SUPPLY CHAIN MANAGEMENT

Supply Chain Management

Supply Chain Management

Introduction

Supply chain management (SCM) is a term applied to a management philosophy and to the practices involved in implementing a SCM philosophy, although it can also be used to describe management processes that are not necessarily rooted in a guiding philosophy. SCM, which gained prominence as outsourcing become prevalent in the 1990s, brings together and extends the concerns of total quality management (TQM) and just-in-time (J-I-T) management techniques that preceded it (Aviv 2001: 578).

As a management philosophy, SCM is a systems approach that involves assembling a team of upstream (suppliers) and downstream (distributors and end users) partners with a common goal of satisfying a particular customer value or set of values. This outlook recognizes the interdependency of team members and attempts to foster a cooperative effort that will ultimately give the team a competitive advantage in the market place. SCM differs from earlier management philosophies in that it necessarily involves establishing sufficiently trustful relationships with the members of the chain to warrant involving them in strategic decisions. Companies may be involved in multiple supply chains and function in different roles (e.g., partner, supplier, or customer) at any given time (Blackhurst 2005: 4067).

As a guiding management philosophy and implementation technique, SCM is particularly attractive to socially and environmentally responsible businesses, as it gives assurance that standards set to support social welfare and environmental sustainability are being met throughout the life cycle of any given product.

Supply chain management affects all factors of the shareholder value of a company which includes cost, customer service, productivity and revenues. In addition to the Strategic Planning, Supply Chain Management is the most popular methods for several operations of firms. Nowadays, companies share the various tasks in the value chain, and around the globe. Despite huge tracks that cover the partial products, the companies jointly produce more and cheaper than a company that does the job alone. This happens because the dependence of firms rises with each other and due to the need for ever closer cooperation and more intensive exchange of information (Dooley 2001: 5013).

The extreme strategic importance of supply chain management for the competitiveness of businesses is evident in all sectors. At the same time, the gap between the average companies and leading companies such as Nissan, Toyota, and Dell becomes greater with the passage of time. The best are getting better and faster in almost all industries.

The SCM Model

In the current era of modernization and automation, the organizations are trying their best to achieve time efficiency in terms of the official procedures of forming and delivering a product to respective customers (Fine 2005: 389). Supply Chain Management is a tool used by the organizations; especially manufacturing those are based on a network of interlinked organizations having a common goal to create the best possible means of delivering products or services to customers (Gunasekaran 2001: 71). The process of Supply Chain can be easily understood by the following figure:



The figure illustrates that the raw materials ...