Supply Chain Management
Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.
Some experts distinguish supply chain management and logistics management, while others consider the terms to be interchangeable. From the point of view of an enterprise, the scope of supply chain management is usually bounded on the supply side by your supplier's suppliers and on the customer side by your customer's customers.
Supply chain management is also a category of software products.
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Supply chain management must address the following problems:
Distribution Network Configuration: number and location of suppliers, production facilities, distribution centers, warehouses, and customers
Distribution Strategy: centralized versus decentralized, direct shipment, cross docking, pull or push strategies, third party logistics
Information: integrate systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, and transportation
Inventory Management: quantity and location of inventory including raw materials, work-in-process, and finished goods
SCOR is an operations reference model for supply chain promoted by the Supply-Chain Council.
Activities
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Resolution to supply chain problems span Strategic, Tactical, and Operational levels of activities.
Strategic
Strategic network optimization, including the number, location, and size of warehouses, distribution centers and facilities.
Strategic partnership with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics
Product design coordination, so that new and existing products can be optimally integrated into the supply chain
Information Technology infrastructure, to support supply chain operations
Tactical
Sourcing contracts and other purchasing decisions
Production decisions, including contracting, locations, scheduling, and planning process definition
Inventory decisions, including quantity, location, and quality of inventory
Transportation strategy, including frequency, routes, and contracting
Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise
Operational
Daily production and distribution planning, including all nodes in the supply chain
Production scheduling for each manufacturing facility in the supply chain (minute by minute)
Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers
Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers
Inbound operations, including transportation from suppliers and receiving inventory
Production operations, including the consumption of materials and flow of finished goods
Outbound operations, including all fulfillment activities and transportation to customers
Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers
Performance tracking of all activities
The Bullwhip Effect
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A new theory suggests that the problem of supply chain management has focused on the supplier where it needs instead to focus on the consumer. Using the analogy of a freeway, traffic flow theorist Carlos Daganzo of the Institute of Transportation Studies at Berkeley found that failures in the supply chain tend to be caused by bottlenecks at the consumer end of the supply chain, which caused ripple effects all the way back to the supplier (the bullwhip effect). The just in time inventory strategy is an example of a strategy that addresses this problem of supply chain management, but it is, of course, not applicable at all levels of demand.
Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.
Some experts distinguish supply chain management and logistics management, while others consider the terms to be interchangeable. From the point of view of an enterprise, the scope of supply chain management is usually bounded on the supply side by your supplier's suppliers and on the customer side by your customer's customers.
Supply chain management is also a category of software products.
--------------------------------------------------------------------------------
Supply chain management must address the following problems:
Distribution Network Configuration: number and location of suppliers, production facilities, distribution centers, warehouses, and customers
Distribution Strategy: centralized versus decentralized, direct shipment, cross docking, pull or push strategies, third party logistics
Information: integrate systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, and transportation
Inventory Management: quantity and location of inventory including raw materials, work-in-process, and finished goods
SCOR is an operations reference model for supply chain promoted by the Supply-Chain Council.
Activities
--------------------------------------------------------------------------------
Resolution to supply chain problems span Strategic, Tactical, and Operational levels of activities.
Strategic
Strategic network optimization, including the number, location, and size of warehouses, distribution centers and facilities.
Strategic partnership with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics
Product design coordination, so that new and existing products can be optimally integrated into the supply chain
Information Technology infrastructure, to support supply chain operations
Tactical
Sourcing contracts and other purchasing decisions
Production decisions, including contracting, locations, scheduling, and planning process definition
Inventory decisions, including quantity, location, and quality of inventory
Transportation strategy, including frequency, routes, and contracting
Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise
Operational
Daily production and distribution planning, including all nodes in the supply chain
Production scheduling for each manufacturing facility in the supply chain (minute by minute)
Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers
Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers
Inbound operations, including transportation from suppliers and receiving inventory
Production operations, including the consumption of materials and flow of finished goods
Outbound operations, including all fulfillment activities and transportation to customers
Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers
Performance tracking of all activities
The Bullwhip Effect
--------------------------------------------------------------------------------
A new theory suggests that the problem of supply chain management has focused on the supplier where it needs instead to focus on the consumer. Using the analogy of a freeway, traffic flow theorist Carlos Daganzo of the Institute of Transportation Studies at Berkeley found that failures in the supply chain tend to be caused by bottlenecks at the consumer end of the supply chain, which caused ripple effects all the way back to the supplier (the bullwhip effect). The just in time inventory strategy is an example of a strategy that addresses this problem of supply chain management, but it is, of course, not applicable at all levels of demand.