1. Introduction to Supply Chain Management
Introduction
A supply chain is a global network used to deliver products and services from raw materials to
end customer through information flow, physical distribution and cash.
Supply chain involves all the stages directly or indirectly involved in fulfilling a customer
request which includes manufacturers, suppliers, transporters, warehouses, retailers and
customers. It is the integration of demand and supply. Examples of supply chain activities
include farming, refining, design, manufacturing, packaging, and transportation.
A supply chain may be defined as an integrated process wherein a number of various business
entities like
• Suppliers
• Manufacturers / Producer
• Dealers, Retailers, Customer etc.,
Work together in an effort to
• Acquire raw materials
• Convert these raw materials into specified final products, and • Deliver these final
products to retailers.
Customer is the integral part of supply chain. The main objective of supply chain
management is to monitor and relate production, distribution, and shipment of products and
services. This can be done by companies with a very good and tight hold over internal
inventories, production, distribution, internal productions and sales.
Definitions of Supply Chain Management
1. Supply Chain Management (SCM) is the management and oversight of a product from its
origin until it is consumed. SCM involves the flow of materials, finances and information. This
includes product design, planning, execution, monitoring and control. The goal of this process is
to reduce inventory, increase transaction speed and improve work flow with profit in mind.
(Source: https://www.techopedia.com/definition/23789/supply-chain-management-scm)
2. APICS, the global association for supply chain management professionals, defines supply
chain management as: “the design, planning, execution, control, and monitoring of supply chain
activities with the objective of creating net value, building a competitive infrastructure,
leveraging worldwide logistics, synchronizing supply with demand, and measuring performance
globally.”
1
,(Source: http://www.apics.org/sites/apics-blog/think-supply-chain-landing-page/thinking-supply-
chain/2015/03/11/the-total-scope-of-supply-chain-management)
3. SCM is the management of a network of all business processes and activities involving
procurement of raw materials, manufacturing and distribution management of Finished Goods.
SCM is also called the art of management of providing the Right Product, At the Right Time,
Right Place and at the Right Cost to the Customer.
(Source: https://www.managementstudyguide.com/supply-chain-management-definition.htm)
4. Supply chain management is the design, planning, execution, control, and monitoring of
supply chain activities with the objective of creating net value, building a competitive
infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and
measuring performance globally.
(Source: http://www.orie.cornell.edu/research/supply_chain.cfm)
5. Supply Chain Management is the management of upstream and downstream value-added
flows of materials, final goods, and related information among suppliers, company, resellers, and
final consumers.
(Source: Nabil Abu el Ata, Rudolf Schmandt (2016), The Tyranny of Uncertainty,
Springer, ISBN 978-3662491041)
6. CSCMP’s definition is: Supply chain management encompasses the planning and management
of all activities involved in sourcing and procurement, conversion, and all logistics management
activities.
Importantly, it also includes coordination and collaboration with channel partners, which can be
suppliers, intermediaries, third party service providers, and customers. In essence, supply chain
management integrates supply and demand management within and across companies.
(Source: https://cscmp.org/CSCMP/Educate/SCM_Definitions_and_Glossary_of_Terms/)
7. SCMA defines supply chain management (SCM) as: The process of strategically managing
flows of goods, services, finance and knowledge, along with relationships within and among
organizations, to realize greater economic value through: Supporting enterprise strategic
objectives, contributing to the achievement of strategic competitiveness of the
enterprise, Contributing to the enhancement of the competitive advantage of the enterprise
and Enhancing customer satisfaction.
(Source: http://scma.com/on/careers/about-supply-chain-management)
2
,8. Supply chain management (SCM) is the broad range of activities required to plan, control and
execute a product’s flow, from acquiring raw materials and production through distribution to the
final customer, in the most streamlined and cost-effective way possible.
SCM encompasses the integrated planning and execution of processes required to optimize the
flow of materials, information and financial capital in the areas that broadly include demand
planning, sourcing, production, inventory management and storage, transportation — or logistics
— and return for excess or defective products. Both business strategy and specialized software
are used in these endeavors to create a competitive advantage.
(Source: https://searcherp.techtarget.com/definition/supply-chain-management-SCM)
9. Supply chain management is the management of the flow of goods and services and includes
all processes that transform raw materials into final products. It involves the active streamlining
of a business’s supply-side activities to maximize customer value and gain a competitive
advantage in the marketplace.
SCM represents an effort by suppliers to develop and implement supply chains that are as
efficient and economical as possible. Supply chains cover everything from production to product
development to the information systems needed to direct these undertakings.
