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Operations Management

Paper – IV: Supply Chain


Management
Section A

Unit I: Introduction to SCM - Building Blocks of a Supply Chain

Network,

Performance Measures,

Decisions in the Supply Chain World,

Models for Supply Chain Decision-Making.


Introduction to SCM

he flow and transfer of goods from the raw mat


Introduction to SCM

g the operations of the supply chain as efficiently as possible. Su

anagement encompasses the planning and management of all act


A sample of definitions of supply chain management
AUTHORS DEFINITION
Oliver and Webber (1982) Supply chain management covers the flow of goods from supplier through manufacturing and distribution chains
to end-user
Jones and Riley (1987) Supply chain management techniques deal with the planning and control of total materials flow from suppliers
through end-users
Ellram (1991) An integrative approach to dealing with the planning and control of the materials flow from suppliers to end-users

Christopher (1992) Supply chain management is the management of a network of organizations that are involved, through upstream
and downstream linkages, in the different processes and activities that produce value in the form of products and
services in the hands of the ultimate consumer

International Center for Supply chain management is the integration of business processes from end-user through original suppliers that
Competitive Excellence (1994) provides products services and information that add value for customers
Harland (1994) Supply chain management is defined as the management of the flow of goods and services to end customers to
satisfy their requirements
Berry et al. (1994) Supply chain management aims at building trust, exchanging information on market needs, developing new
products, and reducing the supplier base to a particular original equipment manufacturer (OEM) so as to release
management resources for developing meaningful, long-term relationships

Cooper et al. (1997) An integrating philosophy to manage the total flow of a distribution channel from supplier to ultimate customer

Lee and Ng (1997) (The management of) a network of entities that starts with the suppliers' supplier and end with the customers'
customers for the production and delivery of goods and services
Handfield and Nichols (1999) The supply chain encompasses all activities associated with the flow and transformation of goods from the raw
materials stage (extraction), through to the end-user, as well as associated information flows. Material and
information flow both up and down the supply chain. Supply chain management is the integration of these
activities though improved supply chain relationships to achieve sustainable competitive advantage

Simchi-Levi et al. (2000) Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers,
warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right
locations and at the right time, in order to minimize system-wide costs while satisfying service level requirements

Ayers (2001) Supply chain management is the design, maintenance, and operation of supply chain processes for satisfaction of
end-users
Introduction to SCM
Histor
y
The term supply chain management was coined by consultant, strategy
consulting firm Booz Allen Hamilton in
1982.

Supply Chain Management


(abbreviated as)

Keith Oliver
S C M

Some experts distinguish supply chain management and logistics,


while others consider the terms to be interchangeable.
egrating the organization ’ s functions
vOptions for integrating the organization ’ s functions :

MATERIALS
MANAGEMENT

SUPPLY CHAIN MANAGEMENT .

MERCHANDISING

LOGISTICS
Managing the supply chain

‘Second-tier’ ‘First-tier’ ‘First-tier’ ‘Second-tier’


suppliers suppliers customers customers

The
operation

Purchasing and Physical distribution


supply management management

Logistics
Materials management
Supply chainmanagement
Supply chain management (SCM) is the combination of art and
science that goes into improving the way your company finds the
raw components it needs to make a product or service and deliver it
to customers.
Plan Source Make

egy
es for to
need managing all the resources
create product. Develop athat go
–setThis
of pricing,
is the manufacturing
delivery and payment
step. Schedule
processes
the activities
with suppliers
necessa
an
packaging and preparation for delivery. As the most metric-inten
measure quality levels, production output and worker productivi
rngtheshipments,
supply chain so thatthem,
verifying it is efficient, costs less and delivers high quality and value to customers.
g supplier payments.
Delive Return
r

iders refer to as logistics. Coordinate the receipt


– The problem partofoforders from chain. Create a network for receiving
the supply
of warehouses, pick carriers toproducts
get products to customers
back from andand
customers set supporting
up an customers who have prob
yments.
SUPPLYCHAIN_SIMPLE
SUPPLYCHAIN_COMPLEX
Building Blocks of a Supply Chain Net
The House of SCM illustrates the many facets of SCM. The roof stands for the ultimate goal
of SCM — competitiveness — customer service indicates the means. Competitiveness can be
improved in many ways, e. g. by reducing costs, increasing flexibility with respect to changes
in customer demands or by providing a superior quality of products and services.

The roof rests on two pillars


representing the two main
components of SCM, namely the
integration of a network of
organizations and the
coordination of information,
material and financial flows. The
figure also shows that there are
many disciplines that formed the
foundations of SCM.

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