SUPPLY CHAIN
MANAGEMENT (SCM)
• The supply chain encompasses all activities
associated with the flow and transformation of
goods from the raw materials stage (extraction),
through to the end user, as well as the associated
information flows
• Supply Chain Management (SCM), is the
integration of these activities through improved
supply chain relationships, to achieve a sustainable
competitive advantage.
SCM includes:
• INTERNAL FUNCTIONS
– Order processing, production scheduling, materials
requirements planning (MRP), etc.
• MANAGEMENT OF EXTERNAL UPSTREAM
SUPPLY CHAIN
– Planning, organizing, scheduling purchases;
maintaining supplier relationships, etc
• MANAGEMENT OF EXTERNAL
DOWNSTREAM SUPPLY CHAIN
– Physical distribution, distribution network, etc
INFORMATION SYSTEMS AND SCM
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Centralized coordination of information
Total logistics management – integrating..
Order change --- impacts all functions
Global transportation visibility
Global inventory visibility
Global sourcing visibility
Intercompany information access
INFORMATION SYSTEMS….
• Data interchange – between affiliates and
non affiliates
• Data capture -- data acquisition & tracking
• Transformation of business from within –
employees see “big picture”
• Improvement in supplier-customer
relationships
INVENTORY AND SCM
• INVENTORY
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Becoming a time-based competitor
– (some buzzwords)
• Throughput time reduction
• Delivery speed
• Fast cycle capability
• Quick response or resupply time
• Lead time reduction
• Time compression
Results in less inventory
Often better quality
• SUPPLY CHAIN RELATIONSHIPS
– Traditional adversarial relationship
– Current closer relationship
CHALLENGES FACING SCM
• INFORMATION
– Often not available > Bullwhip effect
– Members often don’t share
• INVENTORY MANAGEMENT
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International borders
Weather
Poor communication
Human error
>>Complex and demanding
• ESTABLISHING TRUST
– Conflict management