What is Supply Chain Management

what supply chain management

What is Supply Chain Management ?


Supply Chain Management, is what I believe to be an obsolete term. "Chain" itself implies mechanically subject to failure, limitations, and per the old axiom, is only as strong as its weakest link. I would propose the industry begin considering fluidity, perhaps incorporation hydraulic terminology into our thinking. We need to plan for pressure, capacity, alternative routing, flexibility of materials to run through it, ability to divert and supplement, and to turn on, off, and variably regulate.
3. One important aspect is that SCM needs to continually attempt to eliminate waste and optimize its own length/scope...the closer you can bring supply and consumption together, the better.

 We should not focus upon "management", but upon "optimization".

SCM is the management of the set of materials, methods, machines, and manpower needed to provide the customer with the quality, service and price superior to that of the competition. It includes ALL functional areas of an organization using various tools and techniques towards this common objective.

SCM is concerned with how a supply chain – ideally through its members working closely together – can successfully deliver the products and / or services demanded by end customers by achieving the highest possible level of customer satisfaction at the lowest possible cost. The supply chain has to meet or exceed customer expectations, and to do this better than the competition.

SCM means managing the flows of materials, goods and services – as well as the flows of funds and of information – across the whole of the supply chain. It involves two dimensions: (i) managing the physical process involved in providing the finished goods and / or services to end customers, starting with the provision of raw materials, and (ii) balancing supply with demand – i.e. making certain that the goods and / or services being provided are what end customers actually want to buy in terms of qualities, features, delivery, prices, service, etc., and also that supplies do not fall short of demand.


SCM requires fully integrating product or service design with production capability, delivery processes and information on both customer demand and on the evolving marketplace.

Keeping it simple: Supply Chain is managing the material and process from your vendor's vendor to your customer's customer efficiently and cost effectively.

Before we can reach a consensus about Supply Chain Management, it is a good idea to review our concept of Supply Chain itself:
Visualize Supply Chain as a System (very similar to a living system). This system has the following:
- A structure (constituted by the organizations, the buildings, the machines, etc.)
- Flows (of materials, products, services, money, energy, etc.)
- Processes (task sequences in order to achieve definite objectives)
The indication of Lakshmi is useful to recognize the boundaries of the system. That is, all things related with a definite product life cycle.

From this perspective of Supply Chain , we can have a better perspective of SCM. SCM would be then all the activities directly oriented to reach a sustainable and smooth flow of materials and goods to the end customer.

SCM - Managing flow of information, goods/services and finances between consumers suppliers and producers

Supply Chain Management is effective management and coordination of all co-related activities that goes in to ensure right product at right quantity at right place at right time at least cost, at the same time ensuring proper timely flow of information in the system & last but certainly not the least....providing quick & efficient after sales service & support to customer.

Supply chain must ensure three flows effectively - flow of product/service, flow of information through proper documents and finally flow of funds (payments - which is the result of two previous flows). of course, reverse logistics and returns management is part of Supply

Chain Management. What is new or UNIQUE in supply chain concept is :INTEGRATION. When philosophers dared to think about this 'Integration' is when they thought, technology is available to enable integration among the business partners. May be after the invent of RDBMS?

“Practitioners and educators have variously addressed the concept of supply chain management (SCM) as an extension of logistics, the same as logistics, or as an all-encompassing approach to business integration. Based on a review of the literature and management practice, it is clear that there is a need for some level of coordination of activities and processes within and between organizations in the supply chain that extends beyond logistics. We believe that this is what should be called SCM.

In simplest terms a Supply Chain is "The network of retailers, distributors, transporters, storage facilities and suppliers that participate in the sale, delivery and production of a particular product."

Supply chain management in business terms is defined as the SIPOC model that is suppliers-Inputs-Process of conversion to produce a valuable deliverable-output-customers...It is not just the management of supplies! or the suppliers it includes all the steps in the process. The major concern here is customers, along the line of supply chain, the value keeps on adding to the product and finally is delivered to the customer!

Supply Chain Management means managing/ co-ordinating all positions in one business (planning, receiving, expediting, warehousing, transporting, procuring, paying, cost controlling, accounting, HR...) in order to get profit for both supplier and customer satisfaction. It is a WIN-WIN game.

