DRIVERS AND

PARTICIPANTS OF
SUPPLY CHAIN
CHAPTER 4
Supply Chain Major Drivers
• refer to the key factors that influence the
efficiency, cost, and performance of a
supply chain.
• These drivers determine how well a
company can balance responsiveness
(meeting customer demands quickly) and
efficiency (minimizing costs while
maximizing productivity).
 1.Facilities
Six Major 2.Inventory
Supply 3.Transportation
Chain 4.Information
Drivers 5.Sourcing
6.Pricing
Facilities
• The physical locations where goods are
produced, stored, and distributed (e.g.,
factories, warehouses, and distribution
centers).
• Their number, location, and capacity
affect cost and delivery speed.
Inventory
• The raw materials, work-in-
progress, and finished goods held
at different points in the supply
chain.
• Proper inventory management
ensures product availability while
reducing excess storage costs.
Transportation
• The methods and networks used to
move goods from one point to
another (e.g., air, sea, rail, and
road).
• Choosing the right transportation
method balances speed, cost, and
reliability.
Information
• The data and technology systems
used for supply chain decision-
making, including demand
forecasting, real-time tracking, and
inventory management.
• Good information flow improves
coordination and efficiency.
Sourcing
• The selection of suppliers and
procurement strategies.
• Efficient sourcing ensures the
quality of materials at the best
cost, affecting production and
supply chain reliability.
Pricing
• The strategies used to set product
prices, influencing demand,
profitability, and supply chain
decisions.
• Dynamic pricing, discounts, and
promotions help balance supply
and demand.
Why Are These Drivers Important?
• These drivers work together to improve
supply chain performance, reduce costs,
increase customer satisfaction, and provide
a competitive advantage.
• Businesses must balance these drivers
effectively to maintain a strong and
resilient supply chain.
Main Participants in a Supply
Chain
Suppliers – Provide raw materials,
components, or products needed for
manufacturing or resale. They can be local
or global.
Manufacturers/Producers – Convert raw
materials into finished goods through
production processes. They can be factories,
food processors, or assembly plants.
Main Participants in a Supply
Chain
Distributors/Wholesalers – Buy products
in bulk from manufacturers and distribute
them to retailers or businesses, ensuring
availability in the market.
Retailers – Sell products directly to
consumers. Examples include supermarkets,
online stores, and specialty shops.
Main Participants in a Supply
Chain
Customers/Consumers – The final users of
the product or service, whether individuals
(B2C) or businesses (B2B).
Logistics Providers – Handle
transportation, warehousing, and
distribution of goods. They ensure timely
and efficient delivery (e.g., shipping
companies, third-party logistics providers)
Main Participants in a Supply
Chain
Service Providers – Offer specialized
services that support supply chain activities,
such as IT solutions, financial institutions,
consultants, and supply chain managers.
Regulatory Bodies – Government agencies
and industry organizations that set laws,
standards, and regulations affecting supply
chain operations (e.g., customs,
environmental agencies).
Aligning The Supply Chain With
Business Strategy
• Ensuring that supply chain operations
support and enhance the company’s overall
goals, whether they focus on cost
leadership, differentiation, or
responsiveness.
• A well-aligned supply chain helps
businesses stay competitive, improve
customer satisfaction, and maximize
efficiency.
Key Steps to Align the
Supply Chain with Business
Strategy
1.Understand the Business Strategy
2.Define Supply Chain Priorities
3.Leverage Technology and Data
Analytics
4.Enhance Collaboration and
1. Understand the Business
Strategy
• Identify whether the company focuses on cost
leadership (minimizing costs),
differentiation (offering unique
products/services), or responsiveness (fast
and flexible delivery).

Example: A luxury brand will prioritize quality

and exclusivity, while a budget retailer will
focus on cost efficiency.
2. Define Supply Chain Priorities
• Based on the business strategy, set clear
goals for supply chain performance, such
as cost efficiency, speed, flexibility, or
innovation.

• Example: A fast-fashion retailer like Zara

aligns its supply chain to ensure rapid
production and delivery of new designs.
3. Leverage Technology and
Data Analytics
• Implements ERP systems, AI, and big data
analytics to improve forecasting, optimize
logistics, and enhance visibility across the
supply chain.

