WHY IS A SUPPLY CHAIN NECESSARY?

While supply chains have existed for a long time, business organizations have only paid attention to what was happening within their “four walls.” Few businesses understood, much less managed, the entire chain of activities that ultimately delivered products to the final customers. The result was disjointed and often ineffective supply chains.
 
Supply chain management is the management of networks of interconnected businesses involved in providing products and services to the final customers. Supply chain activities cover everything from product-development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.

The organizations that make up the supply chain are “linked” together through physical flows and information flows. Physical flows involve the transformation, movement, and storage of goods and materials. They are the most visible piece of the supply chain. But just as important are information flows. Information flows allow the various supply chain partners to coordinate their long-term plans, and to control the day-to-day flow of goods and material up and down the supply chain.

No two companies operate the same way. Even for companies in the same industry, supply chain management practices vary. While there will be exceptions, the methods described in this book are representative of most business organizations.