What is Supply Chain UPDATED for 2023 (SUPPLY CHAIN BASICS, LEARNING LOGISTICS SERIES) Lesson 1

Introduction

Welcome back, everyone! In this video, we’re going to talk about what a supply chain is. If you’re familiar with the channel, you know we already have a video on this topic. I’m going to link it here in the cards or somewhere in the description below. Today, however, is an updated version—the 2023 version—of what a supply chain is. So, what do you say, stick around and let's watch!

Introduction to Supply Chain

Supply chain is one of the most fundamental concepts you need to grasp in Supply Chain Management and Logistics. The supply chain includes all parties directly or indirectly involved in fulfilling a customer order. This involves diverse companies, organizations, and service providers coming together to bring a product or service to a customer. This scope covers all the way from manufacturing to end-consumer delivery.

The supply chain involves manufacturers, suppliers, shippers, wholesalers, retailers, and even the consumers themselves. Each of these organizations has specific functions, such as product development, marketing, operations, sales, finance, and customer service, among others.

Real-Life Supply Chain Example: Walmart

To make things clearer, let’s examine Walmart’s supply chain as an example. Imagine a customer wants to buy laundry detergent at Walmart. This customer demand initiates a series of steps within Walmart's supply chain. They source or purchase finished goods and distribute them to their nationwide stores.

Walmart sources its laundry detergent from vendors like Procter & Gamble. They then transport these products using their own fleet and third-party logistics providers. This whole process is planned using forecasting and demand planning to ensure that products are available on the shelves when customers arrive.

In a hypothetical visual representation, Walmart sits at the center of the supply chain. You’ll see the interconnected roles of Procter & Gamble (the vendor), the Walmart warehouse, and the consumer.

Understanding Supply Chain Flows

The term ‘supply chain’ might suggest a linear sequence of actions but in reality, it resembles more of a dynamic, interwoven network. Supply chain flows refer to the continuous movement of material, information, and finances among the different stages of the supply chain. These flows occur constantly and in both directions.

Walmart, for example, provides pricing and availability information to customers, which then conveys Point of Sales data back to the distribution centers. The distribution centers then replenish stock by managing orders from suppliers like Procter & Gamble, transferring funds, and reordering materials as needed.

Additional Example: Dell Computers

Dell employs a unique supply chain structure that includes both direct-to-consumer and traditional retail models. In a direct-to-consumer model, Dell sells custom-built computers directly from their website. In contrast, their traditional retail model involves vendors and retailers like Walmart and Gome Group distributing Dell products through their own channels.

The Role and Importance of the Customer

The customer is widely regarded as the 'driver' of the supply chain. Customer needs and preferences dictate the design and operation of the supply chain. Thus, the ultimate goal of any supply chain is to satisfy these customer needs.

Supply Chain Design

Supply chain design hinges on understanding customer needs and the roles of various involved parties. For example, Dell uses multiple supply chain structures to cater to different customer segments—direct-to-consumer for customized products and traditional retail for mass-distributed products.

Conclusion

In closing, we've delved into the foundational aspects of supply chains, explored real-world examples like Walmart and Dell, and emphasized the importance of customer-centric design. To learn more, you can check out the courses we offer through MVC Logistics Academy.

Thank you for watching! I'm Professor Rodriguez, and see you next time. Stay tuned for the next lesson where we’ll talk about objectives of a supply chain.

Keywords

Supply Chain
Logistics
Customer Order
Manufacturers
Suppliers
Retailers
Wholesalers
Direct-to-Consumer
Traditional Retail
Supply Chain Flows
Supply Chain Design
Demand Planning

FAQ

1. What is the primary aim of a supply chain?

The primary aim of a supply chain is to satisfy customer needs efficiently and effectively by coordinating various stakeholders—from manufacturers to end consumers.

2. Who are the main parties involved in a supply chain?

The main parties involved are manufacturers, suppliers, shippers, wholesalers, retailers, and the consumers themselves.

3. What does the term 'supply chain flows' mean?

Supply chain flows refer to the continuous movement of materials, information, and finances among different stages of the supply chain, happening both ways and at all times.

4. Why is the customer considered the 'driver' of the supply chain?

The customer is considered the driver because their demand and preferences dictate how the supply chain is structured and how it operates to meet those needs.

5. What's the difference between Direct-to-Consumer and Traditional Retail supply chain models?

In a Direct-to-Consumer model, products are sold directly to customers through online platforms, whereas in a Traditional Retail model, products go through vendors and retailers before reaching the customer.

6. How does demand planning benefit companies like Walmart?

Demand planning helps companies like Walmart forecast the demand for products, ensuring that they can maintain optimal inventory levels and meet customer requirements without shortages or overstocking.