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SUPPLY CHAIN MANAGEMENT

INTRODUCTION

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DEFINITION

Harland, 1996

Supply chain management (SCM)is themanagement of a networkofinterconnectedbusinesses involved in the ultimate provision ofproduct and service packages required byend

customers. Supply chain management spans allmovement and storage ofraw materials,work-in-process inventory, and finished goods frompoint oforigin to point ofconsumption.

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DEFINITION

APICS The association for Operations Management

design, planning, execution, control, andmonitoring of supply chain activities with theobjective of creating net value, building acompetitive infrastructure, leveragingworldwide

logistics, synchronizing supplywith demand andmeasuring performance globally

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CONCEPT

The core concept of SupplyChain Management

is that practically every product that reaches anend user represents the cumulative effort ofmultiple organizations. These organizations arereferred to collectively as the supply chain.

Although Supply chains have existed for a long time, mostorganizations have only paid attention to what was happeningwithin their four walls. The result was disjointed and often

ineffective supply chains.

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CONCEPT - ORGANISATIONS

SUPPLIER

MANUFACTURER

WAREHOUSE DISTRIBUTOR/RETAILERS

CUSTOMER

SUPPLYCHAINPARTNERS

UPSTREAM DOWNSTREAMINTERNAL

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CONCEPT

Supply chain management, then, is the activemanagement of supply chain activities to maximize

customer value and achieve a sustainable competitiveadvantage.

It represents a conscious effort by the supply chain firmsto develop and run supply chains in the most effective &

efficient ways possible. Supply chain activities cover everything from product

development, sourcing, production, and logistics, as wellas the information systems needed to coordinate theseactivities.

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CONCEPT - FLOW

The organizations that make up the supply chain arelinked together through physical flows, information

flows and fund flows Physical flows involve the transformation, movement, and

storage of goods and materials. They are the most visiblepiece of the supply chain.

Information flows allow the various supply chain partnersto coordinate their long-term plans, and to control the day-to-day flow of goods and material up and down the supplychain.

Fund flows is the transfer of funds between the

organizations.

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CONCEPT - FLOW

Everyone is Involved

Systems approach atreducing Costs

Integration is the

Key

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OBJECTIVE

Maximise the overall value generated is the

differencebetween what the final product isworth to the customer and the effort the supplychains expends in filling the request of thecustomer

Worth can be defined as the Utility Value forthe Customer

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CONCEPT ICEBERG

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SUCCESS

Supply chain profitability is the difference

between the revenue generated from thecustomer and the overall cost across the supplychain.

Supply chain success is measured in terms ofsupply chain profitability and not in terms of theprofits at an individual stage.

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