18 October 2007

My Management collection: what is Supply Chain Management?

Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain 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.

Problems addressed:

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 etc.
Inventory Management: Quantity and location of inventory including raw materials, work-in-process and finished goods.
Cash-Flow: Arranging the payment terms and the methodologies for exchanging funds across entities within the supply chain.
Supply chain execution is managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional.

Supply chain management is a cross-functional approach to managing the movement of raw materials into an organization and the movement of finished goods out of the organization toward the end-consumer. As corporations strive to focus on core competencies and become more flexible, they have reduced their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other corporations that can perform the activities better or more cost effectively. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and improving inventory velocity.

Different models and groupings:
Several models have been proposed for understanding the activities required to manage material movements across organizational and functional boundaries. SCOR is a supply chain management model promoted by the Supply Chain Management Council. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF).

Supply chain activities can be grouped into strategic, tactical, and operational levels of activities.

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, load management
Information Technology infrastructure, to support supply chain operations.
Where to make and what to make or buy decisions.
Align overall organizational strategy with supply strategy.

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.
Milestone payments

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.

Supply chain management Scenario
Organizations increasingly find that they must rely on effective supply chains, or networks, to successfully compete in the global market and networked economy.
During the past decades, globalization, outsourcing and information technology have enabled many organizations such as Dell and Hewlett Packard, to successfully operate solid collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities (Scott, 1993). In the 21st century, there have been a few changes in business environment that have contributed to the development of supply chain networks. First, as an outcome of globalization and proliferation of multi-national companies, joint ventures, strategic alliances and business partnerships were found to be significant success factors, following the earlier "Just-In-Time", "Lean Management" and "Agile Manufacturing" practices.

1 comment:

  1. Anonymous3:41 PM

    Well thats true .... Atleast we can play the part..
    if not the history maker......

    Great hope to come some more things like this in futur..


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