Supply Chain Defined

Q: What is a supply chain?

A supply chain is a network that exists between different companies for the purpose of producing and moving a specific product or service.

The supply chain is best thought of as the series of decisions and tasks needed to move a good or service from the supplier to the customer.

Supply chain management involves the coordination of both internal and external operations.

It involves making strategic commitments that support and reflect the doctrine, culture, and values of the company.

Those strategic commitments focus on the value of the flow, the working capital used to obtain the inventory moved, the cost to move and store that inventory, and the profits of the different external and internal entities in the process.


That is a mouthful.

Let’s break it down into chunks. A supply chain is:

  1. A network between different companies,
  2. For the production and movement,
  3. Of a specific product.

...of a specific product? Could that be a SKU?


Coordination between the different business entities requires effort. Each company has its own set of revenue, profit, and effort strategic commitments to maintain.

Those strategic commitments affect the tactical options the companies can make. Multiple strategic commitments define the rules used to choose which tactical options to deploy, and how to coordinate those tactics to create the best value.

With the tactics chosen, operations can progress.

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