Managing the supply chain to meet customer needs
A Warburtons case study

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Page 2: Sectors of industry

The first sector of industry is the primary sector. This is concerned with natural resources and the extraction of raw materials. For Warburtons, this means working with farmers who grow the grain that is required to make its bread and bakery products.

The next sector of industry is the secondary sector. This involves the manufacture or refining of goods from the raw materials obtained in the primary sector. The millers who turn the grain into flour belong to this sector, as do activities of the Warburtons organisation as it uses science and technology to create the products consumers want.

The third sector is called the tertiary sector and this is where services are provided to businesses and consumers. The distribution of Warburtons products falls into this sector, as do the services provided to retailers by the organisation.

Chain of production and added value

The chain of production sees a product move through the three sectors of industry. There are a number of different stages in the chain of production. The system starts with raw materials and may involve one or more manufacturing processes. It then finishes with final products that are ready for consumers.

During each of the different stages, value is added to the product. Value is added in a number of ways, for example:

  • converting wheat into finished baked goods
  • packaging them in a way that keeps them fresh
  • delivering them to places that are convenient for the consumers to purchase from
  • using sustainable methods and materials
  • having the trusted Warburtons premium brand name.

Value added is the difference between the cost of inputs which go into making the product and the price that consumers are willing to pay.

The many sequences that link each of the different stages in the chain of production are all part of the overall supply chain. Through each of the stages in the supply chain organisations like Warburtons work hard to be distinctive and add value.

Emphasis on service

In the 19th century the economy in the UK was mainly dependent on the primary sector. This changed in the 20th century as manufacturing grew in importance. Hence the secondary sector became the largest contributor to the economy. In the last few decades, the tertiary sector has taken over. Now approximately 75% of the UK”s GDP comes from service industries.

Although Warburtons core activities fit in the secondary sector, more emphasis has been placed on adding value through services. The customers of bread products, retailers, want efficient and reliable services from their suppliers. This helps them to meet the needs of their consumers more precisely.

Warburtons | Managing the supply chain to meet customer needs