Page 8 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

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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