Physical Supply Chain

From Open Risk Manual


A Physical Supply Chain (PSC) is the system of organisations, people, activities, information, and resources involved in moving a product or service from a Seller to a Buyer, either domestically or across borders. Also denoted Commodity Chain or Global Value Chain. The basic idea is to trace all the sets of inputs and transformations that lead to an “ultimate consumable” and to describe a linked set of processes that culminate in this item[1]

Physical supply chains transform natural resources, raw materials and components into semi-finished and finished products that are delivered to the end customer. In initial links of the chain the flow is primarily of materials, in later stages of finished products.

Supply chains are the underlying economic activity that gives rise to financing requirements and are typically supported by corresponding Supply Chain Finance activities.


A supply chain can be conceptualized as a network, with the participating organisations being nodes with upstream and downstream linkages.


Supply Chain Management

Physical Supply Chain Management describes the management activities involved in managing the PSC.[2]

See Also


  1. Mapping Global Value Chains. K. De Backer and S. Miroudot, ECB Working Paper, May 2014
  2. Standard Definitions for Techniques of Supply Chain Finance, Global Supply Chain Finance Forum