• Example: Amazon uses AI-driven demand

forecasting and robotics in warehouses to
enhance efficiency.
4. Enhance Collaboration and
Flexibility
• Work closely with suppliers, distributors, and
logistics providers to ensure alignment and
adaptability.

• Example: Toyota’s Just-in-Time (JIT) system

ensures suppliers deliver components exactly
when needed, reducing waste.
Technology in Supply Chain
Operations
• Technology plays a vital role in supply
chain operations by improving the
efficiency, speed, and accuracy of
business processes.
• It helps businesses to manage the flow
of goods, services, information, and
finances across the supply chain.
Technology in Supply Chain
Operations
• Supply chain technology connects
suppliers, manufacturers, warehouses,
and customers to ensure that
products reach the right place at the
right time.
Supply Chain Technology
• refers to the use of modern digital
tools, software, and systems to
automate, monitor, and optimize
different supply chain activities such
as:
•Procurement
•Production
•Storage
•Distribution
 Types of Technology Used in Supply
Chain Operations
Technology Description Importance
Software that manages
Enterprise Resource daily business activities Improves coordination
Planning (ERP) like inventory and between departments.
production.
Radio Frequency Small tags used to track Provides real-time
Identification (RFID) products automatically. product location.
Software that controls
Warehouse storage and product Improves warehouse
Management Systems movement in efficiency.
(WMS) warehouses.
 Types of Technology Used in Supply
Chain Operations
Technology Description Importance
Global Positioning System Tracks delivery vehicles Improves delivery speed
(GPS) and products. and security.
Secure digital records of Provides transparency and
Blockchain Technology supply chain transactions. security.
Machines that can predict Helps in decision-making
Artificial Intelligence (AI) demand and analyze data. and automation.
Online platforms for
E-Procurement Systems buying goods and Saves time and reduces
services. paperwork.
 Types of Technology Used in Supply
Chain Operations
Technology Description Importance
Machines that deliver Machines that deliver
Drones and Robotics small packages and sort small packages and sort
products. products.
cont
Benefits of Technology in Supply Chain
Operations

• Faster delivery times

• Cost reduction
• Improved inventory management
• Better communication
• Accurate demand forecasting
• Higher customer satisfaction
Challenges of Using Technology in Supply Chain
Operations

• High initial costs

• Cybersecurity threats
• Regular system upgrades
• Need for employee training
• System failures and breakdowns
A. Procurement
• refers to the process of sourcing,
acquiring, and purchasing goods,
services, or raw materials needed by a
business to produce products or deliver
services.
• It involves selecting suppliers, negotiating
contracts, and ensuring that the right quality
and quantity of materials are delivered at the
right time and price.
A. Procurement
• plays a crucial role in supply chain
operations by helping businesses manage
costs, maintain product quality, and build
strong relationships with suppliers.
• Effective procurement ensures that
production processes run smoothly without
delays or shortages.
B. Production
• refers to the process of transforming raw
materials or components into finished
goods or products.
• It is one of the most critical stages in the
supply chain, bridging the gap between
raw material suppliers and distribution
to customers.
Key Stages of Production in
Supply Chain
1. Procurement of Raw Materials
Sourcing raw materials from suppliers.
2. Production Planning
Determining what, when, and how much
to produce based on demand forecasts.
3. Manufacturing/Production Process
The actual process of converting raw
materials into finished products.
Key Stages of Production in
Supply Chain
4. Quality Control & Testing
Ensuring products meet quality standards.
5. Packaging & Labeling
Final preparation of products for
distribution.
6. Inventory Management
Storing finished goods before shipping.
Types of Production Systems in Supply
Chain
Production Type Description Example
Produce goods in
Fast-moving consumer
Make-to-Stock (MTS) advance based on
goods
forecast
Produce goods only
Make-to-Order (MTO) after receiving an Custom furniture
order
Basic parts are made
Assemble-to-Order in advance, final
Laptops
(ATO) product is assembled
after order
Produce goods only
Just-in-Time (JIT) when needed to Automotive parts
C. Storage
• refers to the process of holding raw
materials, semi-finished products, or finished
goods at different stages of the supply chain
until they are needed for further production,
distribution, or delivery to customers.
• It plays a vital role in ensuring product
availability, balancing supply and demand,
and enhancing the overall flow of goods.
Role of Storage in Supply Chain
• Storage acts as a buffer between different
stages of the supply chain and ensures:
• Continuous product availability
• Timely delivery to customers
• Protection of goods
• Better inventory management
• Efficient order fulfillment
 Types of Storage in Supply Chain
Type Purpose Example
Raw Material Holds raw materials Iron, wood,
Storage before production chemicals
Stores semi-
Work-in-Progress Half-assembled
finished goods
(WIP) Storage furniture
during production
Holds completed
Finished Goods Mobile phones,
products ready for
Storage clothes
distribution
 Types of Storage in Supply Chain
Type Purpose Example
Stores temperature- Medicines, food
Cold Storage
sensitive products products
Temporary storage
E-commerce
Distribution Centers before goods are
products
shipped to retailers
Importance of Storage in Supply
Chain
• Inventory Control – Helps manage stock
levels.
• Demand Fluctuation Management –
Stores surplus goods during low demand.
• Emergency Backup – Acts as a buffer
during supply chain disruptions.
Importance of Storage in Supply
Chain
• Order Fulfillment – Ensures products are
available for quick delivery.
• Cost Management – Reduces
transportation costs by consolidating
shipments.
D. Distribution
• It refers to the process of delivering
finished products from manufacturers or
suppliers to the final customers through
various channels.
• It acts as the bridge between production
and customer demand, ensuring the right
products reach the right customers at the
right time.
Role of Distribution in Supply
Chain
• Distribution is a key function that
ensures:
• Product availability at the right location
• Timely delivery of goods
• Customer satisfaction
• Efficient order fulfillment
• Business profitability
 Process of Distribution in Supply
Chain
Stage Description

