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Supply Chain Management

Supply Chain Management

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Published by Mustafa
A short summary of supply chain management with emphasis on the SCOR Model. I have tried to make it interesting......
A short summary of supply chain management with emphasis on the SCOR Model. I have tried to make it interesting......

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Published by: Mustafa on Oct 08, 2013
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06/10/2014

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Mustafa Ali
[SUPPLY CHAIN MANAGEMENT-WHAT IT IS & HOW IT WORKS]
 
Supply Chain Management - What it is and How itworks
“It‟s not what you know, but what you can remember 
 when you need it 
 
SCM is a way of delivering products to customers across one or different markets through one or many routes in a way that reduces costs while not compromising quality.SCM, theoretically speaking, comes under the heading of Operations Research. So most of the people involved in this trade basically find ways to make operational processes efficient andeffective.SCM starts from the moment a new idea is conceived. Why? Because now you have to planeverything from raw material extraction, inbound logistics, manufacturing, fabricating,distributing, selling and finally providing additional services-(that may or may not generate profit for the company).Also traditional logistics focuses its attention on activities such as procurement, distribution,maintenance, and inventory management. Supply chain management, on the other hand,acknowledges all of traditional logistics and also includes activities such as marketing, new product development, finance, and customer service.So the SC manager is like the conductor of an orchestra who perhaps should have as many skillsas the arms of an octopus to meet or exceed expectations. This is an important exercise increating balance between different, often competing, activities.So what should he do? He should find ways to make his life easier!So we have discussed how it all starts at the design stage. That means it is perhaps one of themost important stages in the whole supply chain. Here you are planting a small tree or taking thatsmall step that will lead you towards bigger outcomes. So you can think how you can design a product
 
Whose raw materials can be easily procured
 
That is easy to manufacture
 
That is easy to assemble
 
Which has low inventory lead time
 
That is easy to deliver 
 
And finally convenient from the point of view of providing after-sales services(
Tough task, …eh?
)
 
Mustafa Ali
[SUPPLY CHAIN MANAGEMENT-WHAT IT IS & HOW IT WORKS]
 
Anyway that‘s more of a science than an art and
often it involves a lot of mathematics. In realitymost of the process is reactionary i.e. first a product is modeled and tested by the marketingdepartment and then the OR people are told to take care of the dirty work. How do they respond?Well their life is miserable and they use lots and lots of statistical data to conceive the idealsupply chain. There is also some trial and error. Finally with the aid of software and experience away is sought whereby you deliver the product to the customer through different processes alongmany alternative routes (online, brick and mortar shop, etc) while trying to minimize cost andmaintaining quality (read standards). And this is exactly where we started from. Now
let‘s
do some boring stuff and try to discover SCM as it is explained across differentcontemporary texts.
1.
 
The Definition
“  
The management of upstream and downstream relationships with suppliers and customers in order to deliver superior customer value at less cost to the supply chain as a whole.
”  
 
Well…there are many definitions available and the above quoted example is just one of many.
So one can easily find different examples across different textbooks and try to compare them and
 blah, blah, blah, yak, yak, yak….
 
What‘s important here is to understand the concept of SCM as a whole. To specialize in of the
domains of SCM is the province of nerdy PhD scholars or researchers.In simple words the goal or mission of supply chain management can be defined as to
―Increasethroughput while simultaneously reducing both inventory and operating expense.‖
 
2.
 
A Little History
The concept of SCM is very old; perhaps as old as life itself. It goes back to the great wars of ages gone by, the building of great cities, even earlier when man started hunting and make fire,or even earlier when different species were evolving.
I know, I know, too abstruse……
!Ok, so the term was coined in a paper published in 1975.
 Banbury (1975) used „supply chain‟ as a term of passing on electricity towards the ultimate
consumer.
 It was not until the 1980‟s, however, that the term „supply chain management‟ came
into context. Oliver and Webber (1982) discussed the potential benefits of integrating internal business functions of purchasing, manufacturing, sales and distribution into one cohesive
 framework. In the early 1990‟s, supply chain management evolved dramatically with the
increasing importance of the relationship with other suppliers (Harland, 1996).
Then came TQM, lean and JIT. Nowadays there is a strong emphasis on Green Supply ChainManagement and more specifically on Reverse Logistics and Waste Management.
 
Mustafa Ali
[SUPPLY CHAIN MANAGEMENT-WHAT IT IS & HOW IT WORKS]
 
3.
 
How It Works
Over the years researchers (yes those nerdy rascals!) have found that the whole can be greater than the sum of its parts. The concept is similar to the one used in Atomic Physics (:p) Anyway,they like to believe (and they would very much like
us
 
to believe) that it‘s true. In simple words
it means that if we integrate all the functions of SCM effectively, we can achieve greater  productivity than it would have been possible otherwise.
It‘s like cooking a good meal. If we
adjust everything according to the right proportion, the final dish
might 
taste great!
So it‘s like a puzzle where we find the best fit that helps us achieve success (reap profit i.e.). In a
way we are differentiating /positioning ourselves on the basis of service. We are different because our SC is efficient and effective. That means we can deliver a product to our customer quickly and according to specifications.Here we are striving to reduce cost and increase value. How do we do that? Well we should firstrealize that, the chain in SCM can act as a network 
. It‘s
something like the diagram given below

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