Layout of an Ideal Processing Unit:

A flow diagram has been placed for your better understanding. Once you understand this part, the associated and related matters to supply chain will be easy to follow.

Figure : A Layout of an Ideal Processing Unit Explaining the Supply Chain

Internal functions and external suppliers, constituting a company's supply system, are involved in identification and fulfilment of requirements for materials, equipment & key services in an optimized manner. Supply management is base to successful supply chain management. It can create a marvellous impact on any company's bottom line more than any other business function. In case the supply management is not suitably been addressed, there is bound to be problems in the supply chain. Integration of these services and managing them under one head is thus the key to an effective supply chain system. 

The standard phases of supply chain management are following:

• Requirement generation
• Sourcing
• Pricing
• Post-award activities

These phases are all of interrelated and interdependent and may not function in isolation. The production of requirement phase is the most important of all of the phases, since: almost 85% of the cost of services, materials and equipment is designed during this phase. Although, the irony is that supply management is not a contributor to this phase in particular but suppose greater role for the next three phases, that means sourcing, pricing and post award activities.