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What is a Supply Chain?

By Shannon Kietzman
Updated May 16, 2024
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A supply chain is a network of retailers, distributors, transporters, storage facilities, and suppliers that participate in the production, delivery, and sale of a product to the consumer. It is typically made up of multiple companies who coordinate activities to set themselves apart from the competition.

There are three key parts to a supply chain:

  • Supply focuses on the raw materials supplied to manufacturing, including how, when, and from what location.
  • Manufacturing focuses on converting these raw materials into finished products.
  • Distribution focuses on ensuring these products reach the consumers through an organized network of distributors, warehouses, and retailers.

While often applied to manufacturing and consumer products, a supply chain can also be used to show how several processes supply one another. The definition in this sense can apply to Internet technology, finance, and many other industries. A supply chain strategy defines how the network should operate in order to compete in the market, evaluating the benefits and costs relating to the operation. While a business strategy focuses on the overall direction a company wishes to pursue, supply chain strategy focuses on the actual operations of the organization and the path that will be used to meet a specific goal.

Another related term is supply chain management (SCM), which is the oversight of materials, information, and finances as they are distributed from supplier to consumer. The supply chain also includes all the necessary stops between the supplier and the consumer, so its management involves coordinating this flow of materials within a company and to the end consumer.

Supply chain management can be divided into three main flows:

  • The Product flow includes moving goods from supplier to consumer, as well as dealing with customer service needs.
  • The Information flow includes order information and delivery status.
  • The Financial flow includes payment schedules, credit terms, and additional arrangements.
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Discussion Comments
By Nasri77 — On May 26, 2011

what is the importance of strict control to the supply chain in housekeeping?

By anon160554 — On Mar 16, 2011

how can we understand the role of supply chain in internet service providers?

By anon124822 — On Nov 07, 2010

what is the importance of supply chain management?

By anon110416 — On Sep 11, 2010

What about compliance (legal) as part of the supply chain as most of the raw materials and even some finished components are imported or exported?

By anon81128 — On Apr 30, 2010

what are the merits of an effective supply chain?

By anon74506 — On Apr 02, 2010

Excellent job on explaining and details on Supply Chain Management!

By anon70565 — On Mar 15, 2010

in steel industries how important SCM.? how implement SCM on existing conventional system of procurement?

By anon60806 — On Jan 16, 2010

Supply Chain in today's world is very critical and a very complex field to manage. With many many variables at hand and many systems and stats report that must be watched and put into consideration, it is quite a challenge to identify the right decisions to make at one point.

And any slight mistake can cost hundreds of thousands if not millions of dollars.

Due to this complexity there is a need to collaborate and share ideas in this field. Taking the initiative, I and some friends in the industry created an online forum for discussion.

By Habsiy — On Jul 25, 2009

Article 3: My point each step in the supply chain is completing each other and we cannot ignore one of them.

Article 2: Green supply chain I think it is that all the process in supply chain going safely without any difficulties.

Article 1: The natural of the products or the raw materials.

By anon37042 — On Jul 16, 2009

What is the importance of packaging in the supply chain?

By anon23156 — On Dec 17, 2008

so what about green supply chain ?

By anon9988 — On Mar 17, 2008

what are the factors to consider when choosing a ship

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