(Source:https://www.investopedia.com/terms/s/scm.asp)
Supply chain management (SCM) is the process by which an enterprise manages the sourcing of
raw materials to create a product or service and deliver that product or service to customers.
Supply chain management is the handling of the entire production flow of a good or service —
starting from the raw components all the way to delivering the final product to the consumer. A
company creates a network of suppliers (“links” in the chain) that move the product along from
the suppliers of raw materials to those organizations that deal directly with users.
Supply chain management (SCM) is management of the flow of goods, data, and finances related
to a product or service, from the procurement of raw materials to the delivery of the product at its
final destination.
Supply chain activities span procurement, product lifecycle management, supply chain
planning (including inventory planning and the maintenance of enterprise assets and production
lines), logistics (including transportation and fleet management), and order management. SCM
can also extend to the activities around global trade, such as the management of global suppliers
and multinational production processes.
3
,How does supply chain management work?
According to CIO, there are five components of traditional supply chain management systems:
1. Planning
Plan and manage all resources required to meet customer demand for a company’s product or
service.
When the supply chain is established, determine metrics to measure whether the supply chain is
efficient, effective, delivers value to customers and meets company goals.
2. Sourcing
Choose suppliers to provide the goods and services needed to create the product. Then, establish
processes to monitor and manage supplier relationships. Key processes include: ordering,
receiving, managing inventory and authorizing supplier payments.
3. Manufacturing
Organize the activities required to accept raw materials, manufacture the product, test for quality,
package for shipping and schedule for delivery.
4. Delivery and Logistics
Coordinate customer orders, schedule deliveries, dispatch loads, invoice customers and receive
payments.
5. Returning
Create a network or process to take back defective, excess or unwanted products.
Why is supply chain management critical?
Supply chain management offers the following benefits to companies:
1. Better quality control
Working with suppliers makes the quality control process much more seamless. This is because
quality control problems can be detected before reaching the client. As a result, companies can
fix any issues early-on and maintain their reputations.
2. Reduced inventory and overhead costs
An efficient supply chain management system can reduce the need for inventory management.
Thus, this decreases overhead costs associated with security and storage. That being said, a low
4
,inventory level can increase pressure on distribution — which is why companies need to pin
down their optimal inventory level.
3. Better risk mitigation
The further down the line a supply chain issue is detected, the more expensive it is to fix. Since
supply chain management offers visibility of the chain from beginning to end, it is easier to
identify these problems early. As a result, businesses can avoid more risks and higher costs.
4. Lower logistics costs
With rising fuel costs, shipping prices continue to increase. A logistics and supply chain
specialist planning out routes and distribution channels can significantly decrease these costs.
This way, businesses can maintain more substantial cash flow and profits.
Key features of effective supply chain management
The supply chain is the most obvious “face” of the business for customers and consumers. The
better and more effective a company’s supply chain management is, the better it protects its
business reputation and long-term sustainability.
IDC’s Simon Ellis in The Path to a Thinking Supply Chain¹ defines what is supply chain
management by identifying the five “Cs” of the effective supply chain management of the future:
Connected: Being able to access unstructured data from social media, structured data
from the Internet of Things (IoT) and more traditional data sets available through
traditional ERP and B2B integration tools.
Collaborative: Improving collaboration with suppliers increasingly means the use of
cloud-based commerce networks to enable multi-enterprise collaboration and
engagement.
Cyber-aware: The supply chain must harden its systems and protect them from cyber-
intrusions and hacks, which should be an enterprise-wide concern.
Cognitively enabled: The AI platform becomes the modern supply chain's control tower
by collating, coordinating and conducting decisions and actions across the chain. Most of
the supply chain is automated and self-learning.
Comprehensive: Analytics capabilities must be scaled with data in real time. Insights
will be comprehensive and fast. Latency is unacceptable in the supply chain of the future.
Many supply chains have begun this process, with participation in cloud-based commerce
networks at an all-time high and major efforts underway to bolster analytics capabilities.
5
, Objectives of supply chain management
• To maximize overall value generated
• To meet consumer demand for guaranteed delivery of high quality and low cost with minimal
lead time
• To fulfill customer demand through efficient resources
• To maximize efficiency of distribution side
• Helps in better decision
Objectives of Supply Chain Management
Supply Chain Management is a critical part of any business that involves the planning,
management, and execution of the flow of goods and services.
The primary objectives of Supply Chain Management are to ensure efficient and cost-effective
production, timely delivery of products and services, effective inventory management,
collaborative relationships between suppliers and customers, flexibility, and responsiveness to
changes in demand.
Below the Supply Chain Objectives are discussed more comprehensively:
1. Efficient and Cost-Effective Production
Supply Chain Management optimizes production processes and reduces costs while maintaining
quality.
