What is Supply Chain Management?
Supply chain management is the combination of the enterprise strategies,
business process and information technologies that integrates the suppliers of
raw materials or components, the manufacturers or assemblers of the finished
products, and distributors of the products or services into one cohesive
process to include demand forecasting, materials requisition, order processing,
order fulfillment, transportation services, receiving, invoicing, and payment
While ERP and CRM systems are intended to re-engineer internal business
processes to archieve better resource planning and coordination across
departments, SCM systems are utilized to facilitate the coordination with
outside business entities, or in the scope of extended enterprise. SCM usually
refers to the redesign of supply chain processes in order to achieve
streamlining. It is generally performed only by large corporations with large
suppliers. B2B exchange can extend Supply Chain Management to all trading
partners regardless of size by providing a central location to integrate
information from all supply chain participants.
Participants in a Supply Chain
Suppliers - They are organizations that provide goods and/or
services to a purchasing organization (a manufacturer or a distributor). It is
often used synonymously with vendors but may also refer to an internal company
Manufacturers - They are the companies engaged in the original
production and assembly of products, equipment or services. They sometime refer
to companies that purchase such products or services manufactured or assembled
in accordance with company specifications.
||Distributors - Those are the external
entities that sell for suppliers or manufacturers directly and often collects
all payments from customers and maintains an inventory of the supplier's or
Processes of Supply Chain Management
Supply Chain Management: a System
What is Supply Chain Management
Supply Chain Management (SCM) is a business system of enterprise strategies,
business processes and information technologies for improving the planning,
execution and collaboration of material flows, information flows, financial
flows and workforce flows in the supply chain. SCM is supported by modular
software applications that integrate activities across organizations, from
demand forecasting, product planning, parts purchasing, inventory control,
manufacturing, product assembly to product distribution.
A System of Supply Chain Management
SCM is a social or soft system which has goals, components, processes and
Goals of SCM
to reduce inventory cost,
to increase sales
||to improve the coordination and the collaboration with
suppliers, manufacturers and distributors.
Components of SCM System - The components of
an supply chain system consists of 1) supply chain software and hardware, 2)
supply chain business processes and 3) users of SCM system.
SCM Software and Hardware - The core of an SCM system is SCM
software. Supply chain software is module based application. Each software
module automates business activities of a functional area in the supply chain.
UNIX is the most common operating system for running SCM software
Business Processes - Business processes of supply chain
includes supply chain planning, execution and collaboration. and operational
||Users - The users of SCM systems are workers
of supply chain participants at all levels.
Processes of Supply Chain Management
Boundary of the SCM Systems
- The boundary of a SCM system is the boundary of extended enterprise which
includes the company, suppliers, partners, distributors and customers.
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