The objective of a supply chain

The main purpose of the supply chain is to maximize overall value generated. Value is the difference between what the cost supply chain incurs and the worth end product has to the customer. Value of the commercial supply chain is strongly correlated with its profitability generally known as supply chain surplus.

For example:  A customer purchase a personal computer from IBM at $2,000, which indicates the revenue supply chain achieved. All the stages incur costs to make sure the efficient transfer of funds, information, storage of the product, transportation to the final consumer etc. The difference between the supply chain cost and revenue generated from personal computer represent the supply chain surplus or profitability. Supply chain surplus is the total profit shared by all the stages and intermediaries. The greater the supply chain surplus the more successful is supply chain. Supply chain success is measured by its overall surplus not by the profit at each stage. 

     
Sources of the revenue for any supply chain are the customer. At Kmart, all cash flows are simply fund exchange except only one positive cash flow when customers purchase grocery or any other product etc, because each stage has different owners.  Kmart takes portion of funds from customers and share that fund with suppliers. Efficient flows of fund, information, and product is a key to supply chain success and maximize supply chain surplus or profitability.

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