1.2 From producers to consumers The supply and distribution chains In most economies, the world of production exists in order to satisfy the demand of the market by supplying it with what is requested. This means producers and consumers need to connect, and this happens through the and the distribution chains. supply The supply chain The is the system of people, resources and activities involved in manufacturing and moving a product from producers to consumers. Its activities involve the transformation of raw materials into finished products, which are then to final consumers. Its different phases are coordinated carefully by the supply chain management in order to bring benefits to the company in terms of: supply chain delivered cost reduction, competitive prices, minimum inventory, and productive efficiency. The process Here is a simplified version of a supply chain. The first element in the chain are the , who start the process when they decide to a product. If the product is not available, the passes on their request to the which creates a production plan; this involves considering everything that is necessary to manufacture it. The checks the required workforce is available or it, and the orders the necessary tools and materials. The materials are then inspected by the and sent to manufacturing, where the makes the final product. This is then tested and stored by the before being delivered to final consumers by the . consumers purchase sales department planning department human resources department recruits purchasing department quality department production department warehousing department department shipping Modern trends Nowadays it often happens that businesses start their production before consumers actually ask for their products. This is because companies do extensive research in order to know the market and predict its trends, and anticipating production allows them both to be ready to satisfy the demand as soon as it emerges, and to better plan their periodical activity. The distribution chain The is the way products reach final consumers, and this can happen in two ways: distribution chain products are sold directly to final consumers, for example in outlets, or via the Internet; prices are lower, but the process can be inconvenient for consumers; in a direct distribution chain factory products reach consumers through different intermediaries such as , distributors, brokers or ; prices are higher, but sales points are closer to consumers and a relationship between buyers and sellers is possible. in an indirect distribution chain wholesalers retailers