The term supply chain conjures up images of product or supply moving from suppliers to manufacturers to distributors to retailers to customers along a chain. It is important to visualize the collection of information, funds, and product flows along both directions of this chain.

  The term supply chain may also imply that only one player is involved at each stage. In reality, a manufacturer may receive material from several suppliers and then supply several distributors. Thus, most supply chains are actually networks. It may be more accurate to use the term supply network or supply web to describe the structure of most supply chains.

  These examples illustrate that the customer is an integral part of the supply chain. The primary purpose from the existence of any supply chain is to satisfy customer needs, in the process generating profits for itself. Supply chain activities begin with a customer order and end when a satisfied customer has paid for his or her purchase.

  In another example, when a customer purchases online from Dell Computer, the supply chain includes, among others, the customer, Dells Web site that takes the customers order, the Dell assembly plant, and all of Dells suppliers and their suppliers. The Web site provides the customer with information regarding pricing, product variety,and product availability.

  Having made a product choice, the customer enters the site to check the status of the order. Stages further up the supply chain use customer order information to fill the order. That process involves an additional flow of information, product, and funds between various stages of the supply chain.

Note

The customer transfers funds to Wal-Mart. Wal-Mart conveys point-of-sales data as well as replenishment order via trucks back to the store.

Wal-Mart transfers funds to the distributor after the replenishment. The distributor also provides pricing information and sends delivery schedules to Wal-Mart. Similar information, material, and fund flows take place across the entire supply chain.