The relationship between a supply chain and a supply and demand model is an important one. Without this relationship, business would not be able to be as organized with their business. Along with this, the businesses would also not be able to distribute their products to the consumers. The consumers who purchase the products do not realize all of the steps that come with this relationship. There needs to be an understanding of both the supply chain and the supply and demand model. Supply Chain
Supply chain is the beginning of a business production. A business must have a supply chain in order to be able to receive products and to distribute them. The definition of supply chain is described as a certain network of other companies that works together to both serve the customer, and the consumer (Supply Chain, 2015). A supply chain is the main link between a business and its consumers. When a consumer purchases a product from a business it comes from a line of other companies. The product might come from one store that manufactures the product, then is sold to another store for a goods price, next it is sold to the customer at the price they are willing to pay. Supply chains are not always used to their full extent. Many companies are unaware of what really goes on within their supply chain. There are businesses that do not know the information flow of the supply chain, and only really focus on the visible aspect.
This results in the miscommunication and the potential to use the supply chain to its maximum potential (Handfield, 2011). According to “What Is A Supply Chain?” (n.d), a supply chain consists of all parties involved, directly or indirectly, in fulfilling customer request. The process consist of: a customer wanting a product in a store, the customer choosing the store, the store stocking the items on their shelves, the distributor the store works with to have the items supplied to the store, the distributor is then stocked by the manufacture and then the manufacture plant receives the raw materials from other various suppliers. The supply model consists of a chart that shows correlation between price and quantity supplied and is aimed to optimize the flow. The demand model consists of a chart that shows correlation between price and quantity demanded and the customer rather than the companies is what moves the demand model. Supply Chain Management
Supply Chain Management is just as the name suggests-it is controlling of materials, entities, and processes that are involved in producing and delivering goods and services. Planning and communication drive the Supply Chain. The planning is based on current and past demands. The Supply Chain is supplier driven. This is important to maintain a sufficient supply to meet the needs of demand. The Demand Model
The Demand model has transferred the reins from suppliers to consumers. The consumers/customers are at the center of all work, and will dictate how supply chain operate. Demand Chain Model is more complex in the fact that there is “upstream/downstream” relationship between the supplier and the customer. With this Supply Chain Model being customer driven, the customer determines what they wants, how they want it, and when they wants it, and businesses will have to make that accommodation. Supply and Demand Curve
The supply and demand curves are based on prices that are the result of buyers and sellers interacting in markets. Buyers and sellers do not have to be in the same place, they just have to want the same or similar product. Buyers comprise the demand side of the model and sellers comprise the supply side. Prices and quantities are determined where supply and demand comes together. Prices and quantities are the outputs of the supply and demand model and only apply when there is a competitive market. The supply and demand model only takes into consideration the market where there are many people all looking to buy and sell a similar product. Conclusion
All in all, supply chain, and demand models are useful tools to meet the need of supply for demand. If properly incorporated, consumers will be able to receive products that they desire at reasonable costs. Understanding supply and demand will enable organizations to properly keep up with demand, whether high or low, therefore, keeping supply at a steady flow.
Colander, D. C. (2013). Economics (9th ed.). Retrieved from The University of Phoenix eBook Collection database. Handfield, R. (2011). What is Supply Chain Management?. Retrieved from http://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management Supply Chain. (2015). Retrieved from http://www.businessdictionary.com/definition/supply-chain.html What is a Supply Chain?. (n.d.). Retrieved from http://www.sbaer.uca.edu/publications/supply_chain_management/pdf/01.pdf