What is a Supply Chain


Supply Chain Management is as fascinating a subject as any. Recognised as a critical tool that can make or mar any business, today, thanks to the Information technology.

After all, what is a Supply Chain ?


SCM is from supplier's supplier to customer's customer management of  information flow, physical flow and cash flow to earn money for a business entity by satisfying customer with safety, good quality/service and competitive cost.

"A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value chains"

Marketing Management is a business discipline which is focused on the practical application of marketing techniques and the management of a firm's marketing resources and activities. Rapidly emerging forces of globalization have compelled firms to market beyond the borders of their home country making International marketing highly significant and an integral part of a firm's marketing strategy. Marketing managers are often responsible for influencing the level, timing, and composition of customer demand through accepted definition of the term. In part, this is because the role of a marketing manager can vary significantly based on a business' size, corporate culture, and industry context. For example, in a large consumer products company, the marketing manager may act as the overall general manager of his or her assigned product to create an effective, cost-efficient Marketing management strategy, firms must possess a detailed, objective understanding of their own business and the market in which they operate. In analyzing these issues, the discipline of marketing management often overlaps with the related discipline of strategic planning.


You can interpret it that way "it is management of supplies", but remember supplies start from one party and ends at another, both indefensible; the ultimate goal being maximizing the total (not individual) supply chain profit. A good supply chain addresses smooth flow of goods/services, information and cash across SC parties. Importance of Coordination and Collaboration is paramount in achieving the same.

The principal aim of supply chain is to increase the profit percentage among different organisations connected by supply chain as compared to their profit when they were not connected with a supply chain. If after creating a supply chain profit among all the levels is same as previous profit then it wouldn't qualify as a supply chain. So, all the activities that one has to manage to enhance profit or quality or any such parameter comes under the ambit of supply chain management.

A simple definition is the creation and management of the entire supply chain to meet all customers' needs (current and future) and assure the best cost, quality and delivery.

SCM cuts across the entire operations of an organization. That is from Supplier's Supplier to Consumers. (ie Supplier management, Plan, Source, Make, Move, Consumer management)

Logistics is effective and efficient management of flow of Goods, Services and info from point of origin to point of destination in both the directions and Supply Chain includes all parties & functions in the chain. Objective of SCM is to maximize the overall supply chain profitability, by achieving effectiveness/efficiency in Supply chain depending on a company's goal.

The description now needs to be more about value chain...rather than supply chain...which encompasses suppliers (including all the sub-suppliers), OEM & after sales service

what is Supply Chain is perhaps another apt question. The Supply Chains cover not just the flow of products and materials at a basic level but cover other areas such as Finance, HR, Purchasing, Merchandising, Strategic Planning amongst others - it could cover an entire businesses

operations but in most cases many of the other areas are stripped off and operate as stand alone departments.

Supply Chain in most western firms revolves around the flow of product into and through a business including primarily inventory management and distribution functions but it is bigger than that as the best supply chains operate across the whole spectrum of functions within a business be that a small local firm or a global international operator - the name gives it away - Supply Chain - product or service moves through the business across the different departments all - hopefully - working together to improve efficiency and remove cost, free up cash, improve sales.

Supply Chain is the backbone of a modern business. The firms that perform best in this recession will be the ones' with the most switched on and flexible Supply Chains than can flex to meet the varying demands of the current economic climate.

Supply-Chain Management is thus "everything required to satisfy the demand of customers"

SCM is all about the activity and processes that is associated with from Farm to Fork

It can also be defined as the integrated set of business activities that begins with the sourcing of raw material and extends through order delivery to the customer and receipt of payment

Supply Chain Management - The term itself defines i.e. managing the chain of supply from receiving the request from requestor, processing it till the material/services reach the requestor, further requestor is satisfied with received material / services. The entire process to reach and manage upto this stage i.e. from request upto satisfaction of requestor in terms of his request can be termed as supply chain management.

Supply chain management is the implementation of a supply orientation between suppliers and customers.

Supply Chain Management is the optimal balance between a functional design of multiple connecting departments / systems and proper execution by the workforce, supervised by (operational) managers who keep a sharp eye on both. This is both a definition as the key to success of SCM.
It is also a management of supplies at right price, at right time and of a right quality.

The definition of SCM is dependent on what a Supply Chain is in the first place. (Obviously, how can someone manage something that he or she does not know and/or understand?) Fundamentally, a Supply Chain is a flow network, where similar entities (plants, dc's, w/h's) are linked together to allow  flow of goods, information, and cash among them. Now, what is a Supply Chain ? The responsibility for and controlling of this group of entities to maintain the flows accordingly.

supply chain management is a combination of the following 7 interrelated components: supply chain strategy, supply chain planning, supply chain operations, procurement, logistics, product life cycle management, supply chain enterprise applications. Good at managing one or two components cannot guarantee sustainable success in the long run, only those who are adept at managing the integrated whole will survive and become leaders in their industries.

All activities for which the company receives an invoice from outside parties.

“Managing the company’s external resources in such a way that the supply of all goods, services, capabilities and knowledge which are necessary for running, maintaining and managing the company’s primary and support activities is secured at the most favorable conditions”.

All activities that are required in order to get the product from the supplier to its final destination.


Finding sources of supply, guaranteeing continuity in supply, ensuring alternative sources of supply and gathering knowledge of procurable resources.

Purchasing Management:
All activities that are required to manage supplier relationships.

Supply Chain Management:
The management of all activities, information, knowledge and financial resources associated with the flow and transformation of goods and services up from the raw materials suppliers, component suppliers and other suppliers in such a way that the expectations of the end users of the company are being met or surpassed

Value Chain Management:
Challenging suppliers to improve the value proposition to the end-customers of the value chain. Usually the supplier works closely together with the customer’s technical and marketing staff to reduce the product’s overall costs and add new designs or features to the product which increases the value for the end-customer.

It's organizing the cost effective flow and storage of materials, in-process inventory, finished goods and related information from point of origin to point of consumption to satisfy customer requirements.

However, supply chain is the sequence of suppliers that contribute to the creation and delivery of a good or service to end customers.

Cradle to Grave : managing from the start of the origin of raw material to the end where the product is discarded or recycled.

Well, its simple, so let it be simple.... It starts from acquiring materials from mother earth, producing or processing them into products till delivering to the consumer, and the reverse. This involves the rest of support activities i.e. logistics, procurement, inventory, warehousing....and the list goes on !





See Previous Page also.......



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