Relationship Between Supply Chain and Supply and Demand Model

This paper discusses the relationship between supply chain and the supply and demand model. In the global marketplace of today, an integral aspect of supply chain connections has been the basis of competition for most firms as opposed to the traditional dependence on unique brand names as independent entities. In this regard, a firm’s overall success is influenced by the capacity of the managerial aspect to coordinate and integrate the complicated network of business associations among various members of the supply chain. According to Burrows and Cecere (2012), a supply chain management entails all activities that enable the products and services to reach the market and create satisfaction among customers. The supply and demand model, on the other hand, is the representation of the manner in which interaction occurs between suppliers and consumers in order to determine the price at which a certain quantity of a service or good should be sold in the market. The model is influenced by the behavior of sellers and buyers, and the manner in which the actions of sellers and buyers affect quantity and price of the product.

Supply chain begins with the supply of the raw materials to the manufacturer who then transforms them into consumable products and services. The management of supply chain is essential for every firm in order to make profits and maintain costs at low levels. The supply and demand model is significant for analysis of the competitiveness of a particular good or service in the market. It illustrates an increase in output by manufacturers due to the increasing prices. An increase in marginal costs usually influences market prices to rise and this motivates the need for an increased output. An increase in prices reduces the purchasing power of the consumers thereby influencing them to seek for cheaper products and services (Beggs, 2014). Whenever the quantity of the product needed is less than what is available, the situation influences manufacturers to reduce the product or service price due to the presence of the surplus. On the other hand, whenever, customers demand more than the available quantity in the market, the situation influences manufactures to increase product or service price due to the existence of shortage in the market. A balance between the manufactured quantity and the quantity needed creates an equilibrium situation.

Given that supply chain encompasses control of materials, processes and entities, it relates closely to the supply and demand model. It is significant to note that communication and planning have been essential functions for driving the traditional supply chain management. In this case, the planning function regards the future demand with reference to the past and present demand and makes sure that customer needs becomes the basis of demand. In this case, the customer is usually centrally placed in order to influence the operations of the supply chain (Burrows & Cecere, 2012). Therefore, the needs of the customers are the main drivers of the supply chain. The network that is driven by demand entails all things that a customer wants and, in this case, both the supply chain and the supply and demand model collaborate to satisfy customers, but, also, ensure that stakeholders and companies realize profits. Supply chain can be portrayed in various scenarios; for instance, the high technology or Microsoft supply chain where there is the exchange of response messages and purchase order requests. In this case, the seller acknowledges the purchase order initially placed by the shopper. The seller then sends a confirmation message to the buyer the moment shipment is initiated. In the case of the supply and demand model, there are, also, various scenarios; for instance, the release of Sony PlayStation 4 (Chopra & Meindl, 2012). There was an extremely high demand for it the moment it became available in the market. Certain individuals took advantage of the limited supply, and began selling it online at more than triple the buying price.

In conclusion, this paper discussed the relationship between supply chain and the supply and demand model. A firm’s overall success is influenced by the capacity of the managerial aspect to coordinate and integrate the complicated network of business associations among various members of the supply chain. The management of supply chain is essential for every firm in order to make profits and maintain costs at low levels. The supply and demand model is significant for analysis of the competitiveness of a particular good or service in the market. The network that is driven by demand entails all things that a customer wants and, in this case, both the supply chain and the supply and demand model collaborate to satisfy customers, but, also, ensure that stakeholders and companies realize profits.

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