Posted in Operations and Supply Chain Terms, Total Reads: 158
Upstream refers to a set of activities in the value chain which occur before any particular process. This basically is on the supplier end. Any activities which supply material for the next process to happen are known as an upstream activity for that process.
This concept was developed by Michael Porter and was first mentioned in his book, “The Competitive Advantage” in 1985 as a part of a Value Chain. Generalizing the concept, it can be said that for any process, the supply side becomes the upstream because the completion of these activities will facilitate the occurrence of this process and any process which uses the services/products of this process i.e. this becomes a supplier to that process is known as downstream activities. As the name suggests, anything which happens prior is upstream.
For example: We will take an example of a company and a particular function to illustrate this. In a company, Sales is a part of the value chain, for Sales to take place manufacturing of the products should have taken place because without manufacturing of the products, the Sales team cannot fulfill the orders it will take. So, since manufacturing is a pre requisite for Sales to happen, we can say that Manufacturing is an upstream activity for Sales.