Final answer:
The goal of every supply chain is to maximize the overall value generated, which includes efficient resource use, economies of scale, and responding to cost changes to improve service and profitability. This involves a holistic approach rather than focusing solely on the cost to a manufacturer or the profit of a manufacturer.
Step-by-step explanation:
The objective of every supply chain is to maximize the overall value generated. This encompasses more than just minimizing costs or maximizing profits at an individual manufacturing level. It involves a comprehensive approach that considers the efficiency and optimization of the entire chain, from production to delivery, ensuring that the optimal amount of each good and service is being produced and consumed.
Efficiency in a supply chain follows the demand and supply model, aiming to achieve maximum benefits from scarce resources. This is driven by choices around production technology, scale of production, and responses to changes in cost, such as a drop in gasoline prices for a messenger company. When costs decrease, it can potentially lead to an expansion in supply, contributing to higher profits and greater value throughout the supply chain.
Economies of scale are a key factor in supply chains, as increased output generally leads to a decrease in the cost per unit. This concept is exemplified by large retailers like Costco and Walmart, where larger scale operations lead to lower average costs, thus providing better value both to the business and end consumers.