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Supply Chain Management

WHAT IS A SUPPLY CHAIN?

All activities associated with the flow and transformation of goods from raw materials to end users.
It comprises the flow of all information, products, materials and funds between the different stages of creating and selling a product. It includes all functions involved in receiving and filling a customer request.

 A network of facilities including:



  •  Material flow from suppliers and their UPSTREAM suppliers at all levels.
  • Transformation of materials into semi-finished and finished products (internal process).
  • Distribution of products to customers and their DOWNSTREAM customers at all levels.
  • Benefits
o   Bridges the gap between suppliers and customers.
o   Helps manufacturers in reducing inventories as finished goods are stored nearer to customers.
o   Allows firms to conduct operations at an appropriate time and place for benefit of supplier and customer.

SUPPLY CHAIN MANAGEMENT

It is co-ordination and management of supply chain activities and also the integration of suppliers, distributors, warehouses, manufacturers, customer logistics into one cohesive process. It is the new version of logistics management. It is the active management supply chain activities to maximize customer value and achieve sustainable competitive advantage.

WHY IS SCM IMPORTANT?

  • Boost customer service: Customers expect products to be available at the right location.
  • Reduce Operating Costs: Decreases (a) Purchasing Cost (b) Production Cost (c) Total Supply Chain cost.
  • Improve Financial position
Reference: Part of this article is excerpted from David Simchi-Levi, Philip Kaminsky, Edith Simchi-Levi and Ravi Shankar’s book Designing and Managing the Supply Chain, third edition, 2008


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