Downstream activities can be described as the activities performed after final product refinement within the borders of the respective company. These activities are e.g. conducted by logistics partners distributing goods to the market, and by vendors selling products to end users.
SCM also deals with managing these activities in the supply chain, and stresses the importance of companies proactively trying to improve these activities. Therefore, companies may benefit from collaborating with e.g. external suppliers of logistics services or whole sellers, so that these business partners are able to ad the needed value to the product with their resources.
For instance, companies may benefit from establishing competencies at distributors that is valued by end customers, and proactively try to influence how goods are being presented, marketed and sold by external partners.
Companies may also benefit from building up mutual IT structures with downstream partners. Vendor Managed Inventory (VMI) is a good example of such collaboration in the supply chain that will potentially lead to better planning and reduction of lost sales.
If companies are not able to maintain or develop the needed competencies in their external downstream activities, companies may perform forward integration to ensure the wanted quality in these activities.
Therefore, it is not only important for modern companies to improve downstream and in-house activities, but equally important for companies to improve and monitor the activities closer to end-customers, and to balance upstream competencies to the needs and wants of the market.