A Supply Chain covers the entire system of producing and delivering a product or service, from the initial sourcing of raw materials to the final delivery to end consumers. In other words, the supply chain defines the entire production process, including all the adjunct activities involved at each step of the supply chain. It includes the information flow, natural resources transformed into useful materials, human resources, and any other components (i.e., packing materials, shipping containers, energy consumption) that are perceived as part of the final finished product or service.1).
A very important part of understanding is to conduct an external analysis of the Supply Chain, including documenting all the steps in the Supply chain, the flow of products, goods and services into the step and the processing accomplished in the step. The Supply Chain and the external analysis of the supply chain are essential for strategic planning for any participant in the Supply Chain.
Each step in a supply chain can a separate industry (i.e., producers of raw materials, transport companies, warehousing, and retail). In large corporations such as Walmart, the “separate industries” may actually be part of the same corporation. Although related, the Supply Chain and the Value Chain are different. For example, the Supply Chain might consider all the steps from raw material to final product while the Value Chain only covers the portion of the Supply Chain that a corporation has control over and/or what steps it feels it can add value to the final product.
In other words, the supply chain involves all parties in fulfilling a customer request and leading to customer satisfaction, a value chain is a set of interrelated activities a company uses to create a competitive advantage.2). Within the Supply chain, there is often a many-to-many relationship between parties along the change. I other words, one producer may service multiple distribution centers, one Distribution center may service multiple grocery store chains.
The following are some of the restrictions or benefits apply to Supply Chains in General3)4):