What is value and what is supply chain surplus ?

• End goal of a supply chain is to maximise overall value generated.

• Value in supply chain / also called supply chain surplus: 

            (Value of 'final product' to customer) - (Costs incurred by whole of supply chain)

            

• Value of final product:  It is maximum amount customer is 'willing to pay for' it. It may be noted that this can be different than what is actually the price tag of a product

• Customer surplus: Difference between value of product and it's actual price 

• Strong relation is seen between Supply Chain Surplus and profits

• Supply Chain success is seen in terms of profitability of 'whole' supply chain, and not of an individual stage.