Supply Chain

AAA

DEFINITION of 'Supply Chain'

The network created amongst different companies producing, handling and/or distributing a specific product. Specifically, the supply chain encompasses the steps it takes to get a good or service from the supplier to the customer. Supply chain management is a crucial process for many companies, and many companies strive to have the most optimized supply chain because it usually translates to lower costs for the company. Quite often, many people confuse the term logistics with supply chain. In general, logisitics refers to the distribution process within the company whereas the supply chain includes multiple companies such as suppliers, manufacturers, and the retailers.

VIDEO

Loading the player...

BREAKING DOWN 'Supply Chain'

Supply chains include every company that comes into contact with a particular product. For example, the supply chain for most products will encompass all the companies manufacturing parts for the product, assembling it, delivering it and selling it.

RELATED TERMS
  1. Commercialization

    The process by which a new product or service is introduced into ...
  2. Reverse Fulfillment

    The portion of the supply chain that moves returned products ...
  3. End To End

    A term used in many business arenas referring to the beginning ...
  4. Just In Time - JIT

    An inventory strategy companies employ to increase efficiency ...
  5. Gross Processing Margin - GPM

    The difference between the cost of a raw commodity and the income ...
  6. Option Chain

    A form of quoting options prices through a list of all of the ...
Related Articles
  1. Markets

    Boom in Bourbon Demand Creates Barrel Shortage

    Learn about the surge in demand for bourbon, and specifically how a shortage of oak barrels in 2015 is impacting the whiskey business.
  2. Stock Analysis

    How Is Ambarella Related to GoPro?

    Read about the close business relationship GoPro and Ambarella share, including a discussion of potential risks and future possibilities.
  3. Economics

    Explaining the Supply Chain

    A supply chain is the cumulative network involved in moving raw materials, components and finished products from original suppliers to end users.
  4. Investing

    Zooming In On Net Operating Income

    NOI is a long-run profitability measure that smart investors can count on.
  5. Insurance

    Working Capital Works

    A company's efficiency, financial strength and cash-flow health show in its management of working capital.
  6. Fundamental Analysis

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
  7. Personal Finance

    Five Companies Leading The Green Charge

    Corporations that reduce their environmental footprint anticipate large long-term gains.
  8. Economics

    The Problem With Today’s Headline Economic Data

    Headwinds have kept the U.S. growth more moderate than in the past–including leverage levels and an aging population—and the latest GDP revisions prove it.
  9. Investing Basics

    10 Companies That Yuppies Love

    Learn about 10 companies loved by the modern Yuppie, including how this demographic's impressive buying power has boosted these companies' earnings.
  10. Investing News

    How 'Honesty' Could Pay off for Jessica Alba

    Is it possible that Jessica Alba is one of the savviest businesswomen on the planet?
RELATED FAQS
  1. What are some ways to make a distribution channel more efficient?

    While there are many ways to make a distribution channel more efficient, the three high-level ways to increase the efficiency ... Read Full Answer >>
  2. What is the difference between upstream and downstream oil and gas operations?

    "Upstream" and "downstream" are general business terms referring to a company's location in the supply chain. The closer ... Read Full Answer >>
  3. Who are Toyota's (TYO) main suppliers?

    As the world’s biggest car manufacturer with more than 10 million cars sold in 2014, Toyota Motor Corp. has a diverse supply ... Read Full Answer >>
  4. What metrics can be used to evaluate companies in the wholesale sector?

    The largest wholesale distribution industries include motor parts, commercial equipment, electronics, petroleum products, ... Read Full Answer >>
  5. What impact is the farm-to-table movement having on the food & beverage industry?

    The farm-to-table movement is having a negative effect on the large companies in the food and beverage industry while creating ... Read Full Answer >>
  6. Who are Target's (TGT) main competitors?

    Target (TGT) is a discount retailer, which means that it generates revenue by offering competitively priced consumer goods. ... Read Full Answer >>
  7. What are foundry companies in the electronics sector?

    Foundry companies produce semiconductor chips for third-party manufacturers. Microchip companies utilize foundry services ... Read Full Answer >>
  8. What proportion of the chemicals sector is comprised of integrated companies with ...

    Chemical companies often become integrated and undergo other activities outside the chemical industry. Increased competition ... Read Full Answer >>
  9. What other sectors are most similar to electronics?

    The electronics sector is interconnected with sectors that engage in the design, production, distribution and sales of electronics; ... Read Full Answer >>
  10. What is the difference between a value chain and a supply chain?

    The difference between a value chain and a supply chain is that a supply chain is the process of all parties involved in ... Read Full Answer >>
  11. What types of risk should an investor consider before investing in the chemicals ...

    The chemicals sector is highly regulated and most businesses in the sector monitor supply chain risks very closely. Chemical ... Read Full Answer >>
  12. What types of industries are the main consumers of the products of the chemicals ...

    A variety of different industries use chemical products. Construction, automotive manufacturing and other industrial manufacturing ... Read Full Answer >>
  13. What commodities are the main inputs for the electronics sector?

    A variety of metals, plastics, raw materials and chemicals are used by the electronics industry. Some of the more common ... Read Full Answer >>
  14. Is there a difference in risk between the different regions of the U.S. banks?

    There is a considerable difference in risk between different regions of the U.S. banks. Due to various economies of scale, ... Read Full Answer >>
  15. Why should an investor add exposure to the automotive sector to his or her portfolio?

    Global demand for automobiles is expected to continue increasing as more consumers can afford and have an interest in owning ... Read Full Answer >>
  16. Is backward integration ever illegal?

    Backward integration occurs when a company purchases a supplier in an attempt to increase supply chain efficiency and reduce ... Read Full Answer >>
  17. What impact has robotic production had on profitability in the automotive sector?

    Robotic production has grown tremendously in the United States since the 1920s, when automobile factories first began automating ... Read Full Answer >>
  18. What is an Original Equipment Manufacturer (OEM) in the automotive sector?

    OEM stands for Original Equipment Manufacturer. The OEM is the original producer of a vehicle's components, so OEM car parts ... Read Full Answer >>
  19. What other sectors are most highly correlated with the aerospace sector?

    Sectors that correlate closely with the aerospace sector include the aviation and defense industries. These industries all ... Read Full Answer >>
  20. What are common risks associated with investing in the aerospace sector?

    Investors considering the aerospace sector should carefully consider the challenges and opportunities the industry presents. ... Read Full Answer >>
  21. What are the main problems with a JIT (just in time) production strategy?

    The benefits of the just-in-time (JIT) production strategy are well-documented, but it can also have some serious disadvantages. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Depreciation

    1. A method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both ...
  2. Recession

    A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, ...
  3. Bubble Theory

    A school of thought that believes that the prices of assets can temporarily rise far above their true values and that these ...
  4. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  5. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  6. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!