2Introduction to Supply Chain Management

2.1. Introduction

Supply chain management (SCM) is the decision-making process that manages different activities that generate advantageous profits to the suppliers, retailers and customers involved. In addition, the efficient planning of activities can be profitable for product development, sourcing, production, logistics and all flows that can link those activities. SCM can also be seen as the process of optimizing a set of decisions that generate cost-effective solutions which provide efficient plans for acting on numerous levels while taking into account all decision-making standpoints.

SCM can therefore be defined as the set of activities utilized to efficiently integrate the different elements of the supply chain (SC), which involve suppliers, retailers and customers, so that products are produced and distributed at the right quantities, to the right locations and at the right time, in order to maximize system gain while satisfying service-level requirements.

The remainder of this chapter is organized as follows. In section 2.2, we define the main elements in the SC, section 2.3 defines the main activities in the SC and section 2.4 outlines the decision levels in the SCM.

2.2. Main elements of the supply chain

The efficiency and the performance of the SC are defined by the needs of each entity involved in the supply network, to lower its costs and increase its productivity. These needs depend on the way each entity builds and ...

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