Page 12 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 1: 21st Century Supply Chains

involved at each stage. A manufacturer may receive materials from several suppliers and then Notes
supply several distributors. Thus, most supply chains are actually networks.

Figure 1.4: The Supply Chain

Supplier Manufacturer Distributor Retailer Customer
Product/Services
Information
Finances

Source: Upendra Kachru, (2010), “Exploring the Supply Chain,” Excel Books
Though many stages are shown in the Figure 1.4, each stage need not be present in a supply
chain.

!
Caution The number of stages included should meet the primary purpose for the existence
of the supply chain, i.e. is to satisfy customer needs.
It is in the process that the organization generates profits for itself. A typical supply chain may
involve a variety of stages. These supply chain stages include:

 Customers
 Retailers
 Wholesalers/Distributors

 Manufacturers
 Component/Raw material suppliers
In materials management, most participants performed as buyers and sellers independently of
other firms supplying to the buyer. Supply chain management differs in the sense that its efforts
involve individual firms taking steps to improve the flow of information with its suppliers and
reduce the variation in business processes and practices between the firms that form the supply
chain. In essence, the supply chain concept tries to make each participant in the chain more
efficient by coordinating their efforts towards a common goal.
A lot of interaction and trust between companies is required to make the supply chain work. In
that respect, it is significantly different from materials management.

Figure 1.5: Different Stages of a Supply Chain

Supplier Purchase
FG Whse Cust Whse
Retail
Mtl Whse Mfg Ops
SUPPLIER CONSUMER

Source: Upendra Kachru (2010). “Exploring the Supply Chain”. Excel Books.

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