A supply chain is the combination of the manufacturers, suppliers, warehouses, retailers and even customers themselves; which directly or indirectly fulfill customers’ needs and preferences. Within each firm such as a manufacturers or producer, supply chain consists of all functions involved in receiving and filling needs or request of customers. These functions are new product development, operations, distribution, marketing, finance, customer services and many more functions.

For example: Customer went to a Wal-Mart shop to purchase soap. The Wal-Mart’s supply chain starts with the customer and his/her need for soap. Subsequent step is the Wal-Mart retail shop that the customer visits. Wal-Mart fills its shelves with the finished goods warehouse or by 3rd party. The warehouses are stocked by the manufacturers such as Nestle. Nestle receives its raw material from different suppliers.

A supply chain involves product, the constant flow of information and funds among different stages. Wal-Mart Corporation offers products, their availability and pricing information to the customers. Customers send their money to Wal-Mart Corporation, and then it conveys point of sales information and replenishment order to the distributors or warehouses. After replenishment Wal-Mart transfers funds to the distributor. Distributor deliver schedules and pricing information to the Wal-Mart. Wal-Mart may send back material to be recycled. Fund flows, related information and material takes place through the complete supply chain.           

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