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Updated: Nov 26, 2018

A supply chain consists of all the parties involved, directly or indirectly, in fulfilling a customer request / demand. The supply chain extends from the final customer through a variety of retailers, wholesalers and distributors, and goes back to the manufacturers and their component and raw material suppliers. Within the chain, there are flows of materials and products, information and money.

The final customer’s demand sets the entire supply chain in motion and following is track path it follows on:

  1. It generates a course of actions at retailing to respond to such demand, by having the necessary products in place to satisfy the customers.

  2. These ultimately involve the generation of requests / demand at the next level upstream in the supply chain, at wholesalers or distributors.

As a supply chain lengthens, there are more stages at which orders are placed. The original consumer demand is translated into an order from the retailer to replenish its stock; this depletes the stock at the next stage (e.g. wholesaler), which necessitates an order on the next stage (e.g. manufacturer), and so on until the end of the chain is reached.