A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request.
The supply chain includes not only the manufacturer and suppliers, but also transporters, warehouses, retailers, and even customers themselves.
A supply chain is dynamic and involves the constant flow of information, product, and funds among different stages.
Even though the term supply chain may imply that only one player is involved at each stage, most supply chains are actually networks where each stage receives product from several suppliers and sends output to several customers. It may be more accurate to use the term supply network or supply web to describe the structure of most supply chains.
A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request.
The supply chain includes not only the manufacturer and suppliers, but also transporters, warehouses, retailers, and even customers themselves. Within each organization, such as a manufacturer, the supply chain includes all functions involved in receiving and filling a customer request. These functions include, but are not limited to, new product development, marketing, operations, distribution, finance, and customer service.
A supply chain is dynamic and involves the constant flow of information, product, and funds among different stages.
When a customer makes a purchase online from Amazon, the supply chain includes, among others, the customer, Amazon’s website, the Amazon warehouse, the carrier who delivers packages to customers, and all of Amazon’s suppliers and their suppliers. The website provides the customer with information regarding pricing, product variety, and product availability. After making a product choice, the customer enters the order information and pays for the product. The product is then picked and shipped from an Amazon warehouse. As its inventory diminishes, the warehouse places replenishment orders with suppliers.
A typical supply chain may involve a variety of stages including customers, retailers, wholesalers, distributors, manufacturers, and suppliers. Even though the term supply chain may imply that only one player is involved at each stage, most supply chains are actually networks where each stage receives product from several suppliers and sends output to several customers. It may be more accurate to use the term supply network or supply web to describe the structure of most supply chains.
Toyota:
Consider a customer walking into a Toyota dealership to purchase a new car. The supply chain begins with the customer and his or her need for a car. The next stage of this supply chain is the dealer that the customer visits. The dealer has several cars in inventory that may have been supplied from the assembly plant using trucks from a third party. The assembly plant, in turn, gets various modules such as electronics and powertrain from a variety of Tier 1 suppliers. Each Tier 1 supplier receives material from several Tier 2 suppliers. For example, the electronics supplier receives cameras from the camera supplier and the dashboard display from another supplier. Each of these suppliers receives raw materials from lower tier suppliers.
Walmart:
Walmart has been a leader at using supply chain design, planning, and operation to achieve success with its brick-and-mortar stores. From its beginning, the company invested heavily in transportation and information infrastructure to facilitate the effective flow of goods and information. Walmart designed its supply chain with clusters of stores around distribution centers to facilitate frequent replenishment at its retail stores in a cost-effective manner.
Paint Industry:
The paint industry provides an excellent example of the gains from suitably adjusting the push/pull boundary. The manufacture of paint requires production of the base, mixing of suitable colors, and packing. Until the 1980s, all these processes were performed in large factories, and paint cans were shipped to stores. These qualified as push processes, as they were performed to a forecast in anticipation of customer demand. Given the uncertainty of demand, though, the paint supply chain had great difficulty matching supply and demand. In the 1990s, paint supply chains were restructured so mixing of colors was done at retail stores after customers placed their orders. In other words, color mixing was shifted from the push to the pull phase of the supply chain even though base preparation and packing of cans were still performed in the push phase. The result is that customers are always able to get the color of their choice, whereas total paint inventories across the supply chain have declined.
