components of SCM
The SCM management components are the third element of the
four-square circulation framework.
The level of integration and
management of a business process link is a function of the number
and level, ranging from low to high, of components added to the
link (Ellram and Cooper, 1990; Houlihan, 1985).
Consequently, adding more management components or increasing the
level of each component can
increase the level of
integration of the business process link. The literature on
business process reengineering, buyer-supplier
relationships, and SCM suggests various possible components
that must receive managerial
attention when managing supply relationships.
Lambert and Cooper
(2000) identified the following
components which are:
· Work structure
· Organization structure
· Product flow facility structure
· Information flow facility structure
· Management methods
· Power and leadership structure
· Risk and reward structure
· Culture and attitude
However, a more careful examination of the existing literature
leads us to a more comprehensive structure of what should be the key
critical supply chain components, the "branches" of the previous
identified supply chain business processes, that is what kind of
relationship the components may have that are related with suppliers
and customers accordingly.
Bowersox and Closs states that the emphasis
on cooperation represents the synergism leading to the highest level
of joint achievement (Bowersox and Closs, 1996).
A primary level
channel participant is a business that is willing to participate in
the inventory ownership responsibility or assume other aspects
financial risk, thus including primary level components (Bowersox and
A secondary level participant (specialized), is a
business that participates in channel relationships by performing
essential services for primary participants, thus including secondary
level components, which are supporting the primary ones.
level channel participants and components may be included, that will
support the primary level channel participants, and which are the
fundamental branches of the secondary level components.
Consequently, Lambert and Cooper's framework of supply chain
components, does not lead us to the conclusion about what are the
primary or secondary (specialized) level supply chain components ( see
Bowersox and Closs, 1996, p.g. 93), that is what supply chain
components should be viewed as primary or secondary, and how should
these components be structured in order to have a more comprehensive
supply chain structure and to examine the supply chain as an
integrative one (See above sections 2.1 and 3.1).
Baziotopoulos reviewed the literature to identify supply chain
components. Based on this study, Baziotopoulos (2004) suggests
the following supply chain components :
1. For Customer Service Management: Includes the primary level
component of customer relationship management, and secondary level
components such as benchmarking and order fulfillment.
2. For Product Development and Commercialization: Includes the primary
level component of Product Data Management (PDM), and secondary level
components such as market share, customer satisfaction, profit
margins, and returns to stakeholders.
3. For Physical Distribution, Manufacturing support and
Procurement: Includes the primary level component of Enterprise
Resource Planning (ERP),
with secondary level components such as warehouse management,
material management, manufacturing planning, personnel management,
and postponement (order management).
4. For Performance Measurement: This includes the primary level
component of logistics performance measurement, which is correlated
with the information flow facility structure within the organization.
Secondary level components may include four types of measurement such
as: variation, direction, decision and policy measurements. More
specifically, in accordance with these secondary level components
total cost analysis (TCA), customer profitability analysis (CPA), and
Asset management could be concerned as well. In general, information
flow facility structure is regarded by two important requirements,
which are a) planning and Coordination flows, and b) operational
5. For Outsourcing: This includes the primary level component of
management methods and the company's cutting-edge strategy and its
vital strategic objectives that the company will identify and adopt
for particular strategic initiatives in key the areas of technology
information, operations, manufacturing capabilities, and logistics
(secondary level components).