Order Processing Receiving and confirming customer orders

Packaging Preparing goods for delivery

Warehousing Temporary storage before shipment

Moving goods from warehouse to
Transportation
customers
Delivery Final delivery to customers or retailers
 Functions of Storage in Supply Chain
Function Description

Receiving Goods are received and verified

Sorting Products are sorted based on categories

Storing Goods are placed in assigned locations

Picking Selecting products for shipment

Packing Packaging goods for delivery

Dispatching Shipping products to customers or retailers

Functions of Distribution in
Supply Chain
• Order Fulfillment – Delivering products as per
customer requirements.
• Transportation – Moving goods across
locations.
• Warehousing – Temporary storage for quick
access.
• Inventory Management – Tracking stock
availability.
• Customer Service – Handling returns and
customer queries.
E. Customer Delivery
• It is the final and most important stage
where finished products are transported
from warehouses or distribution centers to
the final customer or end user.
• It directly affects customer satisfaction,
brand reputation, and business
success, making it one of the most crucial
parts of the supply chain process.
Role of Customer Delivery in
Supply Chain
• Customer delivery acts as the final
link in the supply chain by ensuring:
• Right product
• Right quantity
• Right place
• Right time
• Right customer
 Types of Customer Delivery in
Supply Chain
Delivery Type Description Example
Products are
delivered directly
Direct Delivery Amazon Fresh
from manufacturer
to customer
Products go
through
Indirect Delivery distributors or Supermarkets
retailers before
reaching customers
 Types of Customer Delivery in
Supply Chain
Delivery Type Description Example
Fast delivery within Zomato, Flipkart
Express Delivery
24-48 hours Express
Delivery on a pre-
Furniture or
Scheduled Delivery decided date and
appliances
time
Final delivery from
warehouse to
Last-Mile Delivery Swiggy, Amazon
customer's
doorstep
Process of Customer Delivery in
Supply Chain
1.Order Confirmation
Customer places an order.
2.Order Processing
The system verifies payment, stock availability,
and customer details.
3.Packaging
Products are packed for safe transportation.
4.Shipment Allocation
Choosing the best delivery partner or
transportation method..
Process of Customer Delivery in
Supply Chain
5.Tracking & Dispatch
Real-time tracking updates are shared with
customers.
6.Delivery to Customer
Product is delivered to the customer’s
doorstep.
7.Return Management (If Any)
Handling product returns and customer
complaints.
 Challenges in Customer Delivery
Challenge Description
Traffic, weather, or supply chain
Delivery Delays
disruptions
High Delivery
Last-mile delivery expenses
Costs
Incorrect
Wrong products or addresses
Deliveries
Tracking Issues Lack of real-time shipment updates
Customer
Return management problems
Returns