What is Supply Chain Management ?
Supply Chain Management, is what I believe to be an obsolete term.
"Chain" itself implies mechanically subject to failure,
limitations, and per the old axiom, is only as strong as its
weakest link. I would propose the industry begin considering
fluidity, perhaps incorporation hydraulic terminology into
our thinking. We need to plan for pressure, capacity,
alternative routing, flexibility of materials to run through
it, ability to divert and supplement, and to turn on, off,
and variably regulate.
3. One important aspect is that SCM needs to continually attempt to
eliminate waste and optimize its own length/scope...the
closer you can bring supply and consumption together, the
We should not focus upon "management", but upon
SCM is the management of the set of materials, methods,
machines, and manpower needed to provide the customer with
the quality, service and price superior to that of the
competition. It includes ALL functional areas of an
organization using various tools and techniques towards this
SCM is concerned with how a supply chain – ideally through
its members working closely together – can successfully
deliver the products and / or services demanded by end
customers by achieving the highest possible level of
customer satisfaction at the lowest possible cost. The
supply chain has to meet or exceed customer expectations,
and to do this better than the competition.
SCM means managing the flows of materials, goods and
services – as well as the flows of funds and of information
– across the whole of the supply chain. It involves two
dimensions: (i) managing the physical process involved in
providing the finished goods and / or services to end
customers, starting with the provision of raw materials, and
(ii) balancing supply with demand – i.e. making certain that
the goods and / or services being provided are what end
customers actually want to buy in terms of qualities,
features, delivery, prices, service, etc., and also that
supplies do not fall short of demand.
SCM requires fully integrating product or service design
with production capability, delivery processes and
information on both customer demand and on the evolving
Keeping it simple: Supply Chain is managing the material and
process from your vendor's vendor to your customer's
customer efficiently and cost effectively.
Before we can reach a consensus about Supply Chain
Management, it is a good idea to review our concept of
Supply Chain itself:
Visualize Supply Chain as a System (very similar to a living
system). This system has the following:
- A structure (constituted by the organizations, the
buildings, the machines, etc.)
- Flows (of materials, products, services, money, energy,
- Processes (task sequences in order to achieve definite
The indication of Lakshmi is useful to recognize the
boundaries of the system. That is, all things related with a
definite product life cycle.
From this perspective of Supply Chain , we can have a better
perspective of SCM. SCM would be then all the activities
directly oriented to reach a sustainable and smooth flow of
materials and goods to the end customer.
SCM - Managing flow of information, goods/services and
finances between consumers suppliers and producers
Supply Chain Management is effective management and
coordination of all co-related activities that goes in to
ensure right product at right quantity at right place at
right time at least cost, at the same time ensuring proper
timely flow of information in the system & last but
certainly not the least....providing quick & efficient after
sales service & support to customer.
Supply chain must ensure three flows effectively -
flow of product/service, flow of information
through proper documents and finally flow of funds
(payments - which is the result of two previous
flows). of course, reverse logistics and returns
management is part of Supply
Chain Management. What is new or UNIQUE in supply chain
concept is :INTEGRATION. When philosophers dared to think about this
'Integration' is when they thought, technology is available
to enable integration among the business partners. May be
after the invent of RDBMS?
“Practitioners and educators have variously addressed the
concept of supply chain management (SCM) as an extension of
logistics, the same as logistics, or as an all-encompassing
approach to business integration. Based on a review of the
literature and management practice, it is clear that there
is a need for some level of coordination of activities and
processes within and between organizations in the supply
chain that extends beyond logistics. We believe that this is
what should be called SCM.
In simplest terms a Supply Chain is
"The network of retailers, distributors, transporters,
storage facilities and suppliers that participate in the
sale, delivery and production of a particular product."
Supply chain management in business terms is defined as the
SIPOC model that is suppliers-Inputs-Process of conversion
to produce a valuable deliverable-output-customers...It is
not just the management of supplies! or the suppliers it
includes all the steps in the process. The major concern
here is customers, along the line of supply chain, the value
keeps on adding to the product and finally is delivered to
Supply Chain Management means managing/ co-ordinating all
positions in one business (planning, receiving, expediting,
warehousing, transporting, procuring, paying, cost
controlling, accounting, HR...) in order to get profit for
both supplier and customer satisfaction. It is a WIN-WIN
Simply put Supply Management is the process of assuring the
right product, at the right time, at the right cost. Very
simple definition, often however very difficult to accomplish
Supply Chain Management includes everything from the
supplier-side (RFP, tender, supplier relationship, buying)
through to the (multi-tier) network (DC management, systems,
demand forecasting, inventory policy, etc) and ends with the
customer-side (on-shelve-availability, customer service,
customer satisfaction). SCM always comes with a strong IT
link and covers not only operational issues (as outlined above), but also strategic decisions (what's my
network, make-vs-buy decisions).
Supply chain refers to the flow of work, physical, finance,
cash, product, information, materials, services & payments
from suppliers via factories (value chain) to the final
consumer (Demand Chain).
