Introduction
Supply Chain Management
(SCM) is the systemic, strategic coordination of the traditional
business functions within a particular company and across businesses within the
supply chain for the purpose of improving the long-term performance of the
individual companies and the supply chain as a whole. A supply chain consists
of all parties involved, directly or indirectly in fulfilling a customer
request. The supply chain not only includes the manufacturer and the supplier
but also transporters, warehouses, retailers, and customers themselves. Within
each organization, such as a manufacturer, the supply chain includes all the
functions involved in receiving and filling a customer request. A typical
supply chain may involve a variety of stages.
These supply chain stages includes,
- Customers
- Retailers
- Wholesalers/Distributors
- Manufacturers
- Component / Raw-material
suppliers
Need For Supply Chain
Management
Corporations have turned increasingly to
global sources for their supplies. This globalization of supply management has
forced companies to look for more effective ways to coordinate the flow of
materials into and out of the company.
Companies and distribution channels
compete more today on the basis of time and quality. Having a defect-free product
to the customer faster and more reliably than the competition is no longer seen
as competitive advantage but simply a requirement to be in the market.
Customers demand products consistently delivered faster, exactly on time, and
with no damage. Each of these necessitates closer coordination with supplier
and distributors.
The global orientation and increased
performance based competition combined with rapidly changing technology and
economic conditions all contribute to market place uncertainty. This uncertainty
requires great flexibility on the part of individual companies and distribution
channels, which in turn demand more flexibility in channel relationship.
All these factors have made the
concept of Supply Chain Management more important to companies.
Objective of Supply Chain
The objective of every supply chain is to
maximize the overall value generated. The value a supply chain generates is the
difference between what the final product is worth to the customer and the cost
of supply chain incurs in filling the customer's request. For most commercial
supply chains, value will be strongly correlated with supply chain
profitability i.e. the difference between the revenue generated from the
customer and the overall cost across the supply chain.
Process View of A Supply
Chain
The supply chain process occurs in two
ways, Cycle View and Push/Pull view.
1. Cycle View
The processes in a supply chain are
divided into a series of cycle, each performed at the interface between two
successive stages of a supply chain. Cycle view of Supply chain process
includes,
- Customer order cycle
- Replenishment cycle
- Manufacturing cycle
- Procurement cycle
