Supply chain surplus maximizing

The objective of every supply chain should be to maximize the overall value generated. The value (also known as supply chain surplus) a supply chain generates is the difference between what the value of the final product is to the customer and the costs the entire supply chain incurs in filling the customer s request. 

Intercompany Scope Maximizing Supply Chain Surplus... 

The goal of only maximizing company profits can sometimes lead to conflict between stages of a supply chain. For example, both the supplier and the manufacturer in a supply chain may prefer to have the other side hold most of the inventory, with the goal of improving their own profits. If the two parties cannot look beyond their own profits, the more powerful party will simply force the other to hold inventories without any regard for where inventories are best held. The result is a decrease in the supply chain surplus—the total pie that both parties get to share. 

These PO structure a specific business model within a supply chain, and they have roles and interests that are qualitatively different than the sum of individual interests of their members. It has other interests than individual smallholders. Not the farm gate price is the prime concern, but the margin on commercialization of production. Profit is not their prime objective instead they look foremost to ways to maximize the turnover of products from their members. Generating profit (or surplus) on economic activities is however a necessity as they struggle to meet ends as a intermediary enterprise pay staff pay organizational expenses of member consultations pay taxes etc. Their commercial activities are mostly realized in straight competition with private actors in the chain (middlemen). 

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