Page 9 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes Supertech Industries is, therefore, a customer to Nalco and a supplier to Kalyani Breweries. We
can visualize an extended relationship where Kalyani Breweries returns empty pallets or
containers to its first-tier suppliers. This would result in a flow of physical goods back up the
supply chain. If this happens, Kalyani Breweries becomes a supplier to Supertech Industries.
This is in addition to its being the customer. An organization can be part of numerous supply
chains. This follows from the definition given earlier.
For any supply chain, there is only one source of revenue: the customer. At DSIDC, a customer
purchasing beer is the only one providing positive cash flow for the supply chain. All other cash
flows are simply fund exchanges that occur within the supply chain given that different stages
have different owners. When DSIDC pays its supplier, it is taking a portion of the funds the
customer provides and passing that money onto the supplier. It is all these flows – information,
products, or funds - that generate the costs within the supply chain.
The appropriate design of the supply chain will depend on both the customer’s needs and the
role of the stages involved. This relationship reflects a single strand in the supply chain. In a
typical supply chain, there are many more participants than the ones – Kalyani Breweries has
hundreds of suppliers who provide barley, hops, yeast, cartons, etc. It also has a large extended
network of retailers throughout the country whose number is even higher.
Regardless of the number and different types of suppliers a firm uses to satisfy its requirements,
the overall structure and its essential interfaces and control processes have to be identified,
irrespective of how vast and complex the system is.

Any operation or facility in one supply chain arrangement may also be a part of different supply
chains.

Example: As was mentioned earlier, Dabur is a part of the supply chain for consumer
care products, consumer health products, food products, and home products.

A supplier typically participates in numerous different supply chains, which may involve a
wide variety of industries and customers. In the case of the mail order business, such as
Amazon.com, the company maintains an inventory of product from which it fills customer
orders. In the case of retail stores, the supply chain may also contain a wholesaler or distributor,
the store and, the manufacturer. The final consumer is always considered a member of the
supply chain.
There can be many types of supply chains.

Example: A third-party logistics (3PL) provider may be a member of two supply chains
where it is performing the logistics activities between companies that conventionally compete
with each other.
An example of an even more complex relationship could be the case of Reliance Communications.
Reliance Communications might find Nokia to be a customer in one supply chain, a partner in
another, a supplier in a third, and a competitor in still a fourth supply chain. This multiple
supply chain phenomenon also explains the complex nature of the network created by many
supply chains.

In large enterprises, like Dabur, involved in marketing a broad product line to numerous
customers – engaging in basic manufacturing and assembly, and procuring materials and
components on a global basis, the supply chain is very complex. However, for any supply chain,
there is only one source of revenue, the customer. Logically, the sources of cost are all flows of
information, product, or funds. Thus, the appropriate management of these flows is a key to
supply chain success. The conceptual framework of a supply chain is shown in Figure 1.3.

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