| Chapter 1: | Objectives, methodology, approach and definition of terms |
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The demand-side Supply Chain can be described as the demand chain focusing upon market demand towards suppliers. It becomes clear during the explicit consideration of the demand that a respective Supply Chain is customer driven.40 The term pull concept is occasionally used to describe this process of government by a form of “demand vacuum.”41
In exactly the same way as a supplier can have a multitude of Supply Chains to monitor, the supplier’s customer also has limited demand chains that can be individually analyzed. The demand chain translates a customer’s objective into information that the supplier can use as an instruction to act upon and is, in this sense, determined by a decision process. The four general stages by which the decision process is characterized begins with the definition of the purpose (define purpose). At the second stage planning takes place (plan), for example in the form of a category plan. The third stage comprises the management of consumption and requirements (manage consumption and requirements); for example, within the field of stock management. Buying transactions (purchase transactions) are at the center of the last stage; for example, a call-off order as part of a master agreement.42
An alternative approach is the organization-orientated view of the Supply Chain. In accordance with this, the Supply Chain represents an alignment of processes within a company, as well as with other companies (inter- and intra-business processes), which produce goods and services and deliver them to the customer. It comprises actions such as, for instance, procurement of material, production planning and distribution. Purchasing, production, inventory management, stock-keeping and transport are usually regarded as part of the SC organization. Marketing, sales, financial areas and strategic planning, on the other hand, are not considered to be a part of the SC organization. Product development, marketing plans, order registration, customer service and company accounting are not clearly assigned. They clearly belong to the SC processes, but are only seldom part of the SC organization.43