Supply Chain in Central America: What it is and How it Works

What Makes an Effective Supply Chain in Central America?

In order to create a supply chain in Central America that effectively services customers’ needs and preferences, processes must be put into place to obtain raw materials and to manufacture, transport, distribute, and deliver products.  Thus, the main objective of a regional supply chain  is to provide items and materials in the quantity, quality, and time needed at the lowest possible cost.

In order to achieve the creation of an effective and efficient supply chain, companies must:

• Establish good channels of communication;
  
  
• Coordinate all relevant activities;
  
  
• Avoid unnecessary losses;
  
  
• Improve distribution times;
  
  
• Adjust inventory management;
  
  
• Respect delivery times;
  
  
• Respond appropriately to changes in supply and demand.

Also, an effective supply chain in Central America is one that maintains a continuous and free flow of information during the entire process.  At different stages, there is a need to maintain communication with suppliers, wholesalers, and customers, for example.

Who is Part of the Supply Chain in Central America?

For the process to be carried out properly, the regional supply chain must consist of fundamental components, such as:

• Suppliers: are those persons or organizations that are responsible for the distributing, offering, granting, or leasing the use of goods and/or services;
  
  
• Transport: is responsible for the transfer of raw materials, supplies, and finished products between companies and customers;
  
  
• Manufacturers: corresponds to those that transform raw materials into an article;
  
  
• Communication: is a basic feature of operations between each element of a supply chain in Central America that enable processes to develop and flow correctly;
  
  
• Technology: enables supply chain elements to optimize their tasks and to perform them in less time and at the lowest cost.

An Example of a Supply Chain in Central America:

The supply chain in Central America consists of three basic elements.  These are supply, manufacturing, and distribution.

• Supply: refers to the raw materials with which a company works. It is important to be able to answer such questions as to where the materials come from and what are the deadlines that are in place to get them to the places where they are required? Incorrectly answering these questions will have a negative effect on the functioning of a supply chain in Central America;
  
  
• Manufacture: is the phase of assembly or transformation of an item from raw materials into a finished product;
  
  
• Distribution: denotes the process of distributing manufactured items through a transport network, warehouses, and merchants with the aim of delivering it to the final consumer.

Supply Chains in Central America Vary According to Activity

Supply chains vary depending upon the type of company under consideration.  They can be related to the industrial sector companies, service providers, or marketers:

• Industrial companies: are organizations that have a supply chain that have a significant logistics infrastructure. This infrastructure has different characteristics that result from particulars that are related to the company’s size, its production lines, and to the consumers to which its products are delivered.  
  
  In addition to the primary manufacturing function, such organizations are also involved with functions such as new product development and marketing.
  
  
• Service companies: have hierarchical supply chains that are comprised of management, production, sales, and distribution personnel. They rely heavily upon human resources.
  
  
• Marketing firms: obtain and sell products. They receive orders from clients and are responsible for filling them.

There are several activities that ensure that a supply chain functions smoothly.  These include planning, as well as sourcing, storage, and distribution.  Also, critical to success in this area is the management of stocks of raw materials and finished products. 

Supply chain management in Central America also includes the processing of purchase orders, the monitoring and control of contingencies, customer service, warranty management, and payment processing.

The Central American Group is uniquely positioned to assist companies that are doing business in the region to develop and to implement supply chain solutions that are as efficient and cost-effective as possible.