What do upstream and downstream industries mean?

1. Upstream industry originally refers to the industry at the beginning of the whole industrial chain, including the mining and supply of important resources and raw materials, as well as the manufacturing and production of parts. This industry determines the development speed of other industries and has the characteristics of foundation, raw materials and strong connection. In modern industrial chain theory, upstream industry is a relative concept.

2. Downstream industries refer to industries that are at the end of the whole industrial chain, processing raw materials and parts, manufacturing finished products and engaging in production and service.

According to the smile curve theory, the upstream is often an industry with relatively rich profits and relaxed competition, because the upstream often holds some resources, such as minerals, or industries with core technologies and high barriers to entry, so many investors prefer the stocks of upstream industries. To form a competitive advantage, industries cannot lack world-class suppliers, nor can they lack close cooperation between upstream and downstream industries.

Extended information

Key points of management:

1. The supply chain is a one-way process, and the links in the chain are not separated from each other, but become a whole through the link of the chain.

2. Supply chain is the strategic management of the whole process. On the whole, if we only rely on some link information, the plan may be distorted due to the limitation or distortion of information.

3. Different links have different views on inventory. In the supply chain management of logistics, inventory is not regarded as a measure to maintain production and sales, but as a balance mechanism of supply chain.

4. Supply chain management adopts new management methods, such as replacing interfaces with overall synthesis method, seeking overall balance by removing the weakest chain, preventing signal accumulation and amplification with simplified supply chain method, and realizing control with economic cybernetics method.

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