesaler, up until those end up at the retailer. This will allow you to wonder at the process involved in getting that piece of clothing to its final destination in your closet.
It tells you that you don't have to go far to explore the value chain. Raw materials are being moved from one continent to another or from one region to another and come back in the form of finished goods which we can find on the shelves of retailers all around the world.
Going back to what you are wearing. On a typical day you could wear shoes bought in Hong Kong, socks from Uganda, Chinos from South Africa, a belt from Singapore, a shirt and jacket from the Netherlands and a watch from Switzerland. The notion also exists that although some clothing was made in a certain country, it can also mean that the raw material used to make up that garment was shipped in from another country.
These dynamics are an indication of how transport and logistics and the supply chain have evolved over the past decades. Various countries have realised that a strong port and logistics system is critical to ensuring their competitiveness in the global economy.
Countries want to become important players in the global economy and are pushing to remain competitive. As a result we have seen some countries starting to concentrate or specialise in one part of the supply chain. An example of this is distribution, where the country offers certain incentives in the form of tax rebates. Together with a strong and competitive transport and logistics sector, this allows the country to offer great rates to companies. The result is that major brands and companies can offer reduced rates, thereby reducing their unit cost and increasing their market share globally.
We do not have to look far to realise the impact of supply chains. All the ‘stuff’ around us originates from somewhere. And in today’s global society, you potentially have something from every corner of the world in your house, without having travelled there to collect it. Summed up into a neat little thought, you could say that supply chains bring the world to you.
