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Chapter 1 Supply Chain Management A supply chain consists of the flow of products and services from: – Raw materials manufacturers – Component and intermediate manufacturers – Final product manufacturers – Wholesalers and distributors and – Retailers Connected by transportation and storage activities, and integrated through information, planning, and integration activities Many large firms are moving away from in-house Vertically Integrated structures to Supply Chain Management 1 Logistics Management The part of supply chain management that plans, implements and controls the efficient and effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption to meet customers’ requirements. It includes inbound, outbound, internal and external movements, and is relevant in both manufacturing and service organisations and in both private and public-sector organisations. Strategic sourcing In a broad sense, strategic sourcing is all the issues that are of strategic importance in the supply of materials and services to a modern organisation. In a narrow sense, strategic sourcing is the strategic management process whereby commodities (materials and services) and suppliers are analysed, and relationships are formed and managed according to best practices and appropriate strategies in support of long-term organisational goals. Value chain The value chain (developed by Michael Porter) comprises primary and support activities that can lead to a competitive advantage for an organisation when they are configured properly. The value chain is also seen as a management philosophy. Explanatory notes on the term "value chain": • Primary activities include inbound logistics, operations, outbound logistics, marketing and sales, and customer service. • Support activities include purchasing, human resources management, technological development and infrastructure. Distribution management Distribution management entails managing downstream processes (or outbound logistics) and activities to deliver and thus physically distribute the product or service from the end of the production line to the ultimate (or end) customer 1. DEFINE SUPPLY CHAIN MANAGEMENT & ITS IMPORTANCE OF SUPPLY CHAIN MANAGEMENT