Supply chain is defined as a set of three or more companies directly linked by one or more of the upstream and downstream flows of the products, services, finances and information from a source to a customer. It consists of all the stages involved, directly or indirectly, in fulfilling a customer's demand. It not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers and customers themselves. Within an organization, the supply chain includes all the functions involved in fulfilling a customer demand. These functions include, but are not limited to, new product development, marketing, operations, distribution, finance and customer service.

The objective of the supply chain is to maximize the overall value generated. The value a supply chain generates is the difference between what the final product is worth to the customer and the effort the supply chain expends in filling the customer’s demand. It is strongly correlated with the supply-chain profitability, the difference between the revenue generated from the customer and the overall costs across the supply chain.