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What is a supply chain?

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The shortest definition I know is “the supply chain encompasses all of those activities associated with moving goods from the raw-material stage through to the end user.”

However according to the Council of Supply Chain Management Professionals the correct definition is; “Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, and all logistics management activities.  Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers.  In essence, supply chain management integrates supply and demand management within and across companies.”

My definition of the supply value chain is: A firm infrastructure + required technology + well maintained equipment + excellent, competent and productive human resources + a well management procurement process forms the support base.  Inbound just in time logistics + production /operational process + marketing, sales and after sales service forms the primary activities.  The profit margin firmly depends on the synergy between the support and primary activities.

A practical example:  In certain countries, ships will transport bulk crude oil from the field to the refinery for processing.  Depending on the size of the ship and the size of the harbour amongst other requirements, some ships might have to dock outside the harbour at a special pipeline facility to offload directly into the refinery.

The oil refinery will produce various products and distribute for example;

Mass liquid via a pipeline to the receiving depot e.g. Shell/BP/Engen mass storing facility inland from where it will be stored and distributed by road in specially designed fuel tankers to smaller users.  This distribution process is not very labour intensive but requires dedicated and specifically well maintained equipment, skilled operators and excellent stock control abilities.

Bulk liquid will be transported with rail wagons to very large consumers of fuel (also certain lubes) such as the mines, or a block train (more than 40 rail wagons) of a different grade of fuel to the same mass storing facility mentioned above, because the quantity is not large enough for the pipeline.  This process is not very labour intensive but also requires dedicated and well maintained rail infrastructure, excellent traceability of rail wagons and skilled operators.

Bulk liquid fuel and lubes can also be transported by road tankers, normally directly to consumers such as fuel stations in quantities of approximately 40000lt.  As above, this is not labour intensive but also not the most energy efficient way of transport.  Dedicated well maintained vehicles are required as well as very competent drivers and good roads.

Bulk gas can be transported in Isotainers which are normally transported by road to the habour from where it will be shipped for further distribution.  Bulk gas can also be transported by specially designed road tankers to large consumers such as poultry farms and companies filling domestic gas cylinders.   Labour and equipment as mentioned above.

Packed lubes will be palletized, loaded onto flat deck trailers and transported by road to large warehouses, where it will be stored and distributed in smaller quantities to customers such as vehicle maintenance centers.  Infrastructure will include warehouse facilities, forklifts, scanners etc.  Given the above the process is also more labour intensive.

This is just a few examples, for more detail contact us at

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