Supplies are items that aid you in the game. They consist of health, energy, and ammo. They also consist of quest items.
Health items fill up your health when you are hurt. You cannot use them if your health is completely full.
Energy items fill up your energy when it is not at maximum energy. You cannot use them if your energy is completely full.
Ammo is used in ranged weapons such as guns. You cannot use them in combat and you cannot use them if your weapons are already full of ammo.