The Nature of a Supply Chain

The Nature of a Supply Chain

An economic activity involved in manufacturing or distribution is linked to a complex system of suppliers and customers, which must be supported by a transport system. The system as a whole is known as a supply chain; a sequence of transportation and inventory management tasks. A supplier can be another’s customer, depending upon its position along the chain. Thus, a supply chain is a relative concept, but it is commonly applied to the whole sequence as an activity. Retailing usually acts as the final customer and represents the end of a supply chain. Actors such as manufacturers, distributors, or retailers are placing orders, and the fulfillment of these orders results in their transportation. A supplier maintains outbound inventory (parts or raw materials ready to be distributed) while a customer maintains inbound inventory (parts or finished goods ready to be transformed or consumed). A manufacturer also has an in-process inventory, which implies all the parts currently used in the fabrication process.