6
Introduction
A supply chain is a global network used to deliver products and services from raw materials to
end customer through information flow, physical distribution and cash.
Supply chain involves all the stages directly or indirectly involved in fulfilling a customer
request which includes manufacturers, suppliers, transporters, warehouses, retailers and
customers. It is the integration of demand and supply. Examples of supply chain activities
include farming, refining, design, manufacturing, packaging, and transportation.
A supply chain may be defined as an integrated process wherein a number of various business
entities like
• Suppliers
• Manufacturers / Producer
• Dealers, Retailers, Customer etc.,
Work together in an effort to
• Acquire raw materials
• Convert these raw materials into specified final products, and • Deliver these final
products to retailers.
Customer is the integral part of supply chain. The main objective of supply chain
management is to monitor and relate production, distribution, and shipment of products and
services. This can be done by companies with a very good and tight hold over internal
inventories, production, distribution, internal productions and sales.
Definitions of Supply Chain Management
1. Supply Chain Management (SCM) is the management and oversight of a product from its
origin until it is consumed. SCM involves the flow of materials, finances and information. This
includes product design, planning, execution, monitoring and control. The goal of this process is
to reduce inventory, increase transaction speed and improve work flow with profit in mind.
(Source: https://www.techopedia.com/definition/23789/supply-chain-management-scm)
2. APICS, the global association for supply chain management professionals, defines supply
chain management as: “the design, planning, execution, control, and monitoring of supply chain
activities with the objective of creating net value, building a competitive infrastructure,
leveraging worldwide logistics, synchronizing supply with demand, and measuring performance
globally.”
1
,(Source: http://www.apics.org/sites/apics-blog/think-supply-chain-landing-page/thinking-supply-
chain/2015/03/11/the-total-scope-of-supply-chain-management)
3. SCM is the management of a network of all business processes and activities involving
procurement of raw materials, manufacturing and distribution management of Finished Goods.
SCM is also called the art of management of providing the Right Product, At the Right Time,
Right Place and at the Right Cost to the Customer.
(Source: https://www.managementstudyguide.com/supply-chain-management-definition.htm)
4. Supply chain management is the design, planning, execution, control, and monitoring of
supply chain activities with the objective of creating net value, building a competitive
infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and
measuring performance globally.
(Source: http://www.orie.cornell.edu/research/supply_chain.cfm)
5. Supply Chain Management is the management of upstream and downstream value-added
flows of materials, final goods, and related information among suppliers, company, resellers, and
final consumers.
(Source: Nabil Abu el Ata, Rudolf Schmandt (2016), The Tyranny of Uncertainty,
Springer, ISBN 978-3662491041)
6. CSCMP’s definition is: Supply chain management encompasses the planning and management
of all activities involved in sourcing and procurement, conversion, and all logistics management
activities.
Importantly, it also includes coordination and collaboration with channel partners, which can be
suppliers, intermediaries, third party service providers, and customers. In essence, supply chain
management integrates supply and demand management within and across companies.
(Source: https://cscmp.org/CSCMP/Educate/SCM_Definitions_and_Glossary_of_Terms/)
7. SCMA defines supply chain management (SCM) as: The process of strategically managing
flows of goods, services, finance and knowledge, along with relationships within and among
organizations, to realize greater economic value through: Supporting enterprise strategic
objectives, contributing to the achievement of strategic competitiveness of the
enterprise, Contributing to the enhancement of the competitive advantage of the enterprise
and Enhancing customer satisfaction.
(Source: http://scma.com/on/careers/about-supply-chain-management)
2
,8. Supply chain management (SCM) is the broad range of activities required to plan, control and
execute a product’s flow, from acquiring raw materials and production through distribution to the
final customer, in the most streamlined and cost-effective way possible.
SCM encompasses the integrated planning and execution of processes required to optimize the
flow of materials, information and financial capital in the areas that broadly include demand
planning, sourcing, production, inventory management and storage, transportation — or logistics
— and return for excess or defective products. Both business strategy and specialized software
are used in these endeavors to create a competitive advantage.
(Source: https://searcherp.techtarget.com/definition/supply-chain-management-SCM)
9. Supply chain management is the management of the flow of goods and services and includes
all processes that transform raw materials into final products. It involves the active streamlining
of a business’s supply-side activities to maximize customer value and gain a competitive
advantage in the marketplace.
SCM represents an effort by suppliers to develop and implement supply chains that are as
efficient and economical as possible. Supply chains cover everything from production to product
development to the information systems needed to direct these undertakings.
(Source:https://www.investopedia.com/terms/s/scm.asp)
Supply chain management (SCM) is the process by which an enterprise manages the sourcing of
raw materials to create a product or service and deliver that product or service to customers.
