The system of interconnected businesses used to push a product from supplier to consumer is defined as a supply chain. Supply chain management (SCM) focuses on managing the supply chain in an effort to improve the quality and time it requires to manufacture a product. The marriage of lean production and supply chain management creates lean supply chain management, which provides a much leaner and more economical supply chain for the product to flow through.
Much uncertainty about what supply chain management entails is present in today’s society. Many people treat supply chain management as being synonymous with logistics, which is the management of the flow of goods from the origin to the consumers. However, supply chain management encompasses much more than the purchasing or management of goods to the consumer. Supply chain management 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. The following are five basic components of SCM.
The concept of Supply Chain Management is based on two core ideas. The first is that practically every product that reaches an end user represents the cumulative effort of multiple organizations. These organizations are referred to collectively as the supply chain.
The second idea is that while supply chains have existed for a long time, most organizations have only paid attention to what was happening within their “four walls.” Few businesses understood, much less managed, the entire chain of activities that ultimately delivered products to the final customer. The result was disjointed and often ineffective supply chains.
Supply chain management, then, is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the...