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As a small business owner, you’re no stranger to the supply chain process. It’s probably something you have a hand in every day. But even the most everyday operations can be confusing at times, especially when it comes to industry-specific terms. Knowing the subtle differences can be extremely helpful. 

That’s why we’ve put together the following resource for you – one you can revisit as needed to navigate through the most commonly used supply chain terms. 

Supply Chain: The network a company uses to produce and distribute goods to the end consumer. This encompasses all the steps along the way from raw to finished product, including sourcing, manufacturing, warehousing, shipping, distributing, and retailing. 

Supply Chain Optimization: It’s more important than ever to ensure your supply chain is streamlined and running as efficiently as possible. With supply chain optimization, you take a look at your entire network to improve delivery speed, reduce costs, and minimize risks.

Supply Chain Sustainability: Largely driven by consumer demand, this has become the hallmark of socially responsible brands and results when companies incorporate environmentally friendly practices into their supply chain lifecycle.  

Upstream Operations: The part of the supply chain process in which materials are sourced for production. This includes your suppliers or the companies you purchase from to get the goods to manufacture your product. 

Downstream Operations: The part of the production process in which finished products move from the company to consumers.  

Logistics: The Council of Supply Chain Management Professionals defines logistics as “part of the supply chain process that plans, implements and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer’s requirements.” The goal of logistics is to meet customer requirements while the purpose of supply chain management is to gain a competitive advantage in the overall process that results in profitability. 

Third-party Logistics: The process of outsourcing some of your supply chain operations to an experienced third-party provider who can take charge of receiving, storing, packing, and shipping, resulting in a lot of added value. Third-party logistics providers are specialists in these functions and can make the logistics process exponentially more efficient for the seller. 

3PL Value Added Services: Above and beyond primary offerings, these are the additional services third party logistics companies provide to help their customers gain a competitive edge. These often include inventory management, kitting, assembly, and other forms of streamlined packaging. 

Reverse Logistics: Defined by the Management Study Guide as “the planning, process and flow of finished goods inventory, packaging materials and parts of finished product back from end customer to the product company as sales return or warranty return or unsold inventory with trading partners. Reverse Logistics planning further re-captures value from these materials as much as possible by way of re salvaging, repair, refurbishing, recycling etc.” If you contract with a 3PL provider, be sure to ask if they handle any part of this process to gain additional efficiencies.  

Inventory Management: Every successful business needs to keep a watchful eye over their inventory – but did you know this is yet another valuable offering reliable third-party logistics services could provide? With technologically advanced inventory management software, third-party logistics providers can keep a highly detailed record of what enters and exits their warehouse and provide you with real-time updates on-demand. 

Supply chain management can be a daunting task, but it doesn’t have to be. Getting familiar with these basic supply chain terms is a great way to get a better understanding of the overall process. With so many moving parts, it can also be helpful to have a knowledgeable partner break it down even further.  

At Gorgo Group, that’s our specialty. We use our vast experience in supply chain management to develop the best plan for you and offer valuable solutions that help you get the most out of the process. The result? Peace of mind in knowing your supply chain is running smoothly while you’re free to focus on your main job: running your business. 

Contact us today to learn more about all the ways we’re here to help make your supply chain less confusing and more beneficial for your business.