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What Is the Service Supply Chain? - and Why It Matters

logistics manager and boxes in the background

The supply chain industry is vast and includes a lot of moving parts. As you probably know, a supply chain consists of everything from getting raw materials and manufacturing products to delivering them to the customer. But how do companies that offer services and not manufactured goods fit into this picture? 

The modern economy is built around services. And to provide services efficiently, companies need to coordinate their activities across departments and locations. That's where the service supply chains come into play. Here's an introduction to how they work and why they're important.

Defining Service Supply Chains - What Are They?

While logistics and supply chain management are most often associated with the manufacturing industry, they are becoming more prevalent in the service sector as well. But why? And how is this type of supply chain different?

A service supply chain is a type of supply chain that helps companies to coordinate their activities in order to provide services efficiently. The main difference between service and manufacturing supply chains is that manufacturing supply chains deal with physical products while service supply chains deal with intangible ones.

In other words, the service supply chain (SSC) refers to the entire lifecycle of a service, starting from its design and development through delivery and support. It includes all the activities needed to provide a service, from the moment the customer requests the service until the moment they receive it. This type of supply chain is complex because it often involves different divisions and locations.

By understanding SSC, retailers can focus their resources efficiently, ensuring they get the highest quality customer experience at every stage of the journey.

The Components of Service Supply Chains

A big part of grasping the service supply chain management is getting familiar with all the levels involved. Here are some of the main components involved in a service supply chain.

  1. Service design and development: The beginning phase is the process of creating and designing a service that meets the needs of the customer. It includes identifying the target market, understanding their needs, and designing a service that meets those needs.
  2. Service delivery: This is the process of delivering the service to the customer. It includes all the activities needed to ensure the service is provided on time and meets quality standards.
  3. Service support: A crucial part of the process is providing support to the customer after they have received the service. It includes troubleshooting, repairs, and maintenance.
  4. Service management: This is the process of managing the supply chain. It includes planning, coordination, and control of all the activities in the service supply chain. You can only provide customers with satisfactory services if all the moving parts of the supply chain are functioning like a well-oiled machine.

Service Supply Chain Example

For example, if you own a marketing agency, your supply chain is largely based on human interaction instead of raw materials, warehouses, and logistics. The supply chain mainly takes place in a virtual realm and is based on communication with the client. 

First off, you have customer demand. This means that a client is hiring your company to provide them with your services - creating a marketing campaign, for instance. To get the finished product (a successful campaign), you need to coordinate your departments and customize the services to the client’s needs.

The production process can include anything from delegating and managing your in-house teams to outsourcing, using AI tools, etc. The process consists of planning, strategizing, developing, optimizing, and delivering the ‘’product’’ to the client. All these things require the involvement of various sectors that will eventually put together the end result. 

So, with an efficient service supply chain, all parts of the process work well together and deliver satisfactory services to the customer.

Why Service Supply Chains Matter - The Benefits

Within any field, trying out ground-breaking technologies and innovations is a big part of staying relevant and competitive. You want to remain among the cutting-edge companies, and utilizing the supply chain is a way to do that. 

There are many reasons why service supply chains matter. Here are some of the most important benefits of effective supply chain management and why you should implement a supply chain strategy even if you’re in the service industry.

Coordination of Operations

One of the main advantages of service supply chains is that they help companies to coordinate their activities. As we’ve said, service supply chains often involve different sectors and locations. By systematizing their activities, companies can provide services more efficiently. If the different departments aren’t working well together, you won’t be able to deliver a good product to the customer. 

Reducing Costs

Supply chains can also help companies in the service industry to save money. This is because they often involve outsourcing and shared resources. 

By outsourcing some of the activities, companies can save money on labor and other costs. People are the most critical resource in these industries, and it is vital to use them wisely. For example, you might be able to outsource for certain parts of the production instead of hiring a full-time in-house employee for the job if it isn’t necessary.

Customer Satisfaction and Retention

A well-functioning supply chain can also help businesses to improve customer satisfaction. The reason is that they often involve customers in the decision-making process. By involving customers in the decision-making process, companies can provide services that are more tailored to their needs. As a service provider, customer satisfaction is the number one priority, which is why creating a customer-centric supply chain is crucial. 

Also, by delivering great services to customers, your customer retention rate is bound to increase, and you’ll create long-term relationships.

Adaptability 

By being flexible and adaptable, companies can quickly respond to changes in the market or the needs of their customers. This is exactly what a functional supply chain will enable you to do. Your business will be able to update processes and fix any issues much quicker.

Innovation

Because they often involve the use of emerging technologies, service supply chains will help your company stay competitive. By using new technologies, companies can provide services that are more innovative and efficient.

Optimize Your Operations - Choose a Reliable Logistics Partner

Even if your business is service-based, you might still have certain logistics needs. In that case, partnering up with an experienced and trustworthy partner is the best way to make sure your operations are efficient and secure. UNIVAL Logistics provides secure shipping services and full-value shipping insurance. So if you’re looking for a way to optimize your logistics sector, check out our services and contact us.

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