Supply Chain Management

Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). 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 (supply chain).

Supply chain management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.

Problems addressed by supply chain management:

Supply chain management must address the following problems:

• Distribution Network Configuration: number, location and network missions of suppliers, production facilities, distribution centers, warehouses, cross-docks and customers.
• Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking, DSD (direct store delivery), closed loop shipping; mode of transportation, e.g., motor carrier, including truckload, LTL, parcel; railroad; intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar); ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated, private carrier, common carrier, contract carrier, or 3PL).
• Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These trade-offs are key to developing the most efficient and effective Logistics and SCM strategy.
• Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc.
• Inventory Management: Quantity and location of inventory, including raw materials, work-in-progress (WIP) and finished goods.
• Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain.

Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional.

Activities/functions:

Supply chain management is a cross-function approach including managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities 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 management control of daily logistics operations. 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 the velocity of inventory movement.

Classification of Food Chains

Food chains are generally classified into two types:

1. Grazing food chain: In this chain energy flows from green photosynthetic plants from which the chain goes to text trophic level herbivores (the organisms eating plants) and then to carnivores.
2. Detritus food chain: In this chain energy pass from dead organic matter into microorganisms and then to detritus-feeding organisms (detrivores) and to their predators.

Grazing Food Chain

Primary producer: Primary producers form the first trophic level of grazing food chain. They directly depend on solar energy as the source of energy and synthesize biomass by photosynthetic process. Primary producers are supply food for primary consumers. The primary producers of grazing food chain are grasses and other plants.

Primary consumers or herbivores: Second link in the grazing food chain are herbivores. Primary consumers acquire their energy by feeding on primary producers. Herbivores of grazing food chain include insects, rats, mice, rabbits, deer, etc.

Secondary consumers or primary carnivores: Secondary consumers are the third trophic level in grazing chain. They receive their energy by feeding primary consumers. Secondary consumers in food chain include small carnivores like snakes, frogs, fox, etc.

Tertiary consumers or secondary carnivores: Tertiary consumers are fourth link in the food chain. These animals gain their organic energy by consuming primary carnivores. Secondary carnivores of grazing food chain includes predatory birds, lion, tiger, etc

Supply chain business process integration:

Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes. An example scenario: the purchasing department places orders as requirements become known. The marketing department, responding to customer demand, communicates with several distributors and retailers as it attempts to determine ways to satisfy this demand. Information shared between supply chain partners can only be fully leveraged through process integration. Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, common systems and shared information. According to Lambert and Cooper (2000), operating an integrated supply chain requires a continuous information flow. However, in many companies, management has reached the conclusion that optimizing the product flows cannot be accomplished without implementing a process approach to the business.

• Customer relationship management
• Customer service management
• Demand management
• Order fulfillment
• Manufacturing flow management
• Supplier relationship management
• Product development and commercialization
• Returns management

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