Supply Chains
What is a supply chain?
A supply chain is the connected path that materials, parts and finished products take from their source to the person or business that uses them. A single product can involve raw-material suppliers, factories, transportation companies, warehouses, distributors and retailers.
Who controls it?
Usually, no single organization controls an entire supply chain. Different participants control different parts. Manufacturers choose suppliers and production methods; shipping, trucking and rail companies move goods; warehouses and retailers manage inventory; governments set trade, safety and transportation rules; and consumer demand influences what businesses order and produce.
How consumers can be affected
- Shortages can reduce availability or delay purchases.
- Higher material, energy or transportation costs can contribute to higher prices.
- Businesses may substitute products, suppliers or package sizes when something is difficult or expensive to obtain.
- Disruptions far away can eventually affect local groceries, vehicles, medicines, electronics and building materials.
How companies can be affected
- Parts or materials may arrive late or cost more.
- Production can slow when one important component is unavailable.
- Businesses may hold more inventory, find additional suppliers or move production closer to customers to reduce risk.
- Higher costs may be absorbed, offset elsewhere, or passed along partly through prices.
What can disrupt a supply chain?
Weather and natural disasters, war and geopolitical events, strikes, factory shutdowns, transportation failures, cyber incidents, tariffs or trade-rule changes, energy costs, and sudden changes in demand can all affect the chain.
Related: Cause & Effect explains how these changes can move through business costs and eventually reach household prices and choices.