Tuesday, October 18, 2011

Introduction to (Sustainable) Supply Chain Management

Supply Chain Management (SCM) is the systemic, strategic coordination of functions that seeks to improve long-term performance. A supply chain consists of all parties involved, directly or indirectly in fulfilling a customer request. The supply chain not only includes the manufacturer and the supplier but also transporters, warehouses, retailers, and customers themselves. Within each organization the supply chain includes all the functions involved in receiving and filling a customer request.

The objective of every supply chain is to maximize the overall value generated. The value a supply chain generates is the difference between what the final product is worth to the customer and the cost of supply chain incurs in filling the customer's request. For most commercial supply chains, value will be strongly correlated with supply chain profitability i.e. the difference between the revenue generated from the customer and the overall cost across the supply chain.

Supply Chain process: Cycle View and Push/Pull view.

1. Cycle View

The processes in a supply chain are divided into a series of cycle, each performed at the interface between two successive stages of a supply chain. Cycle view of Supply chain process includes: Customer order cycle - Replenishment cycle - Manufacturing cycle - Procurement cycle.

2. Push/ Pull view

The processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order or in anticipation of customer orders. Pull process are initiated by a customer order, whereas push process are initiated and performed in anticipation of customer orders.

Companies are enhancing their competitiveness with improvement initiatives, such as implementation of Just-in-Time (JIT) and Quick Responses (QR) inventory management policies, business reengineering, and supply chain management.

Supply chain management involves developing efficient and effective information systems that can inform strategic decisions. The supply chain information systems rely on either EDI (Electronic Data Interchange) or the Internet to transmit information within the supply chain. Information systems are essential to managing a supply chain.

© 2011, Richard Matthews. All rights reserved.

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