ri   lt re and ood      ana ement       8.29
     strengthened at the earliest. The Government of     chain. A manufacturer considers suppliers as
     India decided to merge the commodity market         upstream and customers as downstream. Within a
     regulator, the Forward Market Commission            manufacturer, control over activities in the supply
     (FMC) with the Security & Exchange Board of         chain is subject to a company’s management. Even
     India (SEBI) in 2015–16 with enhanced and           so, a manufacturing activity that occurs prior to
     effective regulatory power given to it.             another is considered an upstream activity. Control
                                                         over activities outside the company is subject to
        uPstreAm & downstreAm                            inter-company negotiations, cooperation and
        requIrements                                     technology. The firms involved in the chain of
                                                         upstream and downstream processes keep their
     ‘Upstream’ and ‘downstream’ are business terms      eyes on several other dimensions, such as strategies,
     applicable to the production processes that exist   integration and improvement.
     within several industries. Upstream, downstream          (i) It is important to understand the strategies
     and midstream make up the stages of the                       of supply chain partners. A supplier
     production process for different industries.                  may have a strategy to grow and begin
     Upstream: The upstream stage of the production                to perform manufacturing functions
     process involves searching for and extracting                 infringing on other supply chain member’s
     raw materials—it does not do anything with the                markets. Understanding the incentives of
     material itself, such as processing the materials.            suppliers, as well as customers, helps to
     In upstream, firms simply find and extract the                plan for these types of changes. In order
     raw material. Thus, any industry that relies on               to remain a powerful player in a supply
     the extraction of raw materials commonly has                  chain, a company can no longer afford to
     an upstream stage in its production process. In               focus on its own business or those of its
     a more general sense, upstream can also refer to              competitors, it must understand supply
     any part of the production process relating to the            chain members business as if they were
     extraction stages.                                            their own.
     Downstream: The downstream stage in the                 (ii) Integration of business processes
     production process involves processing the                    throughout a supply chain depends on
     materials collected during the upstream stage into            cooperation of members. For example,
     a finished product. It further includes the actual            a manufacturer who decides to sole-
                                                                   source a component with one supplier
     sale. End users will vary depending on the finished
                                                                   can control and integrate with the
     product. Regardless of the industry involved,
                                                                   supplier to streamline business processes.
     the downstream process has direct contact with
                                                                   Technology can be implemented to make
     customers through the finished product.
                                                                   business processes between companies
     Midstream: Several points in between the two                  easier to perform. For example, a supplier
     points (the place where raw is extracted and till             can change from requiring a purchase
     it reaches the final consumer as finished product)            order for every delivery to having an open
     are taken as the midstream. It depends on the                 purchase order that simply keeps track of
     reference point as how many or which stage is                 shipments based on material requirements
     considered as the midstream by an industry.                   plans from the manufacturing resource
          Whether an activity is upstream or downstream            planning software of a manufacturer.
     depends on the point of analysis in a supply                  This type of integration becomes less