Supply chain definitions and perspectives

In Step 1.3, we introduced you to the concept of a supply chain and asked you to consider the different stages involved. In this step, we unpack this concept further.

The supply chain, like logistics, can be defined in a number of ways. The following definition recognises that a supply chain encompasses more than just the different stages of a process from the production of raw materials to the consumer.

It includes all logistics management activities and manufacturing operations, and it drives coordination of processes and activities with, and across, marketing, sales, product design, finance and IT.

(Council of Supply Chain Management Professionals 2017)

Building on this, supply chains are often viewed from three perspectives:

  • Logistics
  • Manufacturing
  • Procurement

This course is mainly concerned with supply chains from a logistics perspective, but it is important to recognise the alternative views of supply chains.

These differences mainly concern the power of individual members of a supply chain. Often, they are dependent on the position of the business within the supply chain.

A manufacturer will be interested in ensuring that their manufacturing supply chain is efficient and holds enough inventory to keep customers satisfied and ensure all systems are working at maximum capacity. Not all manufacturers are the most powerful members of a supply chain.

A grocery supply chain is often more powerful than the suppliers that provide the goods they sell.

If we consider the entire supply chain and the relationship between the various organisations and stages, the below definition highlights two distinct categories of activities – upstream and downstream. A supply chain is:

A network of organisations that are involved, through upstream and downstream linkages, in the different process and activities that produce value in the form of products delivered into the hands of the ultimate consumer.

(Mangan and Lalwani 2016)

When a supply chain is concerned with upstream activities, this is the supply chain stages involved with material inputs before manufacturing. Downstream of manufacturing is the customer side of the supply chain - that is, the production of materials into a finished product, distributed to retailers and subsequently purchased by customers.

Illustration of the supply chain – from source illustration by macrovector for Freepik. This shows the supply chain involving raw materials, producer, distributor, retailer, and customer.

The key is to realise that a supply chain is a network of different organisations (or, sometimes, different areas of a single organisation) all involved in delivering a product to the consumer. The network can be viewed from any of the three perspectives of logistics, manufacturing or procurement.

Your task

What is the difference between a supply chain and supply chain management? Investigate the differences and post your findings in the comments area.


References

The Council of Supply Chain Management Professionals (2017) CSCMP Supply Chain Management Definitions and Glossary. [online] available from https://cscmp.org/CSCMP/Educate/SCM_Definitions_and_Glossary_of_Terms/CSCMP/Educate/SCM_Definitions_and_Glossary_of_Terms [6 August 2019]

Mangan, J. & Lalwani, C. (2016) Global Logistics and Supply Chain Management. Chichester: Wiley

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This article is from the free online course:

Principles of Global Logistics Management

Coventry University