Supply Chain Management
Supply Chain Management is an ongoing process which takes into account various organizational functions including, Marketing, Sales, Logistics, Information Systems, Finance and Customer Service and is integral to Business Strategy as it shapes an Organization’s ability to provide superior service to its Customers at increased profitability through enhanced Customer satisfaction. Supply Chain Management can set the basis for competitive advantage formulation
Supply Chain Management can be defined as:
“Management is on the verge of a major breakthrough in understanding how industrial company success depends on the interactions between the flows of information, materials, money, manpower, and capital equipment. The way these five flow systems interlock to amplify one another and to cause change and fluctuation will form the basis for anticipating the effects of decisions, policies, organizational forms, and investment choices.”
(Forrester, Jay W. (1958), “Industrial Dynamics: A Major Breakthrough for Decision Makers,” Harvard Business Review, Vol. 38, July-August, pp. 37-66.
Differences between supply chain management and classical materials and manufacturing control: “1) The supply chain is viewed as a single process. Responsibility for the various segments in the chain is not fragmented and relegated to functional areas such as manufacturing, purchasing, distribution, and sales. 2) Supply chain management calls for, and in the end depends on, strategic decision making. “Supply” is a shared objective of practically every function in the chain and is of particular strategic significance because of its impact on overall costs and market share. 3) Supply chain management calls for a different perspective on inventories which are used as a balancing mechanism of last, not first, resort. 4) A new approach to systems is required—integration rather than interfacing.”
(Houlihan, John B. (1988), “International Supply Chains: A New Approach,” Management Decision, Vol. 26, No. 3, pp. 13-19.)
“The objective of managing the supply chain is to synchronize the requirements of the customer with the flow of materials from suppliers in order to effect a balance between what are often seen as conflicting goals of high customer service, low inventory management, and low unit cost.”
(Stevens, Graham C. (1989), “Integrating the Supply Chains,” International Journal of Physical Distribution and Materials Management, Vol. 8, No. 8, pp. 3-8.)
Supply chain strategy includes: “... two or more firms in a supply chain entering into a long-term agreement; ... the development of trust and commitment to the relationship; ... The integration of logistics activities involving the sharing of demand and sales data; ... the potential for a shift in the locus of control of the logistics process.”
(La Londe, Bernard J. and James M. Masters (1994), “Emerging Logistics Strategies: Blueprints for the Next Century,” International Journal of Physical Distribution and Logistics Management, Vol. 24, No. 7, pp. 35-47.)
Supply chain management is “... an integrative philosophy to manage the total flow of a distribution channel from supplier to the ultimate user.”
(Cooper, Martha C., Douglas M. Lambert, and Janus D. Pagh (1997), “Supply Chain Management: More Than a New Name for Logistics,” The International Journal of Logistics Management, Vol. 8, No. 1, pp. 1-14.)
