In the summer of 1962, Peter Drucker stated that the supply chain “is today’s frontier in business. It is the one area where managerial results of great magnitude can be achieved. And it is still largely unexplored territory”.

Forty years on this statement still holds true, except that the word ‘unexplored’ should be replaced with the word ‘misunderstood’. The term ‘supply chain’ has echoes of the business process re-engineering (BPR) fad of the early 1990s. Everybody was doing it, but finding two people who had the same understanding of the term was difficult. BPR seemed to cover everything from headcount reduction to channel strategy to organisational restructuring.

Supply chain falls into the same boat. For some, supply chain re-design is about reducing logistics costs, while for others it is re-defining the end-to-end material flow of an entire global industry.

Many organisations attribute their entire success to supply chain excellence – Benetton for quick product response, Wal-Mart for the cost advantage it gains and Peapod for home shopping. Other organisations are happy with reduced stock turns and increased order fill rate as their definition of supply chain success.
So what does it really cover? What exactly is a supply chain?

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This article is part of Axon's Supply Chain Management Process.  To view other articles in this process please visit the Supply Chain Management page.