An example of these conflicts is the interrelation between the sale department desiring to have higher inventory levels to fulfill demands and the warehouse for which lower inventories are desired to reduce holding costs . Origin of the term and definitions[ edit ] InKeith Olivera consultant at Booz Allen Hamilton introduced the term "supply chain management" to the public domain in an interview for the Financial Times. Supply chains were originally defined as encompassing all activities associated with the flow and transformation of goods from raw materials through to the end user, as well as the associated information flows.
Supply chains were originally defined as encompassing all activities associated with the flow and transformation of goods from raw materials through to the end user, as well as the associated information flows.
Supply chain management was then further defined as the integration of supply chain activities through improved supply chain relationships to achieve a competitive advantage.
The management of upstream and downstream value-added flows of materials, final goods, and related information among suppliers, company, resellersand final consumers. As a consequence, costs must be lowered throughout the chain by driving out unnecessary expenses, movements, and handling.
Efficiency must be increased, and bottlenecks removed.
The measurement of performance focuses on total system efficiency and the equitable monetary reward distribution to those within the supply chain.
The supply chain system must be responsive to customer requirements. It also includes coordination and collaboration with channel partnerswhich may be suppliersintermediariesthird-party service providers, or customers. More recently, the loosely coupled, self-organizing network of businesses that cooperate to provide product and service offerings has been called the Extended Enterprise.
Supply chain management is the management of such a chain. With SCEM, possible scenarios can be created and solutions devised. Including third-party logistics or other gathering agencies as part of the RM re-patriation process is a way of illustrating the new endgame strategy.
As organizations strive to focus on core competencies and become more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other firms that can perform the activities better or more cost effectively.
The effect is to increase the number of organizations involved in satisfying customer demand, while reducing managerial control of daily logistics operations. Less control and more supply chain partners lead to the creation of the concept of supply chain management.
The purpose of supply chain management is to improve trust and collaboration among supply chain partners thus improving inventory visibility and the velocity of inventory movement, Importance[ edit ] Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy.
In recent decades, globalization, outsourcing, and information technology have enabled many organizations, such as Dell and Hewlett Packardto successfully operate collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities Scott, This inter-organisational supply network can be acknowledged as a new form of organisation.
However, with the complicated interactions among the players, the network structure fits neither "market" nor "hierarchy" categories Powell, It is not clear what kind of performance impacts different supply network structures could have on firms, and little is known about the coordination conditions and trade-offs that may exist among the players.
From a systems perspective, a complex network structure can be decomposed into individual component firms Zhang and Dilts, Traditionally, companies in a supply network concentrate on the inputs and outputs of the processes, with little concern for the internal management working of other individual players.
Therefore, the choice of an internal management control structure is known to impact local firm performance Mintzberg, In the 21st century, changes in the business environment have contributed to the development of supply chain networks.
First, as an outcome of globalization and the proliferation of multinational companies, joint ventures, strategic alliances, and business partnerships, significant success factors were identified, complementing the earlier " just-in-time ", lean manufacturingand agile manufacturing practices.
Many researchers have recognized supply network structures as a new organisational form, using terms such as " Keiretsu ", "Extended Enterprise", "Virtual Corporation", " Global Production Network ", and "Next Generation Manufacturing System".
Supply chain management is also important for organizational learning.
Firms with geographically more extensive supply chains connecting diverse trading cliques tend to become more innovative and productive. Supply Chain Management draws heavily from the areas of operations management, logistics, procurement, and information technology, and strives for an integrated approach.
Historical developments[ edit ] Six major movements can be observed in the evolution of supply chain management studies: Creation era[ edit ] The term "supply chain management" was first coined by Keith Oliver in However, the concept of a supply chain in management was of great importance long before, in the early 20th century, especially with the creation of the assembly line.
The characteristics of this era of supply chain management include the need for large-scale changes, re-engineering, downsizing driven by cost reduction programs, and widespread attention to Japanese management practices.
However, the term became widely adopted after the publication of the seminal book Introduction to Supply Chain Management in by Robert B. Handfield and Ernest L. This era has continued to develop into the 21st century with the expansion of Internet-based collaborative systems.
This era of supply chain evolution is characterized by both increasing value added and cost reductions through integration. A supply chain can be classified as a stage 1, 2 or 3 network.
In a stage 1—type supply chain, systems such as production, storage, distribution, and material control are not linked and are independent of each other.
In a stage 2 supply chain, these are integrated under one plan and enterprise resource planning ERP is enabled.Supply chains can have different organization structures that reflect the business relationship or degree of collaboration between companies in the chain.
These structures range from informal. Many of the exchanges encountered in the supply chain are therefore between different companies that seek to maximize their revenue within their sphere of interest, but may have little or no knowledge or interest in the remaining players in the supply chain.
The term "logistics" applies to activities within one company or organization. Further, this increased collaboration between supply chain buyer and seller leads to another valuable outcome: increased efficiencies. The Longer the Collaboration, the Lower the Costs One of the greatest benefits from long-term supply chain collaboration (and one that consistently delights operationally oriented managers) are the cost savings.
Supply Chain Collaboration and Competitive Advantage SCC is the involvement of the chain members in coordinating activities that span boundaries of their organization in order to fulfill end customer need . Six steps to successful supply chain collaboration.
8. it's important to realize that relationships among the supply chain estates must be maintained for balance. Too much power and influence in any one camp and you risk undermining the effectiveness of your supply chain.
while the supply chain organization must let the C-level. A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to plombier-nemours.com chain activities involve the transformation of natural resources, raw materials, and components into a finished product that is delivered to the end customer.
In sophisticated supply chain systems, used products may re-enter the.