Supply chain river

The supply chain river is a useful tool when it comes to highlighting the interconnection and symbiotic relationship between a supply chain and logistics.

Larson and Halldorsson (2004) argued four perspectives of logistics versus supply chain management, which includes the following models illustrated in the diagram below:

Four perspectives on Logistics vs SCM – this includes the Traditonalist model, Re-labelling model, Unionist model and the Intersectionist model

This, linked with the logistics, manufacturing and procurement viewpoint of supply chains demonstrate that there is no one clear view of what can be defined as supply chain management. The downside to this is often confusion, especially when businesses involved in supply chain or logistics management start to use these terms to market themselves.

The supply chain river is a useful tool to help explain the difference between a supply chain and logistics.

Think of a supply chain like a river. Looking back on the bicycle manufacturing task earlier in Step 1.5, the supply chain could be described as follows:

  • Components of the bicycle are purchased from suppliers and transported to raw material warehouses ready for manufacturing. This is known as ‘materials management’.
  • At the factory, the bicycle is assembled from the raw materials to make a final product, which is then moved to a warehouse ready for physical distribution to a retail shop. This stage post-manufacturing is known as physical distribution.

The river comparison is further emphasised when a supply chain is referred to as upstream, meaning from the factory up to the customer, or downstream to suppliers.

The activities that enable the supply chain to flow are logistics.

  • Transport is used to collect the raw materials
  • These are moved into a warehouse where inventory is managed
  • The raw materials are unitised so they can fit onto a vehicle or warehouse storage
  • Information systems notify different stages of the process and trigger other activities such as manufacturing
  • Sales at a shop bring in cash, which is used to re-order sold inventory
  • That information tells the manufacturer to make more or draw from their own inventory

The whole process goes right back to the supplier. Hence it can be seen that the flow in the supply chain river is logistics.

Showing the flow of the supply chain river, which includes the suppliers, purchasing, materials management, raw materials warehouse stock, manufacturing, production warehouse stock, physical distribution, shops and customers

Your task

So far, we have introduced you to a number of key concepts and terminology, including supply chain of things, supply chain management, logistic flows and supply chain rivers.

Take this opportunity to reflect on these definitions and capture this in your learning log.


References

Larson, P. and Halldorsson, A (2004) ‘Logistics Versus Supply Chain Management: An International Survey’. International Journal of Logistics: Research and Applications 7 (1) 18-31

Further reading

Larson, P. and Halldorsson, A (2004) ‘Logistics Versus Supply Chain Management: An International Survey’. International Journal of Logistics: Research and Applications 7 (1) 18-31

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This article is from the free online course:

Principles of Global Logistics Management

Coventry University