supply chain is a network of retailers, distributors, transporters, storage facilities, and suppliers that

participate in the production, delivery, and sale of a product to the consumer. The supply chain is typically
made up of multiple companies who coordinate activities to set themselves apart from the competition.

A supply chain has three key parts:

 Supply focuses on the raw materials supplied to manufacturing, including how, when, and from
what location.
 Manufacturing focuses on converting these raw materials into finished products.
 Distribution focuses on ensuring these products reach the consumers through an organized
network of distributors, warehouses, and retailers.

Another term associated with a supply chain is supply chain management (SCM), which is the oversight of
materials, information, and finances as they are distributed from supplier to consumer. The supply chain also
includes all the necessary stops between the supplier and the consumer. Supply chain management involves
coordinating this flow of materials within a company and to the end consumer.

Supply chain management can be divided into three main flows:

 The Product flow includes moving goods from supplier to consumer, as well as dealing with
customer service needs.
 The Information flow includes order information and delivery status.
 The Financial flow includes payment schedules, credit terms, and additional arrangements.

Supply chain management (SCM) is the process ofplanning, organizing,

implementing, and controlling the operations of the supply chain for the
purposeofsatisfyingthe customers’ needs as efficiently as possible. SCM
isresponsible for all the storage and movements of raw materials, work-in-
processinventory, and finished goods inventory from point of origin to point
ofconsumption.A supply chain network of anorganization includes the location
as well as movement decisions in respect ofprocurement of raw materials and
other inputs, transformation of thesematerials into intermediate and finished
products, and the distribution ofthese finished products to customers. With
effective and efficient Supply ChainManagement (SCM) company can improve
the way it finds the raw components itneeds to make a product or service and
deliver it to customers. SCM issignificant for both service and manufacturing
organizations, although thecomplexity of the chain may vary greatly from
industry to industry.Supply chain managementincludes five basic activities:
planning and strategy formulation, sourcing,transformation process, delivery,
and at last handling customer complaints andexcess stocks.

Planning and strategy formulation: Company needs a strategy formanaging all

the resources that go toward meeting customer demands. Supplychain
planning is carried out at corporate level as well as at operation level.Strategy
formulated at corporate level is for long term horizon and includesdecision on
main objectives of supply chain in terms of customer service,formulating
policies, designing supply chain, strategic alliances, etc.Operational level
planning is for short term, and focuses on activities over aday-to-day basis.
The effort is to effectively and efficiently manage theproduct flow in order to
fulfill the strategic goals. Sourcing: First generate the list ofsuppliers supplying
the required inputs, evaluate each of them on the basis ofrelevant criterion as
price, quality, delivery time, etc. Now choose the bestsupplier. Develop a set of
pricing, delivery and payment processes withsuppliers and make efforts for
monitoring and improving the relationships. Alsomake sure the proper
management of inventory of goods and services receivedfrom suppliers,
including receiving shipments, verifying them, moving them tomanufacturing
facilities and authorizing supplier payments.

Transformation process: It includes Scheduling the activities necessary for

production, testing, packaging and preparation for delivery and also ensuring
the smooth production, high quality levels and improved worker productivity.

Delivery:This part of supply chain is many times referred as logistics by many

companies. It includes coordinating the receipt of orders from customers,
developing a network of warehouses, arranging for pick carriers to move
products to customers and setting up an invoicing system to receive payments.

Handling customer complaints and excess stocks: This part of supply chain
deal with the problems that originate while carrying out the above activities like
receiving defective and excess products back from customers, Wrong order
placement, delay in receiving goods, conflicts with suppliers, etc. Integration of
Supply Chain Activities Traditionally, planning, purchasing organizations,
manufacturing, marketing and distribution along the supply chain is operated
independently. These activities are carried out by different departments or
organizations and each have their own objectives and these are often
conflicting. For example, Marketing's objective of high customer service and
maximizing sales revenue conflict with manufacturing and distribution goals.

Many manufacturing operations are designed to achieve lower costs with small
consideration for distribution capabilities and inventory levels. Such conflict
makes it necessary to integrate all the functions of supply chain network.
Coordination between these functional organizations in the chain is a key to
attain a balanced supply chain network

Major Supply Chain Decisions:There are four major decision are as related to
supply chain management: location, production, inventory, and transportation.

Location Deciding on the location of manufacturing facilities, storage points,

and sourcing points is first step in creating a supply chain. These should be
taken carefully with due consideration of the long term plans of the
organization. The location of facilities further guide management about how to
reach customer market also it has a great impact on revenue, cost, and level
of service.

These decisions are normally based some of these factors: proximity to raw
material source or customer market, production costs, taxes, tariffs, duties and
duty drawback, transportation costs, production limitations, etc.

