CHAPTER 1

INTRODUCTION

The best companies around the world are discovering a powerful new source
of competitive advantage. It's called supply-chain management and it encompasses
all of those integrated activities that bring product to market and create satisfied
customers.

The earliest appearance of the term 'supply chain management' as we know
it today published in recognizable media and literatures can be traced back to the
early 1980s. More precisely, it first appeared in a Financial Times article written
by Oliver and Webber in 1982 describing the range of activities performed by the
organization in procuring and managing supplies. However, in the early
publications of supply chain management in the 1980s were mainly focused on
purchasing activities and cost reduction related activities. The major development
and the significant increases of publications in the areas of supply chain integration
and supplier-buyer relationship came in 1990s when the concept as we know it
today was gradually established.
No organization works in isolation, and each one acts as a customer when it buys
materials from its own suppliers, and then it acts as a supplier when it delivers
materials to its own customers. For instance, a wholesaler acts as a customer when
buying goods from manufacturers, and then as a supplier when selling goods to
retailers. A manufacturer buys raw materials from suppliers, assembles these into
finished products, and sells them to wholesalers. As a result, most products move
through a series of organizations as they travel between original suppliers and final
customers. These series of activities and organizations that involves the movement
of materials from the initial suppliers to the final customers is called supply
chain.


Fig 1: A logistic Network

A supply chain encompasses all the activities, functions and facilities involved in
producing and delivering a product and/or service, from suppliers (and their
suppliers) to the customers. The supply chain management (SCM) paradigm is
geared towards optimizing each component that is involved in a supply chain
network.