Simply put Supply Management is the process of assuring the right product, at the right time, at the right cost. Very simple definition, often however very difficult to accomplish

Supply Chain Management includes everything from the supplier-side (RFP, tender, supplier relationship, buying) through to the (multi-tier) network (DC management, systems, demand forecasting, inventory policy, etc) and ends with the customer-side (on-shelve-availability, customer service, customer satisfaction). SCM always comes with a strong IT link and covers not only operational issues (as outlined above), but also strategic decisions (what's my network, make-vs-buy decisions).

Supply chain refers to the flow of work, physical, finance, cash, product, information, materials, services & payments from suppliers via factories (value chain) to the final consumer (Demand Chain).

Supply chain management involves coordinating, smoothing, streamlining and integrating these flows both within and among companies. The ultimate goal of any effective supply chain management system is to continuously improve an organization competitiveness, profit & integrated processes for product & service design, purchasing, production, logistics and customer satisfaction

Its goals also include reducing inventory (with the assumption that products are available when needed) and ensuring optimal operation of a supply chain. This includes cost saving, improving profit, responsiveness & supply chain flow & decreasing lead time.

As a solution for successful supply chain management, the web-based ERP II ( extended enterprise resources planning) software allow the suppliers & buyers in the supply chain to access the data and applications over the Internet using a web browser . It typically has a web address. Or, we can use the enterprise application integration software (EAI) to integrate the software applications & databases. Both are the total solution for any companies especially the SME to improve the supply chain efficiency. 

supply chain management is the management of materials and information from supplier to end user

It seems a few similar terms are consistently mentioned in some of the above definitions, such as coordination, integration, collaboration. That is really the role of SCM. Companies have specialists in procurement, production, inventory management, distribution, sales, etc. The role of SCM is to seamlessly coordinate all of the activities associated with these functions to ensure optimal effectiveness (customer service) and efficiency (cost reduction). As such, it is a challenge to find people with both hard and soft skills to fill supply chain positions within companies.

Supply Chain is a key chain of events from demand creation to collection of cash from a sale. The key steps in between include: procurement, manufacturing, logistics & distribution, customer relationship & forecasting. In the end, it is about having the right material, in the right package, at the right location to meet customer expectations of lead time and cost...while sustaining a profitable business.

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.

SCM is the INTEGRATION of the best resources/services available in the market or in the company to MAXIMIZE the satisfaction of the preferred customers in the most PROFITABLE way

Supply Chain's scope can also be described by using a 3 x 2 grid. The '3' dimension being a hierarchical time frame ( Strategic, Tactical and Operational) and the '2' being Operational / Sustaining and Development / Change. The '2' can be subdivided- but lets leave that for now.

The real challenge for supply chain managers should be keeping the Capabilities and Capacities of the supply chain in line with, and supportive of, the needs of the business. If the business is more reactive in nature the pressures and challenges on managing the supply chain are consequently that much more difficult. Clearly, in this situation, developing capacity / capabilities beyond the current need will be a necessary tactic for survival.

Two final thoughts:

1. Consider that, in any give supply chain, there is not one single supply chain manager, but many, each with different, but hopefully, overlapping objectives!

2. In our review and definition of SCM we should consider both, the WHAT, and the HOW. In theory, these could be considered independently, but in reality, they are inter dependent. Process, Technology, Data, Organization, Business Model and Business Strategy all impinge on both.

“Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. 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. Supply Chain Management is an integrating function with primary responsibility for


linking major business functions and business processes within and across companies into a cohesive and high- performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.” Source: Definition from The Council of Supply Chain Management Professionals (CSCMP).

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.

For ALL Products, Services and Solutions, throughout their lifecycle, manage all the relevant Supply / Customer relationships ( internal & external) across the entire supply chain:

2. CREATE / CHANGE the supply chain capabilities / capacities
4. REVIEW: Performance / Development / Realignment.

In all its simplicity, SCM can be defined as:
The customer needs the product. Supply Chain is responsible for delivering that product in a timely and cost-effective manner. All the activities that thus originate come under the purview of SCM.

The easiest way to define Supply Chain Management is going back to the basics and the core of SCM which "is about matching your offer of supplies/products to your demand levels while maximizing profits and mitigating risks"

SCM is the management of group of activities involved in S-I-P-O-C (Supplier-Inputs-Process-Output-Customer) Model, in a way, such that the right product is available at the right time to the right customer at the right place at right price in right condition.

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