Productio Decisions like what to produce, capacity of plant, production

scheduling, equipment maintenance, workload balancing, quality control, etc.
These decisions also have a great impact on the revenues, costs and
customer service levels of the firm.

Inventory:Inventory includes raw material, semi-finished and finished goods.

They can be in-process between locations. The primary purpose is to buffer
against any uncertainty that might be in the supply chain. Decision relating to
inventory should consider carrying/holding cost, ordering cost, and opportunity
cost. As inventory cost constitutes the big part of the total cost, it is critical
decision in supply chain operation. It also includes the determination of the
optimal levels of order quantities and reorder points, and setting safety stock
levels, at each stocking location. These levels are vital as they are primary
determinants of customer service levels.

Transportation: These decisions are closely linked to the inventory decisions,

as the decision are based on trade-off between cost involved using the
particular mode of transportation and the indirect cost of inventory associated
with that mode. For example air shipments may be fast, reliable, and requires
lesser safety stocks, they are expensive. While other modes like rail and road
are though less costly but requires maintaining high level of safety stock due to
high level of uncertainty involved. Also the customer service levels and
geographic location influence such decisions.

Objectives

Greater efficiency, lower costs

Enhance flexibility, agility
Improve customer service
Optimize the value chain

The objective of every supply chain is to maximize the overall value generated.
The value a supply chain generates is the difference between what the final product is
worth to the customer and the effort the supply chain expends in filling the
customer’s request. For most commercial supply chains, value will be strongly
correlated with supply chain profitability, the difference between the revenue
generated from the customer and the overall cost across the supply chain. For
example, a customer
purchasing a computer from Dell pays $2,000, which represents the revenue the
supply
chain receives. Dell and other stages of the supply chain incur costs to convey
information, produce components, store them, transport them, transfer funds, and
so on.
The difference between the $2,000 that the customer paid and the sum of all costs
incurred by the supply chain to produce and distribute the computer represents the
supply
chain profitability. Supply chain profitability is the total profit to be shared across all
supply chain stages. The higher the supply chain profitability, the more successful the
supply chain. Supply chain success should be measured in terms of supply chain
profitability and not in terms of the profits at an individual stage.
Having defined the success of a supply chain in terms of supply chain
profitability, the next logical step is to look for sources of revenue and cost. For any
supply chain, there is only one source of revenue: the customer. At Wal-Mart, a
customer purchasing detergent is the only one providing positive cash flow for the
supply
chain. All other cash flows are simply fund exchanges that occur within the supply
chain
given that different stages have different owners. When Wal-Mart pays its supplier, it
is
taking a portion of the funds the customer provides and passing that money on to the
supplier. All flows of information, product, or funds generate costs within the supply
chain. Thus, the appropriate management of these flows is a key to supply chain
success.
Supply chain management involves the management of flows between and among
stage
sin a supply chain to maximize total supply chain profitability.

Supply chain planning: Planning sets directions for the entreprise

-Procurement :( Establishing what needs to be purchased,  selecting suppliers & managing relations with
them, reducing costs, improving possibly raw material...)

-Inventory management:  (Managing  levels  of inventory in order to satisfy internal and external
customers demand....)

-Packaging (Ensuring correct package design in order to encourage the recycling of packaging and
reducing packages costs )

-Faicility design (This includes insuring  the best design that suits the internal or external customers.
Here we are concerned with the issue such as : Size, Lightning, facilities, equipment , safety and security)

-Wharehousing ( This includes stock management , efficient facility operations , layouts for effective
transportation, safety, storage methods and equipment)

-Transportation (This includes transportation modes, costs, transportation management, terminal

utilisation, and in-transit care of goods)

-Reverse logistics (The reduction where possible of product errors so that reverse logistics may be
reduced...)
-
-Logistics Systems: ( This includes decision suport systems , technology and software)

-Customer service and marketing:  This includes customer relationships, cusomer solicitation and
retention and issues pertaining to the marketing mix variables.
A supply chain is a system of organizations, people, technology, activities,
information and resources involved in moving a product or service from supplier to
customer. Supply chain activities transform 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 supply chain at
any point where residual value is recyclable. Supply chains link value chains.[2]

Contents
[hide]

 1 Overview
 2 Supply chain modeling
 3 Supply chain management
 4 Standardization
o 4.1 Nomeclature, classification and codification
 5 See also
 6 References
 7 External links

[edit] Overview
The Council of Supply Chain Management Professionals (CSCMP) defines Supply
Chain Management as follows: “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. Supply Chain Management is an integrating function with primary
responsibility for linking major business functions and business processes within and
across companies into a cohesive and high-performing business model. It includes all
of the logistics management activities noted above, as well as manufacturing
operations, and it drives coordination of processes and activities with and across
marketing, sales, product design, finance and information technology.”

