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Intro to Supply Chain

What is a supply chain?

A supply chain is a network used to deliver products and services from raw materials to end customers through an organized flow of information, physical distribution, and cash.

A basic supply chain has three entities. They are a producer, supplier, and customer. The flows that connect these entities are as follows: flow of physical materials and services from suppliers to the end customer, flow of cash from the customer to the raw materials supplier, and flow of information back and forth along the chain. There is occasional reverse flow of product returned, but a basic supply chain works in this way.

A seller is a supplier that provides goods and services to a person or organization with who the buyer does business. These sellers provide raw materials, energy, services, and components to a producer who then receives these components from a seller to produce a finished good or service. Then, the customer is the one who receives the finished product .

More specifically on how a supply chain works is in regard to its strategy. The three main supply chain strategies are reactive, stable, and efficient reactive. These strategies can be broken down as:


-Focused on execution, efficiency, and cost performance.

-Use simple connectivity technologies and have little need for real-time information.


-Works well when the chain acts to fulfill demand from trade partners.

Efficient reactive:

-Concerned with efficiency and cost management on the total delivered cost of finished goods.

These strategies each work in tandem with one of four flows. They are:


-Invoices, sales literature, specifications, receipts, orders, and rules and regulations.

-Only flow that can go in both directions.

Primary product flow:

-Materials, components, supplies, services, and finished products.

Primary cash flow:

-Payments of products and supplies.

Reverse product flow:

-Returns for repair, replacements, recycling, and disposals.

This is the simple breakdown of how products get from where they are made into the hand of consumers. These entities are in consistent communication with each other until the product reaches the customer.

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