What is Supply ChainManagement
Set of linkages between suppliers of materialsand services
Overview
Set of linkages between suppliers of materials and services that span the transformation of rawmaterials in products or services and delivers them to a firm’s customers is known as supply chain.Consultant
Keith Oliver
, of strategy consulting firm Booz Allen Hamilton in 1982, coined the termsupply chain management. The dictionary meaning of Supply-Chain-Management is:
Supply:
To provide something that is wanted or needed, often in large quantitiesand over a long period.
Chain
: (a length of) rings which are connected together and used for fastening, pulling, supporting, or limiting freedom.
Management
: The control and organization of something
The basic purpose of supply-chain management is to control inventory by managing the flows of materials. Inventory is stock of material used to satisfy customer demand or support the productionof goods or services. Inventory exists in three aggregate categories.
Raw Materials
: Needed for the production of goods
Work- in- Proces
s: Consists of Items needed for the final product inmanufacturing
Finished Goods
: Final product or Items ready for sale.
An important part of this process is provision of the information needed for planning and managingthe supply chain. This information comes from internal and external sources and is disseminated todecision makers through
ERP (Enterprises Resource Planning) systems
, which often containsupply-chain management systems as a module.The supply chain for a firm can be very complicated, because many companies have hundredssuppliers, and hundreds distributors, in which there can be so many layers, therefore, value of supplychain management system become apparent when the complexity of the supply chain is recognized.Successful Supply-chain management requires a high degree of functional and organizationalintegration. Such integration does not happen overnight, it required tremendous amount of time,efforts, and money also. The Integral supply chain provides a framework for the operating decisionsin a firm. SCM provides interfaces between the internal supply chain and the customers andsuppliers.
Supply Chane Management - MIS Report.doc - Page 3 of 22
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