What is Supply Chain Management?

Supply Chain Management is a network of supplier, manufacturing, assembly, distribution, and logistics facilities that perform the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these products to customers. Supply chains arise in both manufacturing and service organizations. SUPPLY CHAIN MANAGEMENT  (SCM) is a systems approach to managing the entire flow of information, materials, and services from raw materials suppliers through factories and warehouses to the end customer. SCM is different from SUPPLY MANAGEMENT which emphasizes only the buyer-supplier relationship.

Supply chain management has emerged as the new key to productivity and competitiveness of manufacturing and service enterprises. The importance of this area is shown by a significant spurt in research in the last five years and also proliferation of supply chain solutions and supply chain companies (e.g. i2, Manugistics, etc.). All major ERP companies are now offering supply chain solutions as a major extended feature of their ERP packages.

Supply chain management is a major application area for Internet Technologies and Electronic Commerce (ITEC). In fact, advances in ITEC have contributed to growing importance of supply chain management and SCM in turn has contributed to many advances in ITEC.

 Two Faces of Supply Chain Management

SCM has two major faces to it. The first can be called loosely as the back-end and comprises the physical building blocks such as the
supply facilities, production facilities, warehouses, distributors, retailers, and logistics facilities. The back-end essentially involves
production, assembly, and physical movement. Major decisions here include:

   1. Procurement (supplier selection, optimal procurement policies, etc.)

   2. Manufacturing (plant location, product line selection, capacity planning, production scheduling, etc.)

   3. Distribution (warehouse location, customer allocation, demand forecasting, inventory management, etc.)

   4. Logistics (selection of logistics mode, selection of ports, direct delivery, vehicle scheduling, etc.)

   5. Global Decisions (product and process selection, planning under uncertainty, real-time monitoring and control, integrated scheduling)

Stochastic models (Markov chains, queueing networks), optimization models (LP, ILP, MILP, heuristics), and simulation provide the basis for the above decisions.

The second face (which can be called the front-end) is where IT and ITEC play a key role. This face involves processing and use of information to facilitate and optimize the back-end operations. Key technologies here include: EDI (for exchange for information across different players in the supply chain); Electronic payment protocols; Internet auctions (for selecting suppliers, distributors, demand forecasting, etc.); Electronic Business Process Optimization; E-logistics; Continuous tracking of customer orders through the Internet; Internet-based shared services manufacturing; etc.
Supply chain management courses are included in associate and bachelor’s degree programs in supply chain management or logistics courses. At the graduate level, students can find relevant studies in master’s and doctoral degree programs in business, global supply chain management or supply chain engineering. Additionally, supply chain management and logistics courses can be found within graduate certificate or professional development programs, which may require completion of 6-8 courses. Some colleges and universities also offer stand-alone courses on the subject. Individual continuing education classes and seminars, which can range from 1-3 days, are also available through professional organizations.

Some common concepts taught in these courses are:

Accounting skills
Distribution and inventory management
Understanding the role of supply chain management
Cost management education
Current global trends within logistics


To introduce the major building blocks, major functions, major business processes, performance metrics, and major decisions
(strategic, tactical, and operational) in supply chain networks

To provide an insight into the role of Internet Technologies and Electronic Commerce in supply chain operations and to discuss
technical aspects of key ITEC components in supply chain management.

To bring out the role of stochastic models (Markov chains, queueing networks); optimization models (LP, ILP, MILP, GA, Constraint Programming); and simulation in supply chain planning and decision-making. This will provide the foundation for design and analysis of supply chains. 


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