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My Introspective

by Laurus Nobilis
My BrainCast

Supply Chain

Supply Chain Management:

Integrated Supply Chain (E)


What was the evolution history of supply chain management? What are the main components of supply chain? How big is the importance of supply chain integration?


Posted: Oct 2011









The integrated supply chain concept connects a whole range of individual activities into interconnected and interrelated structure. These activities span from purchasing of raw materials, transporting and producing to delivery of product to the customer in one direction. The opposite direction flow exist as well. There are three major items flow up and down the stream of supply chain: Product, Information, and Financial Resources, as is shown on the graph.

Products in a supply chain are flowing downstream from origin, raw material, to its final destination, finished good delivered to consumers. In the opposite direction, returned products and information concerning product orders are flowing upstream. Payments by customers to retailers, distributors, manufacturers, and suppliers are also flowing upstream. These two types of flows are in the opposite direction and they are complement each outer, though making integrated supply chain. There are other aspects of products, information, and financial resources that flow upstream and downstream in typical supply chains.

Supply chain management plays a very important role within the company. The supply chain generate most of the costs of the company, due to the width and complexity of the function (manufacturing, warehouse, distribution). Any inefficiency can create tremendous negative impact to the company. On the other hand, good supply chain management can bring huge benefits and competitive advantage to the company.

  • Products. This begins with the raw materials and is being transformed into products that are purchased by customers and consumers at retail locations. Products include the physical product itself, packaging, labels, etc.

    Downstream processes hold raw materials, work-in-process, and finished goods moving towards the customer.

    Upstream processes contain reverse process of damaged and returned products flow to be disposed of or re-sold. Also includes disposition of used packaging materials, returnable containers etc.

  • Information. Products can't be ordered, produced, or distributed without the placing the accurate and detailed information. That is information contain orders, inventory levels, production schedules, shipment dates, order status, etc.

    Downstream processes contains Information accompanying the downstream flow of product. Includes order confirmation, advance ship notices, and billing/invoicing information.

    Upstream processes contain information relating to product sales and usage, as well as information relating to product returns.

  • Financial resources. Products need to be paid for. Therefore, payments flow between the various links of the supply chain - manufacturers to suppliers, distributors to manufacturers, retailers to distributors, and consumers to retailers. The flow of financial resources is a function of payment terms, credit terms, return policies, and other terms of trade.

    Downstream processes holds credits, discounts and promotional allowances paid to customers from upstream supply chain partners.

    Upstream processes contain payments by customers or consumers which flow to retailers, distributors, manufacturers, and suppliers.


Continue Reading:

Overview of Supply Chain Components
Historical Development of Supply Chain
Traditional and Modern View to Supply Chain
Supply Chain Activities
Order Processing
Demand and Supply Planning
Inventory Management
Customer Care
Integrated Supply Chain
Financial Resources
Integration vs. Non-Integration


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