5.1 Introduction

In the last three chapters, we have considered the three key elements of logistics and we now need to look at how the total supply chain behaves as a system to supply consumers with goods and services. Most supply chains start at some point with raw materials, either as a result of mining, quarrying and gathering resources, or as a result of agricultural activity. Thereafter, they pass through various stages of processing, production and manufacture before being distributed through supply systems to consumers (Figure 5.1). These industrial activities are frequently classified into three sectors as follows.

Figure 5.1: The supply chain and the demand chain

The primary sector, comprising the exploitation of natural resources:

• mined;

• quarried;

• gathered (fishing, harvesting);

• grown (agriculture).

The secondary sector, including a variety of processes:

• extraction;

• refining;

• processing and process manufacture;

• component manufacture;

• sub-assembly and assembly;

• reprocessing;

• construction.

The tertiary sector, through which they then reach the consumer:

• packaging;

• distribution;

• retail;

• repairs;

• services.

In some instances, notably in the energy industry, for instance oil companies and some water companies, a single enterprise controls the whole supply chain from raw material to end consumer, but this is the exception rather than the rule. It is much more frequently the case that many companies are involved in the total supply chain, and so its management and dynamics are of concern to all companies and organizations that form a part of it.

The supply chain comprises the total network of processes between, at one...