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What is a Supply Chain? We define it as a network of facilities including:

• Material flow from suppliers and their "upstream" suppliers at all levels,

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• Transformation of materials into semi-finished and finished products, and

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• Distribution of products to customers and their "downstream" customers at all levels.

  (show on diagram)

Here's an example dealing with a computer printer:

Depending on the situation, the supply chain may include major product elements, various suppliers, geographically dispersed activities, and both upstream and downstream activities. It is critical to go beyond your immediate suppliers and customers to encompass the entire chain, since hidden value often emerges once the entire chain is visualized. For example, a diesel engine manufacturer may be able to integrate a Global Positioning System (GPS) locator into their engine control system. Their immediate customer, a heavy truck manufacturer, may see no need for this functionality. However, the downstream customer, a trucking company with a large fleet, may be very interested in a locator system. Understanding the value to the downstream customer is part of the supply chain management process.

There is more to supply chain management than just material flows; information flows and financial flows are also important. Consider the figure below, which lists examples of material, information, and financial flows in each pull-down menu. For each row, choose the appropriate item. For example, if you feel that "products and parts" are materials that flow downstream from suppliers to customers, select "Products and parts" from the menu under "Material" in the downstream area. When you have chosen an answer for all six areas, click "Check Answers" at the bottom to see how you did.