Supply Chain
Management
The definition one American professional
association put forward is that Supply Chain Management encompasses
the planning and management of all activities involved in sourcing,
procurement, conversion, and logistics management activities. Supply
chain management (SCM) is the process of planning, implementing, and
controlling the operations of the supply chain as 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.
Importantly, it also includes coordination and collaboration with channel
partners, which can be suppliers, intermediaries, third-party service
providers, and customers. In essence, Supply Chain Management integrates
supply and demand management within and across companies.
Some experts distinguish Supply Chain Management and logistics, while
others consider the terms to be interchangeable.
Supply Chain Management
is also a category of software products.
Supply chain event management (abbreviated as SCEM) is a consideration
of all possible occurring events and factors that can cause a disruption
in a supply chain. With SCEM possible scenarios can be created and solutions
can be planned.
Supply chain management
problems
Supply chain management must address the following problems:
Distribution Network Configuration: Number and location of suppliers,
production facilities, distribution centers, warehouses and customers.
Distribution Strategy: Centralized versus decentralized, direct shipment,
Cross docking, pull or push strategies, third party logistics.
Information: Integration of systems and processes through the supply
chain to share valuable information, including demand signals, forecasts,
inventory and transportation etc.
Inventory Management: Quantity and location of inventory including raw
materials, work-in-process and finished goods.
Cash-Flow: Arranging the payment terms and the methodologies for exchanging
funds across entities within the supply chain.
Supply chain execution is managing and coordinating the movement of
materials, information and funds across the supply chain. The flow is
bi-directional.
Supply chain management
is a cross-functional approach to managing the movement of raw materials
into an organization, certain aspects of the internal processing of
materials into finished goods, and then the movement of finished goods
out of the organization toward the end-consumer. As organizations strive
to focus on core competencies and becoming more flexible, they have
reduced their ownership of raw materials sources and distribution channels.
These functions are increasingly being outsourced to other entities
that can perform the activities better or more cost effectively. The
effect has been to increase the number of organizations involved in
satisfying customer demand, while reducing management control of daily
logistics operations. Less control and more supply chain partners led
to the creation of supply chain management concepts. The purpose of
supply chain management is to improve trust and collaboration among
supply chain partners, thus improving inventory visibility and improving
inventory velocity.
Several models have been
proposed for understanding the activities required to manage material
movements across organizational and functional boundaries. SCOR is a
supply chain management model promoted by the Supply Chain Management
Council. Another model is the SCM Model proposed by the Global Supply
Chain Forum (GSCF). Supply chain activities can be grouped into strategic,
tactical, and operational levels of activities.
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