A supply network is a pattern of temporal and spatial processes carried out at facility nodes and over distribution links, which adds value for customers through the manufacturing and delivery of products. It comprises the general state of business affairs in which all kinds of material (raw materials, work in process and finished products) are transformed and moved between various points to maximize the value added for customers. In the semiconductor industry, for example, work-in-process moves from fabrication to assembly, and then to the test house.
The term "supply network" refers to the high-tech phenomenon of contract manufacturing where the brand owner does not touch the product. Instead, she coordinates with contract manufacturers and component suppliers who ship components to the brand owner. This business practice requires the brand owner to stay in touch with multiple parties or "network" at once.[citation needed]
A supply chain is a special instance of a supply network in which raw materials, intermediate materials and finished goods are procured exclusively as products through a chain of processes that supply one another.[citation needed] John Mills et al. have suggested that the addition of the term "network" to the concept of supply chain management has extended supply chain management into a more strategic orientation. In their analysis, internal connections such as links between a company's purchasing department and the staff responsible for new product development would form part of a supply network, alongside the connections to players within the supply chain.[1]
A supplier association can also be seen as a form of supply network.[2]