Supply chain management - Essay Example

Supply Chain Management Table of Contents Supply Chain Management 3 Role of SCM 4 References 5 Supply Chain Management Supply chain management (SCM)is found to be an important concept that is greatly practiced in the world of modern management. The term first came in the picture during late 1980s. By 1990s, it became one of the most well-liked management term (Hugos, 2006). A supply chain can be seen as the alignment of three or more firms that are directly linked by the downstream as well as upstream flows of goods, services, information and finances from a particular source to the customers.

Supply chain management, on the other side is viewed as a management philosophy (Mentzer, 2001). Supply chain management can be defined as the encompassment of management and planning of various activities that are involved in sourcing, procurement, conversion as well as various other activities regarding logistics. The most important aspect of SCM is that it includes collaboration and co-ordination of different channel partners including suppliers, intermediaries and customers. In simple words, SCM integrates the demand and supply management across and within the companies (Council of Supply Chain Management Professionals, n.d.).

The SCM concept views all the channel partners as a ‘single entity’ instead of considering them fragmented parts. According to Stevens, main objective of maintaining the supply chain is synchronizing the flow of goods and services with the needs of the customers so as to manage the balance among the high customer service, low unit cost and low inventory management (Mentzer, 2001). Monczka opined that SCM’s primary objective is managing and integrating the source, flow as well as the control of materials by using a perspective of ‘total system’ across different tiers of suppliers and different functions (Mentzer, 2001).

According to the Institute for Supply Management, SCM is referred to the “design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer (Wisner, Tan & Leong, 2008). Role of SCM In the present competitive business environment, supply chain management principles play significant role in determining the overall performance of an organization. Effective use of this concept assists the company in gaining sustainable competitive advantage and one of the main reasons behind such conclusion is the fact that SCM helps in reducing the inventories across the chain.

Furthermore, information can be shared among various partners in a more effective way by using the principles of SCM. The core concept of supply chain management does not allow ‘planning in isolation’; rather it promotes ‘planning in consultation’. Such practices enable the organizations to reduce their cost of operation and improve customer service significantly. Furthermore, proper application of SCM concepts enhances the efficiency of the entire manufacturing process. One of the most crucial facts is that SCM strengthens the trust among the channel partners and this leads to a win-win situation (Sinha, 2009).

As a result of all these aspects, organizations that effectively practice SCM concepts, find themselves in a better position while making crucial strategic decisions. References Council of Supply Chain Management Professionals, No Date, CSCMP’s Definition of Supply Chain Management, CSCMP Supply Chain Management Definitions, Retrieved on May 13, 2011, from http://cscmp.org/aboutcscmp/definitions.asp Hugos, M. 2006, Essentials of supply chain management, John Wiley and Sons Mentzer, J. T. 2001, Supply chain management, SAGE Sinha, A.

2009, SUPPLY CHAIN MANAGEMENT: Collaboration, Planning, Execution and Co-ordination, Global India Publications, pp. 23 Wisner, J. Tan, K. & Leong, 2008, Principles of Supply Chain Management, Cengage Learning, pp. 8