The Basis of a Supply Chain

The stages involved within a supply chain are influenced by the needs and wants of the customer(s).

In the previous example, the supermarket provides the product, as well as pricing and availability of information, to the customer. Funds are transferred, by the customer, to the supermarket.

The supermarket conveys point-of-sales data, as well as any replenishment order, back to the distributor. Funds are transferred to the distributor by the supermarket after replenishment has taken place. The distributor also provides pricing information and sends delivery schedules to the supermarket.

Similar information, material, and finance flows take place across the entire supply chain.

The primary purpose of any supply chain is to satisfy customer needs whilst in the process generating profits for itself.