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Supply Chain Management Components Integration



The management 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[4], buyer-supplier relationships[5], and SCM[6] suggests various possible components that must receive managerial attention when managing supply relationships.

Lambert and Cooper (2000) identified the following components which are:


  •   Planning and control

  • · 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 Closs, 1996).

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.

Also, third 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 requirements.

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).

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