1.1 WHAT lS A SUPPLY CHAIN?
A supply chain consists of all parties involved。directly or indirectly,in fulfilling a CUStomer request。The supply chain includes not only the manufacturer and suppliers,butalso transporters,warehouses,retailers,and even customers themselves。Within each organization,such as a manufacturer,the supply chain includes all functions involved in receiving and filling a customer request。These functions include。but are not limited tO,new product development,marketing,operations,distribution,finance,and CUStomer service。
Consider a customer walking into a Wal。Mart store tO purchase detergent。The supply chain begins with the customer and his or her need for detergent。The next stage of this supply chain iS the Wal。Mart retail store that the customer visits。Wal。Mart stocks its shelves using inventory that may have been supplied from a finished。goods warehouse or a distributor using trucks supplied by a third party。The distributor in turn iS stocked by the manufacturer(say,Proctor&Gamble〔P&G1 in this case〕。The P&G manufacturing plant receives raw material from a variety of suppliers。who may themselves have been supplied by lower-tier suppliers。For example。packaging material may come from Tenneco packaging。while Tenneco receives raw materials to manu。facture the packaging from other suppliers。This supply chain iS illustrated in Figure 1-1,with the arrows cOrresponding tO the direction of physical product flow。
A supply chain is dynamic and involves the constant flow of information product,and funds between different stages。In our example。Wal。Mart provides the product,aswell as pricing and availability information。to the customer。The customer transfers funds to Wal。Mart。Wal—Mart conveys point。of-sales data as well as replenishment orders to the warehouse or distributor,who transfers the replenishment order via trucks back to the store。Wal。Mart transfers funds to the distributor after the replen—ishment。The distributor also provides pricing information and sends delivery sched。ules to Wal。Mart。Wal—Mart may send back packaging material to be recycled。Similar
information,material,and fund flOWS take place across the entire supply chain。
In another example,when a customer makes a purchase online from Dell Computer,the supply chain includes,among others,the customer,Dell’s web site。the Dell assembly plant,and all of Dell’s 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 order information and pays for the product。The customer may later return to the Web site to check the status of the order。Stages farther up the supply chain use customer order information to fill the request。That process involves an additional flow of information。product。and funds between various stages of the supply chain。
These examples illustrate that the customer is an integral part of the supply chain。……