A supply chain is divided into a number of stages and this is primarily to satisfy customer needs.
The supply chain exists for this reason and this is how companies generate profits.
A typical supply chain may have a variety of stages that include customers, retailers, wholesalers or
distributors, manufacturers and raw material suppliers. Supply chain is a different entity in the
sense that each stage of the supply chain is very important and not one stage can survive without
the other. Each participant in the supply chain must work together to realise a common goal –
increased customer satisfaction. There should be interaction and coordination between the
different stages to realise this goal.
Imagine a raw material supplier who makes the necessary components and sends the material to
the material warehouse. From here it goes to the manufacturer and after the completion of
manufacturing operation the material goes to a warehouse for storing finished goods. On receipt of
an order, it is transported to a customer warehouse. From here the product moves to a retail outlet
where it is purchased by the customer. From this it is very easy to understand the philosophy of
supply chain management. One stage cannot exist without the other. Without a retail outlet, the
supplier cannot make a profit. Without a customer, the store has no business.
From this we understand that the finished product that reaches the final customer is actually the
coordinated and consistent effort of multiple organisations. We also understand that each
organisation must stop concentrating solely on their own activities and also give due importance to
inter-organisational activities too. They should understand what is happening outside their four
walls and in the supply chain so that the finished goods can be delivered to the customer efficiently.
In short, each firm in the supply chain directly and indirectly affects the performance of all the
other supply chain members. It also affects the ultimate overall channel performance. Members
should focus on developing innovative solutions to create unique individualised sources of
customer value. It also reminds the purpose of supply chain management as to improve customer
value and satisfaction.