What is the Supply Chain Management (SCM)?

The best companies around the world are discovering a powerful new source of competitive advantage. It's called supply-chain management and it encompasses all of those integrated activities that bring product to market and create satisfied customers.

The Supply Chain Management Program integrates topics from manufacturing operations, purchasing, transportation, and physical distribution into a unified program. Successful supplychain management, then, coordinates and integrates all of these activities into a seamless process. It embraces and links all of the partners in the chain. In addition to the departments within the organization, these partners include vendors, carriers, thirdparty companies, and information systems providers.

Within the organisation, the supply chain refers to a wide range of functional areas. These include Supply Chain Management-related activities such as inbound and outbound transportation, warehousing, and inventory control. Sourcing, procurement, and supply management fall under the supply-chain umbrella, too. Forecasting, production planning and scheduling, order processing, and customer service all are part of the process as well. 

Importantly, it also embodies the information systems so necessary to monitor all of these activities.

Simply stated, "the supply chain encompasses all of those activities associated with moving goods from the raw-materials stage through to the end user." 

Advocates for this business process realised that significant productivity increases could only come from managing relationships, information, and material flow across enterprise borders.

What is the importance of Supply Chain Management

In the ancient Greek fable about the tortoise and the hare, the speedy and overconfident rabbit fell asleep on the job, while the "slow and steady" turtle won the race. That may have been true in Aesop's time, but in today's demanding business environment, "slow and steady" won't get you out of the starting gate, let alone win any races. Managers these days recognise that getting products to customers faster than the competition will improve a company's competitive position. To remain competitive, companies must seek new solutions to important Supply Chain Management issues such as modal analysis, supply chain management, load planning, route planning and distribution network design. 

Companies must face corporate challenges that impact Supply Chain Management such as reengineering globalisation and outsourcing. 

Why is it so important for companies to get products to their customers quickly? Faster product availability is key to increasing sales, 

An example of a Supply Chain Management application: 

To Reduce Cycle Time, Kick Those Bad Habits 

..One of the chief causes of excessive order-to-delivery cycle times is the existence of longstanding "bad habits" that result when companies fail to revise internal processes to reflect market changes. The existence of separate, independent departments tends to perpetuate these inefficient practices. Taking the supply-chain management view, on the other hand, helps companies identify the cumulative effects of those individual procedures. Eliminating such bottlenecks improves product availability and speeds delivery to customers--both of which can increase sales and profits. 

Supply Chain Management Today 

If we take the view that Supply Chain Management is what Supply Chain Management people do, then in 1997 Supply Chain Management has a firm hand on all aspects of physical distribution and materials management. Seventy-five percent or more of respondents included the following activities as part of their company's Supply Chain Management department functions: 

• Inventory management
• Transportation service procurement
• Materials handling
• Inbound transportation
• Transportation operations management
• Warehousing management

Moreover, the Supply Chain Management department is expected to increase its range of responsibilities, most often in line with the thinking that sees the order fulfilment process as one co-ordinated set of activities. Thus the functions most often cited as planning to formally include in the Supply Chain Management department are: 

• Customer service performance monitoring 
• Order processing/customer service
• Supply Chain Management budget forecasting

On the other hand, there are certain functions which some of us might feel logically belong to Supply Chain Management which companies feel are the proper domain of other departments. Most difficult to bring under the umbrella of Supply Chain Management are:

• Third party invoice payment/audit
• Sales forecasting
• Master production planning

Write-in responses reveal the leading edge of what some Supply Chain Management departments are doing. These include engineering change control for packaging; custom 

Today Supply Chain Management includes services such as:

• Operational Analysis and Design Materials Handling
• Distribution Strategy
• Operational Improvements, Distribution Management
• Computer Systems
• Warehouse Design Project Management
• Operational Commissioning
• Computer Simulation
• Technical seminars