What is Supply Chain Management ?
Supply Chain Management ,as defined by
the world famous,
Institute of Supply Management Inc., USA, is the design and management of
seamless , value added process across organizational
boundaries to meet the real needs of the end customer.
Management encompasses the planning and management
of all activities involved in sourcing and
procurement, conversion, and all logistics
Importantly, it also includes
coordination and collaboration with channel
partners, which can be suppliers, intermediaries,
third-party service providers, and customers.
essence, supply chain management integrates supply
and demand management within and across companies.
Supply Chain Management is an integrating function
with primary responsibility for linking major
business functions and business processes within and
across companies into a
cohesive and high-performing business model.
It includes all of the logistics
management activities noted above, as well as
manufacturing operations, and it drives coordination
of processes and activities with and across
marketing, sales, product design, finance and
development and integration of people and technological
resources are critical to successful
supply chain integration.
As the corporations strive
to focus on core competencies and become more flexible, they have reduced their ownership of raw
materials sources. These functions are increasingly
being outsourced to other corporations that can
perform the activities better or more cost effectively. The
effect has been to increase the
number of companies involved in satisfying consumer
demand while reducing the management control on daily
control and more supply chain partners led to the
Supply Chain management concepts.
The purpose of Supply chain management is to
improve trust and collaboration among
chain partners, thus improving inventory
visibility and improving inventory velocity.
Thus the answer to the question "
What is Supply
Chain Management ? " can be as
Supply Chain Management
is the process of planning ,
implementing and controlling the operations of the supply
chain with the purpose of satisfying the customer's
requirement as efficiently as possible. Supply Chain spans
all movement and storage of raw materials ,
Work-in-process , inventory and finished goods from the
point of origin to the point of
According to the CSCMP , a professional association, that developed the
definition, Supply Chain Management encompasses the planning
and management of all activities involved in sourcing and
procurement, conversion and all logistics management
activities. It also includes coordination and collaboration
with channel partners which can be suppliers
intermediaries , third party etc.
Supply Chain management must address the following problems:
Distribution Network Configuration:
Number and location of suppliers, production facilities, distribution
centers , warehouses and customers
Centralized Vs decentralized , cross docking, direct
shipment, pull or push strategies, third party
Integrate systems and processes through the supply chain to share valuable
information, including demand signals , forecasts, inventory and
Inventory management: Quantity and location of
inventory including raw material, work-in-process and finished goods service providers and customers.
Thus Supply chain management (SCM) can also be described
as the oversight of materials, information, and
finances as they move in a
process from supplier to manufacturer to wholesaler to
retailer to consumer. Supply chain
management involves coordinating and integrating these
flows both within and among companies. It is said that
the ultimate goal of any effective supply chain
management system is to reduce inventory (with the
assumption that products are available when needed). As
a solution for successful supply chain management,
sophisticated software systems with Web interfaces are
competing with Web-based application service providers
(ASP) who promise to provide part or all of the SCM
service for companies who rent their service.
Is Supply Chain
Management an Extended Enterprise?
Supply chain management flows can be divided into three
The product flow
The information flow
The finances flow
The product flow includes the movement of goods from a
supplier to a customer, as well as any customer returns
or service needs. The information flow involves
transmitting orders and updating the status of delivery.
The financial flow consists of credit terms, payment
schedules, and consignment and title ownership
In essence, Supply chain management
and demand management within and across companies. Some
Supply Chain Management with
while others consider the term to be
the point of view of an enterprise, the scope of supply
chain management is usually bounded on the supply side to
the supplier's supplier and on the customer side by your
What is a Supply Chain ?