Knowing Supply Chain

Basically material flow consist of 3 section. Raw material (RM) flow towards to manufacturer company start from supply system, then RM processed in plant, and after become a finish good, it distributed to end customer with good distribution system.

There are several important factor in supply chain:
• Supply chain include all activity and processing to supply a product to deliver to end customer.
• There are many company will connected in supply chain.
• A customer can become a supplier for another customer, so this supply chain will have several supplier.
• Although distribution system enable a direct shipment from producer to customer, depend on product and market condition, they also can use distributor like wholesale, retailer.
• material flow usually from supplier to customer, information flow from both side, and cost flow from customer to supplier.

In the past, the biggest focus company is in internal. Indeed company realize there are another factor such as supplier, distributor, and customer. But they only considered as business relationship. For example, purchasing have to negotiate the price as cheap as possible and they want a guarantee about the product, delivery time, however this activity only prosper the company. Supplier usually positioned as an enemy.

Today, time has changed. Company adopt supply chain concept that covered all activity from RM production to deliver to customer as a bond of chain from activity. In chain supply there are 3 main factors, there are:
• material flow,
• information flow, and
• cost flow.
(Source : Introduction to Materials Management pg. 5)