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 satisfy a 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.

Discussion

Supply chain management or simply known as supply chain is an important & very crucial department of business. It can be called the bloodline of any firm or organization especially the ones involved in manufacturing of products like textile, mobile phones, fast food or anything that has to do with manufacturing. In plain business terms, it is management of successfully converting raw material also known as the input of any business into finished goods also known as the output (Chan 2006: 110). The management utilizes a complete set of various processes and procedures to ensure efficient utilization of business's resources in turning the raw materials into finished products. There are three layers in Supply chain namely:

Upper layer - comprises of suppliers of various raw materials for a business

Internal stream layer - the actual production process of the manufacturing firm involved in converting raw materials to finished goods

Bottom or Downstream layer - the placement "P" of the marketing strategy responsible for the delivery of finished goods to clients via distribution centers, shops, wholesalers and retailers etc.

For producers and retailers, the newfound wealth of information allowed them to seek out suppliers from a greatly expanded population. Outsourcing, whether domestic or international, increases the complexity of management and carries with it two sets of costs. The first set is considered “hard costs,” because they are quantifiable and known. These include acquisition and transportation costs, and any applicable taxes, tariffs, and other import-related costs (Choi 2006: 652). The second set comprises “soft costs,” so-called because they are harder to quantify and ...