Introduction

Supply chain management (SCM) encompasses all activities that are associated with the
flow and transformation of a customer's product from raw material to finished product as
efficiently as possible at the right quantities, to the right locations and at the right time so
as to fulfill and satisfy customer’s demands and requests. Supply chain management
emphasizes the logistics interactions that take place among the functions of marketing,
logistics, and production within a firm and those interactions that take place between the
legally separate firms within the product-flow channel.

It is important to know note that supply chain management is about the product flows
across functions and across companies to achieve competitive advantage and profitability
for the individual companies in the supply chain and supply chain members collectively.

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A supply chain is the combination of supply network, manufacturing plants, assembly
and distribution systems, logistics facilities as well as the end users and is made up of
five basic components i.e., plan / decision making; location decisions; production
decisions; inventory decisions and transportation decisions to help it attain sustainable
competitive advantage. Basic supply chain concept of links stretching form raw materials
to end users is accepted and pervasive today; is the foundation for how most of us now
think about goods-oriented operations.

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Procurement is an essential function in the supply chain management processes and if
well-managed, it can give a significant competitive advantage such as ensuring
continuous supply of materials needed for smooth operation of day to day activities
within an organization. Procurement process usually begins when the purchase
requisition is received from the requesting department or directly from the ultimate users
who either have insufficient or have already run out of inventories on hand. Nowadays,
organizations might also consider using e-procurement, an electronic media such as
electronic data interchange (EDI), online marketplaces or e-marketplaces to acquire or
obtain goods and services as it can bring about benefits such as improved customer
service, reduction in paperwork and duplicated records, improved ability to analyze and
measure spend and performance, etc.

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Logistics is part of the supply chain that involves the entire process of anticipating
customer needs and wants through planning, implementing, and controlling the efficient,
effective forward and reverse flow and storage of goods, services, as well as the related
information between point of origin and point of consumption.

Good logistics management views each activity in the supply chain as contributing to the
process of adding value. If little value can be added, it is questionable whether the
activity should exist. However, value is added when customers are willing to pay more
for a product or service than the cost to place it in their hands. To many firms throughout
the world, logistics has become an increasingly important value-adding process for a
number of reasons.

482 words

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References

http://www.siam.org/journals/plagiary/1657.pdf

Business Logistics / Supply Chain Management (Fifth Edition) – Ronald H. Ballou

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