Here is a simple definition to understand supply chain.
Supply Chain can be defined as the network of people, processes and systems working together to store, transport and transform raw materials and deliver the finished goods to the customers.
Supply chain activities are performed by a large group of people composed of positions such as Supply Chain Director, Upstream Manager, Downstream Manager, Operations Manager, Warehouse Manager, Procurement Manager, Demand Planner and Resource Planner. These positions are again supported by an army of executives.
There are several processes under functions such as procurement, demand management, operations, forecasting, order management, customer relationship management, supplier relationship management, warehousing, transportation, distribution, inventory management, reverse logistics, account management etc.
Here the term systems refer to the infrastructure composed of facilities such as production plant, offices, warehouses, distribution centres and retail stores. And machineries such as production equipment, material handling equipment, gadgets, tools etc. This term also refers to the software applications such as Enterprise Resource Planning (ERP), Warehouse Management System (WMS), Transportation Management System (TMS), Advanced Planning Systems (APS) and other supply chain productivity tools and applications.
So, going back to the definition, that these people, processes and systems are working together to store, transport and transform the raw materials into finished goods and deliver the same to the customers.
Recall the discussion on Supply Chain Model, where the physical supply system feeds the manufacturing facilities with the raw materials and components. These are transformed into the finished goods by the manufacturing processes to the desired end products. Such finished goods are made available in the market through the physical distribution system. So, the three elements of a supply chain are physical supply system, manufacturing companies and physical distribution system.
This is an excerpt from the sessions of Certified Inventory Optimization Professional (CIOP) of Integrated Institute of Supply Chain Management (IISCM). CIOP is based on Inventory Management Body of Knowledge (IMBoK v2.0).
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