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Unit 1: 21st Century Supply Chains




                                                                                                Notes
                 Figure  1.1:  (a)  Traditional  Supplier-Buyer  Relationship, (b)  Basis  Supply  Chain

                                 SELLER          BUYER      (a)


                        SUPPLIER           SELLER           BUYER       (b)


          Source: Upendra  Kachru (2010), “Exploring the Supply  Chain,” Excel  Books
          Figure 1.1 shows a  traditional seller-buyer relationship (a) and a basic supply chain (b).  An
          extended supply chain is  the supply chain shown in Figure  1.2. An extended supply  chain
          consists of a number of relationships. These are called tiers. The simplified version of the supply
          chain of Kalyani Breweries, exemplifies this.

                      Figure  1.2: A  Simplified View  of  Kalyani Breweries  Supply  Chain

                2nd tier  1st tier
              supplier  supplier
                                                      Distributor  Retailer
                                          Kalyani        UBSN                Final
              NALCO      Supertech        Breweries       Ltd.      DSIDC    customers
                         Industries


                                              Transportation companies
                                      Supertech
                                      Industries

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

          For the product to reach a typical customer who goes to the shop to buy beer, these linkages and
          the steps necessary to bring the product to him are not probably apparent.


                 Example: Take Cans
          National Aluminum (NALCO) extracts the aluminium ore  and converts  it into  aluminium
          metal. The aluminium metal is shipped to Supertech Industries at Bangalore, who convert the
          aluminium into cans. Supertech Industries supplies cans to Kalyani Breweries. As Supertech
          Industries supplies directly to Kalyani Breweries, it is a first-tier supplier in the supply chain.
          Using the same logic, NALCO is a second-tier supplier. It is the supplier of a supplier.
          The beer is produced from other raw materials, such as barley, hops, yeast, and water. Aluminium
          cans from Supertech Industries used  to contain the product and combined with cartons, to
          produce the packaged beverage. Kalyani Breweries then sells the packaged beverage to UBSN
          Ltd., the distributor, who in turn sells the finished good  to retailers like DSIDC. Transport
          carriers, who move the inputs and outputs from one place to the next along the supply chain,
          provide the logistic support.
          In the example given, we see that goods and information flow travels both ways. In other words,
          members in a supply chain are both customers and suppliers, with respect to these flows.


                 Example: Supertech Industries places an order (information) with Nalco, who in turn
          ships aluminium (product) to Supertech Industries.





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