Essential Tools for Operations Management: Tools, Models and Approaches for Managers and Consultants

CHAPTER 4

SUPPLY CHAIN MANAGEMENT

INTRODUCTION

Organizations have to recognize, respond to and satisfy the requirements of their customers if they intend to stay in business and benefit from future growth through repeat business. In support of this, supply chain management (SCM) has, for many companies, developed from the older function of purchasing to now embrace planning, implementing and controlling all of the suppliers to the organization with a view to delivering a more integrated service to its customers. This is often achieved though both vertical and horizontal integration. Typically, the management of the supply chain includes raw material ordering, storage, work-in-process inventory and finished goods. Such management is achieved through a set of product and production processes covering commercial, financial and quality management activities. Through this integrated approach, SCM offers organizations a systematic approach to the management of its entire value-added chain; from the component level supplier to the main manufacturer, integrator or prime contractor, then to the retailer who in turn finally exchanges the goods for money with the end customer (Figure 4.1).

Figure 4.1 Elements of the supply chain process.

This chapter examines the development of SCM and ...