A typical supply chain begins with ecological and biological regulation of natural
resources, followed by the human extraction of raw material, and includes several
production links (e.g., component construction, assembly, and merging) before
moving on to several layers of storage facilities of ever-decreasing size and ever more
remote geographical locations, and finally reaching the consumer.

Many of the exchanges encountered in the supply chain will therefore be between
different companies that will 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. More recently, the loosely coupled, self-organizing network of
businesses that cooperates to provide product and service offerings has been called the
Extended Enterprise.[citation needed]

[edit] Supply chain modeling

A diagram of a supply chain. The black arrow represents the flow of materials and
information and the gray arrow represents the flow of information and backhauls. The
elements are (a) the initial supplier, (b) a supplier, (c) a manufacturer, (d) a customer,
(e) the final customer.

There are a variety of supply chain models, which address both the upstream and
downstream sides. However the SCOR model is most common.

The SCOR Supply-Chain Operations Reference model, developed by the Supply

Chain Council, measures total supply chain performance. It is a process reference
model for supply-chain management, spanning from the supplier's supplier to the
customer's customer.[3] It includes delivery and order fulfillment performance,
production flexibility, warranty and returns processing costs, inventory and asset
turns, and other factors in evaluating the overall effective performance of a supply
chain.

The Global Supply Chain Forum (GSCF) introduced another Supply Chain Model.
This framework[4] is built on eight key business processes that are both cross-
functional and cross-firm in nature. Each process is managed by a cross-functional
team, including representatives from logistics, production, purchasing, finance,
marketing and research and development. While each process will interface with key
customers and suppliers, the customer relationship management and supplier
relationship management processes form the critical linkages in the supply chain.

The American Productivity & Quality Center (APQC) Process Classification

Framework (PCF) SM is a high-level, industry-neutral enterprise process model that
allows organizations to see their business processes from a cross-industry viewpoint.
The PCF was developed by APQC and its member companies as an open standard to
facilitate improvement through process management and benchmarking, regardless of
industry, size, or geography. The PCF organizes operating and management processes
into 12 enterprise level categories, including process groups and over 1,000 processes
and associated activities.

[edit] Supply chain management

A German paper factory receives its daily supply of 75 tons of recyclable paper as its
raw material

In the 1980s, the term Supply Chain Management (SCM) was developed[5] to express
the need to integrate the key business processes, from end user through original
suppliers. Original suppliers being those that provide products, services and
information that add value for customers and other stakeholders. The basic idea
behind the SCM is that companies and corporations involve themselves in a supply
chain by exchanging information regarding market fluctuations and production
capabilities.

If all relevant information is accessible to any relevant company, every company in

the supply chain has the possibility to and can seek to help optimizing the entire
supply chain rather than sub optimize based on a local interest. This will lead to better
planned overall production and distribution which can cut costs and give a more
attractive final product leading to better sales and better overall results for the
companies involved.

Incorporating SCM successfully leads to a new kind of competition on the global

market where competition is no longer of the company versus company form but
rather takes on a supply chain versus supply chain form.
Many electronics manufacturers of Guangdong rely on supply of parts from numerous
component shops in Guangzhou

The primary objective of supply chain management is to fulfill customer demands

through the most efficient use of resources, including distribution capacity, inventory
and labor. In theory, a supply chain seeks to match demand with supply and do so
with the minimal inventory. Various aspects of optimizing the supply chain include
liaising with suppliers to eliminate bottlenecks; sourcing strategically to strike a
balance between lowest material cost and transportation, implementing JIT (Just In
Time) techniques to optimize manufacturing flow; maintaining the right mix and
location of factories and warehouses to serve customer markets, and using
location/allocation, vehicle routing analysis, dynamic programming and, of course,
traditional logistics optimization to maximize the efficiency of the distribution side.

There is often confusion over the terms supply chain and logistics. It is now generally
accepted that the term Logistics applies to activities within one company/organization
involving distribution of product whereas the term supply chain also encompasses
manufacturing and procurement and therefore has a much broader focus as it involves
multiple enterprises, including suppliers, manufacturers and retailers, working
together to meet a customer need for a product or service.[citation needed]

Starting in the 1990s several companies chose to outsource the logistics aspect of
supply chain management by partnering with a 3PL, Third-party logistics provider.
Companies also outsource production to contract manufacturers.[6]

There are actually four common Supply Chain Models. Besides the two mentioned
above, there are the American Productivity & Quality Center's (APQC) Process
Classification Framework and the Supply Chain Best Practices Framework.

An unusual food supply chain operated by illiterate Dabbawalas in Mumbai is noted

for being extremely reliable without using any computers or modern technology. It
has been verified to be a six sigma supply chain, meaning they make less than 1
mistake in 3.4 million deliveries.