An introduction to supply chain management

An overview of various methods in supply chain management, including supply chain design, production scheduling, and distribution considerations Body: Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

An introduction to supply chain management

Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption supply chain. 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.

Supply chain activities cover everything from product developmentsourcing, production, and logistics, as well as the information systems needed to coordinate these activities. Manufacturers, suppliers, transporters, warehouses, distributors, wholesalers, retailers and customers together make up the supply chain.

These entities are supported by various functions such as sales, product development, operations, logistics, after sales service and finance. At the heart of the supply chain lies the flow of information, products and cash flows.

Some of these flow towards and some away from the customer. The main objective of any supply chain is to deliver value to customers in optimal fashion. Value can, in simple terms, be understood as the difference between the price the end customers are prepared to pay and the costs incurred in meeting their needs.

Components of Supply Chain Today, the ever increasing technical complexity of standard consumer goods, combined with the ever increasing size and depth of the global market has meant that the link between consumer and vendor is usually only the final link in a long and complex chain or network of exchanges.

This supply chain begins with the extraction of raw material and includes several production links, for instance; component construction, assembly and merging before moving onto several layers of storage facilities of ever decreasing size and ever more remote geographical locations, and finally reaching the consumer.

Although many companies and corporations today are of importance not just on national or regional but also on global scale, none are of a size that enables them to control the entire supply chain, since no existing company controls every link from raw material extraction to consumer.

Many of the exchanges encountered in the supply chain will therefore be between different companies who will all generally seek to maximize company revenue within their sphere of interest but will have little or no basic knowledge or interest in the remaining players in the supply chain except those to which it is directly linked.

Indeed, SCM drives corporate strategy in the case of companies like Dell.

Introduction to Supply Chain Management (SCM) Definitions of Supply Chain Management Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, ). Supply Chain Management. As you saw in the video, supply chain management is the process of managing the movement of the raw materials and parts from the beginning of production through delivery to the many organizations, operational supply chain decisions are made hundreds of times each day affecting how products are developed, manufactured, moved, and sold. The strategic supply chain processes that management has to decide upon will cover the breadth of the supply chain. These include product development, customers, manufacturing, vendors, and logistics.

There must be a strategic fit between competitive strategy and SCM, i. A company must have a broad vision of how the supply chain will function and evolve over time. Accordingly, investment decisions must be made.

An introduction to supply chain management

These include manufacturing facilities, warehouses, transportation infrastructure and information technology. Supply chain design decisions typically have long term implications. So they must be made carefully, taking into account uncertainty and anticipated market conditions over the next few years.

These strategic design decisions must be backed by appropriate medium term planning decisions and short term operational decisions.


Planning may involve making forecasts typically for a year and breaking it down into quarterly figures. Supply chain operations are more focused on handling incoming customer orders in the best possible manner.

Efficiency and responsiveness make up the two conflicting demands of a supply chain. Usually as investments are made to improve responsiveness to market needs, costs tend to go up. Similarly, as efforts are made to cut costs, responsiveness often suffers. Of course, there are situations, where intelligent supply chain configuration can simultaneously improve responsiveness and lower costs.

Thus, in the computer industry, Dell builds-to-order thereby cutting the costs associated with inventory obsolescence. But Dell has also cut down response time and increased the opportunities to customize, so that responsiveness to customer needs has not been compromised. The effectiveness of a supply chain depends critically on how different activities are coordinated.

Coordination problems arise because of conflicting objectives or poor information flows. These challenges have increased in recent times on account of multiple ownership of the supply chain and increased product variety.

One manifestation of the problem is the bullwhip effect. Fluctuations in orders get amplified as they move backwards along the supply chain from retailers to wholesalers to manufacturers to suppliers. Suppose, there is a random increase in customer demand at the retailer level.

Similarly the wholesalers may order more than the observed increase in demand from the retailer. This phenomenon extends right down to the suppliers. The bullwhip effect can be minimized by greater coordination across the supply chain by streamlining information flows, by aligning incentives and by improving trust.d p a 1) Introduction to Supply Chain Management • The supplychain: an introduction – Definition of a supplychain – Supplychain or logistics – what’s the difference?

Supply chain management is a strategy through which such an integration can be achieved.

An Introduction to Supply Chain Management

Supply chain management is typically viewed to lie between fully vertically integrated firms, where the entire material flow is owned by a single firm, and those where each channel member operates independently. Oct 17,  · Introduction of Supply Chain Management (SCM) Introduction of Supply Chain Management (SCM) Skip navigation Sign in.

Search. Loading Close. This video is . Introduction to Supply Chain Management - Chapter Summary. Our lessons address the many aspects of supply chain management in an easy-to-follow format, and each lesson clearly distinguishes. Importance of Supply Chain Management In , the US companies spent $1 trillion (10% of GNP) on supply-related activities (movement, storage, and control of products across supply chains).

“Supply Chain Management deals with the management of materials, information, and financial flows in a network consisting of suppliers, manufacturers, distributors, and customers.“.

Introduction to Supply Chain Management (SCM)