Supply chain management involves coordinating, smoothing,
streamlining and integrating these flows both within and
among companies. The ultimate goal of any effective supply
chain management system is to continuously improve an
organization competitiveness, profit & integrated processes
for product & service design, purchasing, production,
logistics and customer satisfaction
Its goals also include reducing inventory (with the
assumption that products are available when needed) and
ensuring optimal operation of a supply chain. This includes
cost saving, improving profit, responsiveness & supply chain
flow & decreasing lead time.
As a solution for successful supply chain management, the
web-based ERP II ( extended enterprise resources planning)
software allow the suppliers & buyers in the supply chain to
access the data and applications over the Internet using a
web browser . It typically has a web address. Or, we can use
the enterprise application integration software (EAI) to
integrate the software applications & databases. Both are
the total solution for any companies especially the SME to
improve the supply chain efficiency.
supply chain management is the management of materials and
information from supplier to end user
It seems a few similar terms are consistently mentioned in
some of the above definitions, such as coordination,
integration, collaboration. That is really the role of SCM.
Companies have specialists in procurement, production,
inventory management, distribution, sales, etc. The role of
SCM is to seamlessly coordinate all of the activities
associated with these functions to ensure optimal
effectiveness (customer service) and efficiency (cost
reduction). As such, it is a challenge to find people with
both hard and soft skills to fill supply chain positions
Supply Chain is a key chain of events from demand creation to
collection of cash from a sale. The key steps in between
include: procurement, manufacturing, logistics &
distribution, customer relationship & forecasting. In the
end, it is about having the right material, in the right
package, at the right location to meet customer expectations
of lead time and cost...while sustaining a profitable
Supply Chain in most western firms revolves around the flow
of product into and through a business including primarily
inventory management and distribution functions but it is
bigger than that as the best supply chains
operate across the whole spectrum of functions within a
business be that a small local firm or a global
international operator - the name gives it away - Supply
Chain - product or service moves through the business across
the different departments all - hopefully - working together
to improve efficiency and remove cost, free up cash, improve
SCM is the INTEGRATION of the best resources/services
available in the market or in the company to MAXIMIZE the
satisfaction of the preferred customers in the most
Supply Chain's scope can also be described by using a 3 x 2 grid.
The '3' dimension being a hierarchical time frame (
Strategic, Tactical and Operational) and the '2' being
Operational / Sustaining and Development / Change. The '2'
can be subdivided- but lets leave that for now.
The real challenge for supply chain managers should be
keeping the Capabilities and Capacities of the supply chain
in line with, and supportive of, the needs of the business.
If the business is more reactive in nature the pressures and
challenges on managing the supply chain are consequently
that much more difficult. Clearly, in this situation,
developing capacity / capabilities beyond the current need
will be a necessary tactic for survival.
Two final thoughts:
1. Consider that, in any give supply chain, there is not one
single supply chain manager, but many, each with different,
but hopefully, overlapping objectives!
2. In our review and definition of SCM we should consider
both, the WHAT, and the HOW. In theory, these could be
considered independently, but in reality, they are inter
dependent. Process, Technology, Data, Organization, Business
Model and Business Strategy all impinge on both.
“Supply Chain Management encompasses the planning and
management of all activities involved in sourcing and
procurement, conversion, and all logistics management
activities. Importantly, it also includes coordination and
collaboration with channel partners, which can be suppliers,
intermediaries, third-party service providers, and
customers. In 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 information
technology.” Source: Definition from The Council of
Supply Chain Management Professionals (CSCMP).
Supply Chain is the backbone of a modern business the firms that perform best in this recession
will be the ones' with the most switched on and flexible
Supply Chains than can flex to meet the varying demands of
the current economic climate.
Supply-Chain Management is thus "everything required to
satisfy the demand of customers"
SCM is all about the activity and processes that is
associated with from Farm to Fork
It can also be defined as the integrated set of business activities that begins with
the sourcing of raw material and extends through order
delivery to the customer and receipt of payment
Supply Chain Management - The term itself defines i.e.
managing the chain of supply from receiving the request from
requestor, processing it till the material/services reach
the requestor, further requestor is satisfied with received
material / services. The entire process to reach and manage
upto this stage i.e. from request upto satisfaction of
requestor in terms of his request can be termed as supply
For ALL Products, Services and Solutions, throughout their
lifecycle, manage all the relevant Supply / Customer
relationships ( internal & external) across the entire
1. INTERPRET AND PLAN FOR THE NEEDS OF THE BUSINESS/ES:
Short / Medium / Long Term
2. CREATE / CHANGE the supply chain capabilities /
3. MANAGE SUPPLY CHAIN OPERATIONS
4. REVIEW: Performance / Development / Realignment.
In all its simplicity, SCM can be defined as:
The customer needs the product. Supply Chain is responsible
for delivering that product in a timely and cost-effective
manner. All the activities that thus originate come under
the purview of SCM.
The easiest way to define Supply Chain
Management is going back to the basics and the core of SCM
which "is about matching your offer of supplies/products to
your demand levels while maximizing profits and mitigating
SCM is the management of group of
activities involved in S-I-P-O-C
(Supplier-Inputs-Process-Output-Customer) Model, in a way,
such that the right product is available at the right time
to the right customer at the right place at right price in