The Components of Supply Chains
• The term supply chain comes from a picture of how partnering organizations in a
specific supply chain are linked together.
• Figure 1 shows a relatively simple supply chain, which links a company with its
suppliers (on the left) and its distributors and customers (on the right).
• The upper part of the figure shows a generic supply chain;
• The lower part shows the chain of a toy manufacturer.
• Notice that suppliers may have their own (second-tier) suppliers.
• In addition to flow of material there is a flow of information (shown only in the upper part of the figure) and money as well.
• The flow of money usually goes in the direction opposite to the flow of materials.