Supply chain

From ArticleWorld

Supply chain is the entire gamut of institutions, individuals, materials, processes, logistics, and tracking systems that ideally run from the 'supplier's supplier' to the 'customer's customer'. In layman's terms it includes everything and everyone involved after the development phase to enable a consumer to use a particular product or service.

Supply chain components

A supply chain could include: raw materials and their producers or suppliers, manufacturing companies and their facilities, distribution networks including companies, logistics management systems, inventory trackers, and warehouses. There is increasing interaction between all the different stages and parties involved due to technological and communications advances that allow more efficient fulfillment of inventory and tailor-made production. Supply chains used to be discussed in terms of their management, but analysts have of late started using the term supply network operations. This is because unlike in the past, when the supply chain was a fairly linear set of interactions, today there is more exchange of information – the key to all supply chains – in the process that transforms raw materials to finished services or products in the consumer's hands.

Costs and revenue

Supply chains are often broken down in terms of the costs involved at each stage to produce the finished value-added product:

  • The suppliers have materials costs.
  • The manufacturing facility has manufacturing costs.
  • The transporters have transportation costs
  • The distributors have warehousing costs'and inventory management costs

The consumer pays for the service or product, generating revenue.