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Supply Chain Management

Supply Chain Management



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Published by manoj rakesh
A brief idea about supply chain management.
A brief idea about supply chain management.

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Published by: manoj rakesh on Nov 03, 2009
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Supply Chain Management
MKRakeshPh.D scholar Mahatma Gandhi Kashi VidyapeethVaranasimkrakesh@rediffmail.com
 Through the past decades we have seen an increasing rate of globalization of theeconomy and thereby also of supply chains. Products are no longer produced andconsumed within the same geographical area. Even the different parts of a product may,and often do, come from all over the world. This creates longer and more complex supplychains, and therefore it also changes the requirements within supply chain management.This again affects the effectiveness of computer systems employed in the supply chain.A longer supply chain will often involve longer order to delivery lead times. Flaherty[10] states, in accordance with the discussion in Section, that the consequences of longer lead times will often be less dependable forecasts as these have to be made earlier,reduced production flexibility, i.e. greater difficulties to adjust to order changes, higher levels of inventory. Therese M. Flaherty. Global Operations Management. McGraw-Hill, New-York, 1996. The evident answer to the problem of longer lead times is to speed up the supply chain.But a limit is often reached beyond which further effort to shorten lead times are futile,especially in international supply chains. Another approach is to restructure the supplychain. This simply means to reconsider the strategic level decisions priorly made. A thirdapproach identified by Flaherty [10] is changing
: The order, forecasting, procurement, and information sharing procedures among the members of the supplychain. We will dwell on the issue of coordination in the next section.Globalization also brings foreign competition into markets that traditionally were local.Local companies are thereby forced to respond by improving their manufacturing practices and supply chain management. Bhatnagar et al. [5] states that attempts havefocused, among others, on reduction of inventory levels, and increased flexibility throughreduced lead times. Yet again we see how industry focuses on the issues of inventorymanagement and flexibility to maintain high levels of customer satisfaction.DefinitionsSupply chain management (SCM) is the process of  planning, implementing and controllingthe operations of thesupply chainas efficiently as possible. 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
Traditionally, marketing, distribution, planning, manufacturing, and the purchasingorganizations along the supply chain operated independently. These organizations havetheir own objectives and these are often conflicting. Marketing's objective of highcustomer service and maximum sales dollars conflict with manufacturing and distributiongoals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distributioncapabilities. Purchasing contracts are often negotiated with very little information beyondhistorical buying patterns. The result of these factors is that there is not a single,integrated plan for the organization---there were as many plans as businesses. Clearly,there is a need for a mechanism through which these different functions can be integratedtogether. Supply chain management is a strategy through which such integration can beachieved.There seems to be a universal agreement on what a supply chain is. Jayashankar et al.[25] defines a supply chain to beA network of autonomous or semi-autonomous business entities collectively responsiblefor procurement, manufacturing, and distribution activities associated with one or morefamilies of related products.Lee and Billington [17] have a similar definition:A supply chain is a network of facilities that procure raw materials, transform them intointermediate goods and then final products, and deliver the products to customers througha distribution system.And Ganeshan and Harrison [12] has yet another analogous definition:A supply chain is a network of facilities and distribution options that performs thefunctions of procurement of materials, transformation of these materials into intermediateand finished products, and the distribution of these finished products to customers.According to Wikipedia.orgSupply Chain Management (SCM): Supply chain management (SCM) is the process of  planning, implementing, and controlling the operations of the supply chain with the purpose of satisfying customer requirements as efficiently as possible. Supply chainmanagement spans all movement and storage of raw materials, work–in–processinventory, and finished goods from point–of–origin to point–of–consumption(http://en.wikipedia.org/wiki/Supply_Chain_Management
).The definition one American professional association put forward is that Supply ChainManagement encompasses the planning and management of all activities involved insourcing, procurement, conversion, and logistics management activities. Importantly, italso includes coordination and collaboration with channel partners, which can besuppliers, intermediaries, third-party service providers, and customers. In essence, SupplyChain Management integrates supply and demandmanagement within and across companies. More recently, the loosely coupled, self-organizing network of businessesthat cooperates to provide product and service offerings has been called the
 Logistics is that part of the supply chain process that plans, implements, and controls theefficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers' requirements.
“Efficient Management of the Supply Chain (source, make and deliver) in order tomaximize the value for money to the customer”.In other words Supply Chain Management means integration and management of SupplyChain organization and activities through coordinated and collaborative strategicalliances, efficient business processes and high levels of information sharing to create avalue chain that would provide member organizations a sustainable competitiveadvantage and in turn provide value for money to the customer. Instead of brand versus brand or store versus store, it is now supply chain versus supply chain. In this emerginghighly competitive and dynamic environment, the ultimate success of the Business entitywill depend on management's ability to integrate the company's complicated network of  business relationships. The graphic will explain the process of Integration in the SupplyChain network.The broader view of SCM is depicted in the above figurein a simplified supply chainnetwork structure. This would explain the basic difference between Logistics and SCM.Supply Chain is inter-company integration of business process and relationships andwhere as Logistics is intra-company integration.A Working Definition of Supply Chain Management:We can define the supply chain as the flow of information and material to and fromsuppliers and customers. The objectives of Supply Chain Management (SCM) are to:Maximize supply chain responsiveness and flexibility to customers,Minimize total supply chain cycle time, costs, inventory, and;Maximize supply chain capacity, utilization, and Return on Assets (ROA).There are four fundamental operating principles at work in SCM :

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