What are the objectives of a typical supply chain?

Table of Contents

Abstract

Supply chain management aims to maximize the overall value generated by the supply chain, which is the difference between the final product’s worth to the customer and the costs incurred in fulfilling their request. This value is strongly correlated with supply chain profitability, which measures total profit shared across all stages.

Keyword: Supply chain management, objectives

Introduction

There are different parties involved in a Supply Chain such as manufacturers, marketers, suppliers, transporters, warehouses, retailers, customers, etc. They are directly or indirectly involved in the fulfillment of the customer requirements. The main objective is to maximize the overall value generated. They continually look for sources of revenue and cost.

Supply Chain profit

The objective of every Supply Chain is to maximize the overall value generated. Value is the difference between what the final product is worth to the customer and the costs the supply chain incurs in fulfilling the customer’s request. Value is strongly correlated with supply chain profitability (also known as supply chain surplus). Supply chain profitability is the total profit to be shared across all stages of the supply chain.

Supply Chain Cost

Supply chain success should be measured by total supply chain profitability, not profits at an individual stage. The source of supply chain revenue is the customer. Sources of supply chain cost are flows of information, products, or funds between stages of the supply chain. Supply chain management is the management of flows between and among supply chain stages to maximize total supply chain profitability.

SCM OBJECTIVES

Conclusion

Balancing between effectiveness and responsiveness, and building a greener supply chain, are among the long-term and short-term goals of a Supply Chain.