What is supply?

Supply management refers to all activities aimed at ensuring the availability of raw materials, components or finished products required for a company’s production or sales. This includes managing stocks, selecting suppliers, negotiating purchase contracts and monitoring orders. Supply is therefore a major business function, contributing to the achievement of production and sales objectives by ensuring that the necessary resources are available at the right time and in the right place.

Factors influencing supply

The request

Supply depends mainly on customer demand for the company’s products or services. If demand is high, the company must ensure that it has sufficient stocks to meet that demand.

Costs

Supply can be influenced by the costs of producing, transporting and storing products. These costs vary according to different factors, such as raw materials, employee salaries, etc.

Availability of raw materials

Supply may, in some cases, be limited by the availability of certain raw materials required for the production of certain products or services.

Logistical constraints

Supply can be influenced by certain constraints linked, for example, to the transport or distribution of one or more products. For example, a company may be faced with inconveniences caused by the distance of certain regions or weather conditions.

Company policies

Sourcing also depends on the company’s policies in terms of stock management, relations with suppliers, etc.

Market conditions

Market conditions can also influence supply. For example, competition and product prices play a central role in influencing supply.

How to ensure a good supply?

Establishing solid relationships with suppliers

Having reliable, professional suppliers is an invaluable aid to a company’s ability to ensure regular and timely supplies. This means that frequent delays by certain suppliers can be avoided as far as possible.

Establish long-term supply contracts

By establishing long-term supply contracts, a company can ensure regular supplies and anticipate its raw materials requirements.

Set up an effective stock management system

By implementing an effective stock management system, a company gains the ability to monitor stock levels in real time and source supplies accordingly to avoid potential shortages.

Anticipating demand variations

By analysing major market trends and questioning customer demand, a company can anticipate major needs and obtain supplies in the shortest possible time and in the best possible quantity.

Diversifying supply sources

Sourcing from several suppliers can, in some cases, help a company to reduce its dependency and better cope with potential supply problems such as shortages or strikes.

What are the different types of supply?

Just-in-time supply (JIT)

This is a supply system that aims to provide raw materials, components and finished products at the exact moment they are needed in the production process, without having excess stocks. The aim is to minimise costs by reducing losses due to unnecessary stocks and storage costs, and by increasing production efficiency.

Supply in bulk

Supply in bulk is a type of procurement that involves buying large quantities of products at a lower price from a supplier, then reselling them in smaller quantities at higher prices. It is very often used by companies that need a lot of products for their business to succeed.

Strategic supply

This system aims to ensure the availability of the raw materials and components needed for the company’s production by minimising risks and maximising opportunities. This includes, for example, diversifying sources of supply and establishing long-term contracts with key suppliers.

Local supply

Local supply means buying products from suppliers located close to the company. It is mainly used to support the local economy and reduce certain costs, such as transport costs.

Sustainable supply

This sourcing system minimises its environmental and social impact. To achieve this, the company turns to products from sustainable and responsible sources. Examples include organic, ecological and fair trade products.