| Chapter 1: | Objectives, methodology, approach and definition of terms |
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An understanding of the Supply Chain is important for those involved in the implementation of procedural improvements to the Supply Chain. The Supply Chain can be widely or narrowly defined, depending upon the perspective. At present, the tendency is for a wider definition, as seen at the conference carried out by the Council of Logistics Management (CLM)30 in the year 2002 and integrated into the definition advocated by the CLM. In accordance with this the Supply Chain can now be described as the total of all activities, procedures, etc., that are applied to a product from beginning to end.31
In this sense the Supply Chain may be seen as beginning, for example, in the mining of ore, the extraction of raw materials from the ground, or the planting of seeds. The chain continues through a multitude of transformations and distributions, which deliver the product to the end user. It ends with the conclusive disposal of the product and its residues. In line with this understanding, the Supply Chain represents more than just the physical movement of the goods: it also takes into account movements of information, finance, and knowledge.
It can therefore be taken from this that the Supply Chain comprises all procedures within the product life cycle,32 including the physical, informative, financial and knowledge-based procedures for the movement of products and services (from the supplier right up to end consumers).33 On the process side, a Supply Chain consists of all organizations included in the design, production and delivery of a product to the market.34
1.3.1 Definition of the Supply Chain
The definitions that can be found in academic and business-orientated literature include the whole span of perspectives – from the very narrow to the very wide demarcation of the term. Although the Supply Chain’s spectrum has expanded in the past years, more narrowly demarcated or emphasized definitions can still be found today. An overview of the various approaches to the definition of the Supply Chain follows. An appreciation of the differences involved in this field is a necessary precondition for the full comprehension of Supply Chain Management.
A key decision in this field is that of the side from which the Supply Chain is viewed, i.e., from the customer or the supplier side. In the supplier-centric approach, the Supply Chain represents a network of suppliers which manufacture goods. These goods are traded amongst each other as well as with additional parties. The goods originate with the supplier and arrive finally with the target customer. Between these start and end points, they often run through distributors and processing companies.35