Supply chain management has relationship with discipline of sales and marketing such as procurement,

finance and operations management.

SUPPLY CHAIN MANAGEMENT AND PROCUREMENT

Supply chain management has a direct relationship with procurement .Supply chain involves
various activities where procurement is one of them(procurement is a subset of supply chain
management).Supply chain involves activities aimed to make sure the goods and the services
reach the final consumer .It involves raw material gathers, manufacturers, transportation
companies. It also involve task to move the product such as marketing, quality control and
marketing.

Procurement involves acquiring goods and services required by your company its activities
include negotiating prices, buying goods, inventory control, packaging of the products.
Procurement is also business management function that ensures identification ,access, sourcing,
access of resources required to meet its strategic objectives Activities procurement does include
planning ,identification and analysis, corporate governance, supply chain management . The
benefits of procurement include: security of supply, lower cost, reduce risk, increases efficiency,
greater added value and innovation.

Supply chain management and procurement do collaborate. For example, after a launch of a
product in a company. The procurement docket will launch the project to identify suppliers that
are capable of delivery specific materials required in forecasted volume and required quality. The
procurement staff will then engage with qualifying suppliers to negotiate the favorable terms and
fix that in that contract .it will hand over the management of the ongoing supplier relationship
with the supply chain functions. The procurement staff will continue to monitor the situation by
checking whether the suppliers will comply with contract terms.

There is also a similarity between procurement and supply chain management. They both act as
primary interfaces between an organization and its suppliers. Both acts as incentivized to ensure
that materials and components bought from elsewhere are available in the right quality, right
time and right place

SUPPLY CHAIN MANAGEMENTAND FINANCE

Most companies do not have their physical and financial flows integrated. Managers make
decision from a supply management point of view and do not realize the impact of financial
performance on supply and vicevesa. However, growth, profitability and proper capital
utilization are better ulitilized when there is a proper integration between supply and finance.
There several ways of integrating supply chain managers and finance managers such as:

 The supply manager and finance manager having a good business

language(understanding the various supply and finance concepts and how they
integrate)
  Supply managers and finance managers speaking a common language

A proper link between the finance and supply is measured in terms of impact on cashflow,
market value and also important financial performance like return on capital, economic profit,
working capital and equity.

They are various financial statements such as:

 Income statement
 Cash flow
 Statement of financial position

INCOME STATEMENT

This statement shows the firms earnings over a particular period of time. Its components include
product cost, administrative overhead cost and revenues. The net income is most focused on non
performance metric in the business community. It may also focus on components of net income
such as gross margin, earning before gross margin, earnings before interest and taxes minus
depreciation and amortization expense.

Various income statement components are affected by supply chain issues that finally affect the
financial performance .for example revenue is affected by the following supply chain issues:

 Lead time
 Time to market new products
 Response time to customer request
 On-time delivery
 Product quality
 Product returns
 Stock outs
 Fill rates

The other component of income statement also by supply chain issues is product cost in the
following way:

 Transportation cost
 Network distance
 Procurement cost
 Inventory cost
 Storage cost
 Packaging cost
 Waste
 Moreover the sales, general and administrative costs a component of the income statement is
affected by the following supply chain issues like:

 Warranty cost
 Selling cost
 Exchange rate cost

STATEMENT OF FINANCIAL POSITION

Within the statement of financial position there is working capital that shows the organizational
success or failure. Not only does supply chain decisions have an impact on working capital but
also working capital flow and direct impact on financial and performance warrant cost of a firm.
A firm that lacks enough working capital will not have the funds available to pay its employees,
suppliers; this may lead to the firm shutting down. Whereas a firm with excess working capital
will have the ability to expand without increase borrowing.

The supply function influences working capital. The following supply decisions affect the
different components of the working capital. For instance inventory days is affected by the
following supply functions:

 holding cost
 obsolescence
 theft
 forecasting accuracy
 sourcing time
 delivery time

Accounts receivable days also is a component of working capital that is affected by following
supply chain issues:

 bad debt
 follow up to receive payment
 unable to ship due to non-payment
 exchange rate changes
 correct invoicing terms
 proof of receipt

Accounts payment days is also another component of working capital that is affected by the
following supply chain issues:

 discount not taxes

 payment penalties
 correct invoicing terms
  late payments

STATEMENT OF CASH FLOW AND STATEMENT OF SHAREHOLDERS EQUITY

It contains information from income statement and statement of financial position. It shows the
use of the source and the use of funds in the key primary areas of a firm: operations, financing
and investing. The supply chain organization impacts the statement through actions that affect
the statement of financial position and income statement.

The statement of shareholders equity is used to summarize the ownership portion of the firm
(capital stock sales and purchases, income generation and payment of dividends. The supply
chain function mostly directly affects the net income generated for the firm.

SUPPLY CHAIN MANAGEMENT AND OPERATIONS

Operations management is the system that converts resources into goods and services. The
system is responsible for managing the core processes used to manufacture goods and services.
The role of operations management in business can be summed down to supplying certain
activities for the business. These are:

 Forecasting: Estimating demand, conditions and growth

 Capacity planning :planning amounts
 Scheduling: creating and maintaining schedules
 Managing inventory: self explanatory
 Assuring quality: quality is indispensable .Customers expect high- quality products and
services .This focuses on efficiency and courtesy
 Motivating and training: employees are also self explanatory
 Locating facilities: finding places to situate your business and its resources to
manufacture goods and services.

Supply Chain Management is concerned with strategic choices, sharing of information

and resources, coordination of logistics, and capacity to optimize the cost-effective
creation of value along a supply chain. Operations Management, on the other hand,
covers the activities, decisions and responsibilities of managing the resources that are
dedicated to the production and delivery of products and services.

The following are the differences between the supply chain management and operations
management:
 Supply Chain Management aims to cut out inefficiencies in the chain, and increase profits
by reducing costs. Operations Management has a larger set of activities engaged with
controlling and monitoring every aspect of the processes used in the manufacturing of a
product.
 Supply Chain Management is about getting material in and out of a factory, and making
sure the right parts are coming in from the suppliers in the correct quality and quantity.
 Operations Management is concerned with what is done with these materials inside the
factory.
 Supply Chain Management focuses on activities independent of the type of business you
are conducting. Operations Management is concerned with the type of business your
organization conducts and how well you are able to carry out these activities. 
 Supply Chain Management revolves around the activities that take place outside of a
company. Operations Management takes place internally.
REFFERENCES
 Business degrees, February 19. 2015
 www.floridate.com/resources/supply chain management
 Business performance, supply chain management by emerald group publishing
limited.
 Basics of supply chain management by Priscilla Wisner May 25 2011
 Supply chain and finance by David Dumke 5/12/2011
 Supply management in procurement article by will green on 20th October 2013
 Difference in supply chain management article by Jake Wayne