The extended supply chain includes all companies that contribute to a product. This means that the extended supply chain includes the suppliers to your suppliers as well as the customers of your customers.
When companies encounter supply chain problems, the initial action is to ask the supplier about the situation. However, organizations that monitor the extended supply chain have the option of reaching back through the primary supplier to the company that supplies components to the primary supplier. As an example, if a popular baseball hat is not available from the manufacturer, the normal reaction of the store manager is to contact the manufacturer. However, if the retailer monitors the extended supply chain, the store manager would know the manufacturer was having trouble getting the brim. If it appears that additional brims will not be available to the manufacturer quickly, the retailer would have time to seek a different supplier.
Source: cio.com