Supply chain management is the handling of the entire production flow of a good or service —
starting from the raw components all the way to delivering the final product to the consumer. A
company creates a network of suppliers (“links” in the chain) that move the product along from
the suppliers of raw materials to those organizations that deal directly with users.
Supply chain management (SCM) is management of the flow of goods, data, and finances related
to a product or service, from the procurement of raw materials to the delivery of the product at its
final destination.
Supply chain activities span procurement, product lifecycle management, supply chain
planning (including inventory planning and the maintenance of enterprise assets and production
lines), logistics (including transportation and fleet management), and order management. SCM
can also extend to the activities around global trade, such as the management of global suppliers
and multinational production processes.
3
,How does supply chain management work?
According to CIO, there are five components of traditional supply chain management systems:
1. Planning
Plan and manage all resources required to meet customer demand for a company’s product or
service.
When the supply chain is established, determine metrics to measure whether the supply chain is
efficient, effective, delivers value to customers and meets company goals.
2. Sourcing
Choose suppliers to provide the goods and services needed to create the product. Then, establish
processes to monitor and manage supplier relationships. Key processes include: ordering,
receiving, managing inventory and authorizing supplier payments.
3. Manufacturing
Organize the activities required to accept raw materials, manufacture the product, test for quality,
package for shipping and schedule for delivery.
4. Delivery and Logistics
Coordinate customer orders, schedule deliveries, dispatch loads, invoice customers and receive
payments.
5. Returning
Create a network or process to take back defective, excess or unwanted products.
Why is supply chain management critical?
Supply chain management offers the following benefits to companies:
1. Better quality control
Working with suppliers makes the quality control process much more seamless. This is because
quality control problems can be detected before reaching the client. As a result, companies can
fix any issues early-on and maintain their reputations.
2. Reduced inventory and overhead costs
An efficient supply chain management system can reduce the need for inventory management.
Thus, this decreases overhead costs associated with security and storage. That being said, a low
4
,inventory level can increase pressure on distribution — which is why companies need to pin
down their optimal inventory level.
3. Better risk mitigation
The further down the line a supply chain issue is detected, the more expensive it is to fix. Since
supply chain management offers visibility of the chain from beginning to end, it is easier to
identify these problems early. As a result, businesses can avoid more risks and higher costs.
4. Lower logistics costs
With rising fuel costs, shipping prices continue to increase. A logistics and supply chain
specialist planning out routes and distribution channels can significantly decrease these costs.
This way, businesses can maintain more substantial cash flow and profits.
Key features of effective supply chain management
The supply chain is the most obvious “face” of the business for customers and consumers. The
better and more effective a company’s supply chain management is, the better it protects its
business reputation and long-term sustainability.
IDC’s Simon Ellis in The Path to a Thinking Supply Chain¹ defines what is supply chain
management by identifying the five “Cs” of the effective supply chain management of the future:
Connected: Being able to access unstructured data from social media, structured data
from the Internet of Things (IoT) and more traditional data sets available through
traditional ERP and B2B integration tools.
Collaborative: Improving collaboration with suppliers increasingly means the use of
cloud-based commerce networks to enable multi-enterprise collaboration and
engagement.
Cyber-aware: The supply chain must harden its systems and protect them from cyber-
intrusions and hacks, which should be an enterprise-wide concern.
Cognitively enabled: The AI platform becomes the modern supply chain's control tower
by collating, coordinating and conducting decisions and actions across the chain. Most of
the supply chain is automated and self-learning.
Comprehensive: Analytics capabilities must be scaled with data in real time. Insights
will be comprehensive and fast. Latency is unacceptable in the supply chain of the future.
Many supply chains have begun this process, with participation in cloud-based commerce
networks at an all-time high and major efforts underway to bolster analytics capabilities.
5
, Objectives of supply chain management
• To maximize overall value generated
• To meet consumer demand for guaranteed delivery of high quality and low cost with minimal
lead time
• To fulfill customer demand through efficient resources
• To maximize efficiency of distribution side
• Helps in better decision
Objectives of Supply Chain Management
Supply Chain Management is a critical part of any business that involves the planning,
management, and execution of the flow of goods and services.
The primary objectives of Supply Chain Management are to ensure efficient and cost-effective
production, timely delivery of products and services, effective inventory management,
collaborative relationships between suppliers and customers, flexibility, and responsiveness to
changes in demand.
Below the Supply Chain Objectives are discussed more comprehensively:
1. Efficient and Cost-Effective Production
Supply Chain Management optimizes production processes and reduces costs while maintaining
quality.
6
