How the Supply Chain Works

Supply chain activities begin with a customer order and end when a satisfied customer has received the product or service.

The term supply chain conjures up images of product or supply moving from suppliers to manufacturers to distributors to retailers to customers along a chain however it is important to visualise information, finance and product flowing in both directions of this chain.

The term supply chain may also imply that only one player is involved at each stage but in reality a manufacturer may receive material from several suppliers and then supply several distributors.

It may be more accurate to use the term supply network or supply web to describe the structure of most supply chains.

Each stage may not be present in every supply chain. The appropriate design of the supply chain is dependent on both the customer’s needs and the roles of the stages involved.