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Supply Chain Management (SCM)

In commerce, supply chain management (SCM), the management of the


flow of goods and services, [2]
involves the movement and storage of raw materials, of
work-in-process inventory, and of finished goods from point of origin to point of consumption.
Interconnected or interlinked networks, channels and node businesses combine in the provision of
products and services required by end customers in a supply chain.[3] Supply-chain management has
been defined [4] 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.

Note:- without supply chain management ,product


will not be available when needed by consumers .

supply chain management (SCM)


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.

to
SCM encompasses the integrated planning and execution of processes required

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.
Note:- without supply chain management ,product
will not be available when needed by consumers .
Obviously, you need effective flows of products from the point of origin to the point of consumption.
But there’s more to it. Consider the diagram of the fresh food supply chain. A two-way flow of
information and data between the supply chain participants creates visibility of demand and fast
detection of problems. Both are needed by supply chain managers to make good decisions regarding
what to buy, make, and move.

Other flows are also important. In their roles as suppliers, companies have a vested interest in
financial flows; suppliers want to get paid for their products and services as soon as possible and

Sometimes, it is also necessary to move


with minimal hassle.

products back through the supply chain for returns,


repairs, recycling, or disposal., not only reach to
customber but when return back , it is also the work
of scm to watch return from customer to company.
Because of all the processes that have to take place at different types of participating companies,
each company needs supply chain managers to help improve their flows of product, information.

SCM Processes

Supply chain activities aren't the responsibility of one person or one company. Multiple
people need to be actively involved in a number of different processes to make it work.

It's kind of like baseball. While all the participants are called baseball players, they don't do
whatever they want. Each person has a role – pitcher, catcher, shortstop, etc. – and must
perform well at their assigned duties – fielding, throwing, and/or hitting – for the team to be
successful.

Of course, these players need to work well together. A hit-and-run play will only be
successful if the base runner gets the signal and takes off running, while the batter makes
solid contact with the ball. The team also needs a manager to develop a game plan, put people
in the right positions, and monitor success.

Winning the SCM “game” requires supply chain professionals to play similar roles. Each
supply chain player must understand his or her role, develop winning strategies, and
collaborate with their supply chain teammates. By doing so, the SCM team can flawlessly
execute the following processes:

 Planning – the plan process seeks to create effective long- and short-range supply chain
strategies. From the design of the supply chain network to the prediction of customer
demand, supply chain leaders need to develop integrated supply chain strategies.
 Procurement – the buy process focuses on the purchase of required raw materials,
components, and goods. As a consumer, you're pretty familiar with buying stuff!
 Production – the make process involves the manufacture, conversion, or assembly of
materials into finished goods or parts for other products. Supply chain managers provide
production support and ensure that key materials are available when needed.
 Distribution – the move process manages the logistical flow of goods across the supply
chain. Transportation companies, third party logistics firms, and others ensure that goods
are flowing quickly and safely toward the point of demand.
 Customer Interface – the demand process revolves around all the issues that are related to
planning customer interactions, satisfying their needs, and fulfilling orders perfectly.

Seven Principles of SCM

More than ten years ago, a research study of 100+ manufacturers, distributors, and retailers
uncovered some widely used supply chain strategies and initiatives. These ideas and practices
were distilled down to seven principles and presented in an article in Supply Chain
Management Review, a magazine widely read by SCM professionals.

 Principle 1: Segment customers based on the service needs of distinct groups and adapt the
supply chain to serve these segments profitably.
 Principle 2: Customize the logistics network to the service requirements and profitability of
customer segments.
 Principle 3: Listen to market signals and align demand planning accordingly across the supply
chain, ensuring consistent forecasts and optimal resource allocation.
 Principle 4: Differentiate product closer to the customer and speed conversation across the
supply chain.
 Principle 5: Manage sources of supply strategically to reduce the total cost of owning
materials and services.
 Principle 6: Develop a supply chain-wide technology strategy that supports multiple levels of
decision making and gives clear view of the flow of products, services, and information.
 Principle 7: Adopt channel-spanning performance measures to gauge collective success in
reaching the end-user effectively and efficiently.

Though they are more than a decade old, these timeless principles highlight the need for
supply chain leaders to focus on the customer. They also stress the importance of
coordinating activities (demand planning, sourcing, assembly, delivery, and information
sharing) within and across organizations.

upply Chain Management: A Learning


Perspective
About this course: As a human being, we all consume products and/or services all the time.
This morning you got up and ate your breakfast, e.g., eggs, milk, bread, fresh fruits, and the
like. After the breakfast, you drove your car to work or school. At your office, you used your
computer, perhaps equipped with 27” LCD monitor. During your break, you drank a cup of
coffee and played with your iPhone. So on and so forth. You probably take it for granted that
you can enjoy all of these products. But if you take a closer look at how each of these
products can be made and eventually delivered to you, you will realize that each one of these
is no short of miracle. For example, which fruit do you like? Consider fresh strawberries. In
order for the strawberries to be on your breakfast table, there must be numerous functions,
activities, transactions, and people involved in planting, cultivating, delivering, and
consuming strawberries. Moreover, all of these functions, activities, transactions, and people
are connected as an integral chain, through which physical products like strawberries
themselves and virtual elements such as information and communication flow back and forth
constantly. By grouping related functions or activities, we have a supply chain, comprised of
four primary functions such as supplier, manufacturer, distributor, and finally consumer. A
supply chain is essentially a value chain. For the society or economy as a whole, the goal is to
maximize value, i.e., to create satisfactory value without spending too much. In order to
create the maximum value for the strawberry supply chain, every participant in the chain
must carry out its function efficiently. In addition, all of the members must coordinate with
each other effectively in order to ensure value maximization. We have to face the same issues
for almost all the products and services we take for granted in our everyday life, e.g., cars,
hamburgers, haircuts, surgeries, movies, banks, restaurants, and you name it!

he concept of Supply Chain Management (SCM) is based on two core


ideas:

1. The first is that practically every product that reaches an end user
represents the cumulative effort of multiple organizations. These
organizations are referred to collectively as the supply chain.
2. The second idea is that while supply chains have existed for a long
time, most organizations have only paid attention to what was
happening within their “four walls.” Few businesses understood, much
less managed, the entire chain of activities that ultimately delivered
products to the final customer. The result was disjointed and often
ineffective supply chains.

The organizations that make up the supply chain are “linked” together
through physical flows and information flows.

Physical Flows

Physical flows involve the transformation, movement, and storage of goods


and materials. They are the most visible piece of the supply chain. But just
as important are information flows.

Information Flows

Information flows allow the various supply chain partners to coordinate


their long-term plans, and to control the day-to-day flow of goods and
materials up and down the supply chain.