What Is a Supply Chain?


Quick Answer

A supply chain is the complete sequence of processes and events that a manufacturer relies upon to obtain raw materials from suppliers and ultimately deliver a finished good to the final purchaser. A variety of organizations, individuals, resources, distributors and logistics networks can comprise a start-to-finish supply chain. The primary function of a supply chain is to transform raw materials into purchased products and to do so in the most efficient, quality-assured and cost-effective manner possible.

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Full Answer

A supply chain is most effective when all of its various components, from the initial upstream supplier to the final client, are able to share information and coordinate their activities based on both future and current needs. Effective and well-informed supply chain management can minimize costs, prevent shortages and respond quickly and appropriately to changes in supply and demand.

Procurement, production planning and logistics play a vital role in supply chain management. These processes also drive a company's support functions such as marketing, finance, human resources, information technology and product development. Supply chain management is basically an integrating function that works towards building and maintaining a cohesive linking of a company's internal and external clients and providers into an effective multi-tier business model.

Timely and accurate forecasting and the exchange of information regarding production capabilities, market demand and resource availability enable the upstream and downstream components of a supply chain to function as an integrated system. As these systems grow and compete within a global market, a much higher degree of market share competition develops among supply chains rather than between individual companies.

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