Understanding the Complexity of a Typical Global Supply Chain
1. Supplier
Suppliers provide raw materials needed to make a product. These materials can be sourced locally or internationally. The process begins with raw material suppliers who provide essential inputs like metals, chemicals, textiles, etc. These are sourced locally or globally.
Example:
For a mobile phone, the battery may come from South Korea, the display from Japan, and the processor from the USA.
2. Freight Forwarder
A freight forwarder arranges and coordinates the transportation of goods from suppliers to manufacturing plants or warehouses. They handle documentation, insurance, customs arrangements, and cargo booking. The freight forwarder arranges the transportation of goods from the supplier to the manufacturer (plant). They manage documentation, booking transport, and export-import logistics.
Example:
DHL Global Forwarding organizes the export of textile fabric from India to a garment factory in Bangladesh.
3. Plant (Manufacturer)
This is the production unit where raw materials are converted into finished goods. Goods are also packed and labeled here. The plant or manufacturing unit converts raw materials into finished or semi-finished goods. After production, goods are packed and prepared for dispatch.
Example:
A car manufacturing plant in Chennai assembles cars using parts imported from Germany, Japan, and Korea.
4. Roadways
Trucks or lorries transport goods from the plant to a port or warehouse. Roadways are typically used for short-distance and flexible transport. Trucks or lorries move the goods from the plant to the port. It’s the most common mode for short-distance and internal transport.
Example:
Finished garments from a Tirupur factory are moved via truck to Chennai Port.
5. Customs Agent
The customs agent handles documentation and legal procedures to clear goods for export or import. They ensure duties and taxes are paid. At the port, a customs agent clears the goods for export by completing formalities and documentation. This ensures legal compliance with both exporting and importing countries.
Example:
Before exporting spices to Europe, an Indian exporter’s customs agent ensures all regulatory checks are completed at Mumbai Port.
6. Ocean Liner / Airways
This is the international transport phase. Goods are shipped via ocean (bulk, low cost, longer time) or air (expensive, fast delivery). Goods are transported via ocean shipping (for heavy, bulk shipments) or airways (for fast delivery or high-value items). This is the international transport phase.
Example:
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Ocean: Shipping 500 containers of electronics from China to the US.
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Air: Flying perishable goods like flowers from Kenya to the Netherlands.
7. Port (Destination Country)
After arriving in the destination country, goods are unloaded at the port and inspected. Import duties are paid, and goods are cleared for inland transport. The goods arrive at a port in the destination country and go through import clearance.
Example:
Imported Italian tiles arrive at Mumbai Port and await customs clearance.
8. Road / Rail
Post customs clearance, goods are transported inland either by truck (road) or train (rail), depending on volume, urgency, and distance. After clearance, goods are transported inland by road or rail to distribution centers or warehouses.
Example:
Large shipments of steel from Chennai Port are sent to Pune factories by rail.
9. RDC – Regional Distribution Center
A centralized facility that receives goods from ports and distributes them to local warehouses or retailers. RDCs serve as hubs where goods are stored, sorted, and dispatched regionally to customers or retailers. They help reduce delivery time and cost.
Example:
Amazon has RDCs in each major Indian city. Goods from abroad are sent here first, then sorted for delivery.
10. Roadways (again)
From RDCs, goods are delivered to final warehouses, retail outlets, or customers via trucks, vans, or local delivery services.
Example:
Electronics from the Delhi RDC are delivered to Reliance Digital showrooms across NCR by road.
11. Customer’s Warehouse
Retailers or wholesalers store their stock here before it is sent to individual outlets or customers. Retailers or wholesalers store goods in their warehouse before selling them. It’s the staging point for distribution to final users.
Example:
Big Bazaar stores receive their stock from central warehouses in the city.
12. Customer (Retailer)
The retailer is the point of contact for the end consumer. They could be brick-and-mortar stores or online platforms. Retail stores display and sell products to consumers. Could be brick-and-mortar stores or online platforms.
Example:
Flipkart, Croma, and D-Mart are retailers that sell finished goods to consumers.
13. Consumer (Home)
The final destination of the supply chain – the consumer purchases and receives the product either in-store or at home (via delivery). The end consumer is the final recipient of the product. Delivery may happen via e-commerce, courier, or in-person purchase.
Example:
You order a mobile phone on Amazon, and it is delivered to your doorstep from the nearest warehouse.
Why Is It Called a “Complex” Supply Chain?
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Multiple stakeholders: Suppliers, customs agents, transporters, warehouse managers, retailers, etc.
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Different countries and laws: Global sourcing and delivery means dealing with diverse regulations.
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Various transport modes: Road, rail, sea, air – all are involved.
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Delays, risks, and coordination: Weather, strikes, customs checks, and poor infrastructure can delay any stage.
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Reverse logistics: Returns, repairs, or recycling add another layer of complexity.
Real-World Example: iPhone Global Supply Chain
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Suppliers: Camera modules from Japan, glass from the USA, chips from Taiwan.
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Assembled in: China (by Foxconn).
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Shipped via: Ocean and air to Apple RDCs worldwide.
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Retailers: Apple Stores, Amazon, Flipkart.
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Consumer: Buys online or offline and receives the product at home.
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