Production and Operations Management
Term Paper
Supply Chain Management
SCM Aspects & a Look at Current Trends
I- Supply Chain Management in brief
o An Introduction
o Functions of Supply Chain Management
II- Supply Chain Management Integration:
o Supply chain business process integration
*ƒ¿*…¡*ƒ‚§ Customer Service Management
*ƒ¿*…¡*ƒ‚§ Procurement
*ƒ¿*…¡*ƒ‚§ Product Development and Commercialization
*ƒ¿*…¡*ƒ‚§ Manufacturing Flow Management
*ƒ¿*…¡*ƒ‚§ Physical Distribution
*ƒ¿*…¡*ƒ‚§ Outsourcing
*ƒ¿*…¡*ƒ‚§ Performance Measurement
o Supply chain management components integration
*ƒ¿*…¡*ƒ‚§ Management Components of SCM
*ƒ¿*…¡*ƒ‚§ Reverse Supply Chain
III- Supply Chain Management Development:
o Why develop a Supply Chain?
o Methods of Developing Supply Chain
IV- Trends in Supply Chain Management:
o Demand planning
o Spreading Globalization
o Price Pressures and Increased Competition
o Outsourcing
o Changing Product Life Cycles
o Stakeholder Collaboration in Supply Chains
o How is technology affecting Supply Chains Systems today?
V- Conclusion
VI- References
I- Supply Chain Management in brief:
An Introduction:
The concept of Supply Chain Management was adopted in the 1980s and introduced the
concept of integrating key operations and business processes from the chain of materials
that pass from all suppliers to the end customer. Throughout the chain, suppliers add value
gradually to the product by providing materials, information and services for customers
and other stakeholders.
Accessible information that is relevant to companies in the supply chain has to reach every
element of the supply chain in order to benefit the chain as a whole instead of just the
company itself. Hence, this will lead to better productivity and overall distribution as it
will cut costs, provide a product for the end-user and increases the involved companies
success. 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.
The primary goal of supply chain management is to satisfy customer by providing efficient
resource usage, distribution requirement planning, inventory and labor planning. Also,
optimizing the supply chain means eliminating bottlenecks in the chain; implementing JIT
techniques to optimize manufacturing flow; and using logistics optimization to maximize
efficiency of the distribution side. During the 1990s several companies began outsourcing
SCM to third party logistics (3PL) in order to create an overall faster flow of resources in
the chain.
Functions of Supply Chain Management:
Supply Chain Management has several functions starting from movement of raw materials
into an organization, internal processing of the materials and finally distribution to the
end-consumer. Companies nowadays tend to focus more on their competencies rather than
their raw materials and distribution channels. These functions are increasingly being
outsourced to other companies that can perform the activities better or more cost
effectively. The overall result is to have more companies involved in satisfying customers
while decreasing a management control over daily logistics operations. This overall effect
has lead to the concepts of supply chain management. The aim of supply chain
management is to improve trust and collaboration among supply chain partners and
accordingly improving inventory visibility and improving inventory velocity.
There are several operational activities involved in supply chain management. Daily
production and distribution requirement planning, including all nodes in the supply chain,
make up one of the most important aspect of operational functions in supply chain
management. Operational functions are heavily incorporated into production scheduling
for each manufacturing facility in the supply chain. Demand planning and forecasting are
activities that coordinate demand forecast and can be shared among suppliers. In addition,
source planning, inbound and outbound production operations facilitate the flow of
materials throughout the supply chain. Finally, order promising accounts for all the
constraints in a supply chain including all suppliers, manufacturing facilities, distribution
centers, and other customers.
II- Supply Chain Business Process Integration:
Successful SCM requires changing from managing individual functions to integrating
activities into key supply chain processes. For example, the purchasing department places
orders as requirements become appropriate. Marketing, responding to customer demand,
communicates with several distributors and retailers and attempts to satisfy this demand.
Shared information between supply chain partners can only be fully powered through
process integration.
Supply chain business process integration involves collaborative work between buyers and
suppliers, joint product development, common systems and shared information. Operating
an integrated supply chain requires continuous information flows which in turn assist to
achieve the best product flows. However, in many companies, management has reached
the conclusion that optimizing the product flows can not be accomplished without
implementing a process approach to the business.
The key supply chain processes are:
” Customer Service Management
” Procurement
” Product Development and Commercialization
” Manufacturing Flow Management
” Physical Distribution
” Outsourcing
” Performance Measurement
Customer Service Management Process:
Customer Relationship Management concerns the relationship between the organization
and its customers. Customer service provides the source of customer information and
provides the customer with real time information on promising dates and product
availability through interfaces with the companys production and distribution operations.
Steps to build successful customer relationships:
” Determine mutually satisfying goals between organization and customers.
” Establish and maintain customer relationship.
” Produce positive feelings in the organization and the customers.
Procurement Process:
Strategic plans are developed with suppliers to support the manufacturing flow
management process and development of new products. In firms where operations extend
globally, sourcing should be managed on a global basis. The desired outcome is where
both parties benefit and reduction times in the design cycle and product development are
achieved. Also the purchasing function develops rapid communication systems such as
Electronic Data Interchange (EDI) and Internet linkages to transfer possible requirements
more rapidly. Activities related to obtaining products and materials from outside suppliers
requires performing resource planning, supply sourcing, negotiation, order placement,
inbound transportation, storage, handling and quality assurance and the responsibility to
