View Full Version : Supply chain breakdown needed

07 Mar 2011, 05:33 AM
Iíve had a difficult time really grasping the whole supply chain concept. Anyway someone can break it down for me, keeping it simple as possible?

24 Mar 2011, 10:40 AM
Supply chain structure is going to vary pretty widely depending on what you’re dealing with. You’ve got to consider both the internal supply chain-- the one that gets the product from raw material to finished product-- and the general supply chain that gets the finished product from manufacturer to final customer. The two interconnect, of course, but they can function quite independently.

Here’s a very simple supply chain:

1. Raw material supplier, pretty much what it says.

2. Possible secondary supplier, most likely a supplier that converts raw material into basic components. Anything from raw ore converted into steel to a specialized microchip. This is sometimes several suppliers long.

3. Manufacturer puts together the final product, either entirely from raw materials or from disparate components.

4. First customer, this would be the manufacturer’s customer. Typically, a wholesale supplier, drop ship client, and the like. This is usually your chair.

5. Final customer, your customer. The end user of the product we’re following.

Product and information rides the chain both downstream (from the initial supplier) and upstream (back to the supplier). The downstream is obvious, and is detailed in the numbered list. What’s not quite so obvious is the upstream flow back to the manufacturer or suppliers, most commonly as “backhauls”. That is, truck loads put together so that the delivering trucks can return “home” without wasting a trip. Any materials capable of being recycled back into the stream travel upstream. Remember that there can be any number of links in a supply chain, and your job is to insert yourself as close to the #3 slot as possible. Hope that helps!