What is Supply Chain Management?
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 supply
chain firms to develop and run supply chains in the most effective &
efficient ways possible. Supply chain activities cover everything from
product development, sourcing, production, and logistics, as well as the
information systems needed to coordinate these activities.
The organizations that make up the supply chain are “linked”
together through physical flows and information flows. Physical flows
involve the transformation, movement, and storage of goods and
materials. They are the most visible piece of the supply chain. But just
as important are information flows. Information flows allow the various
supply chain partners to coordinate their long-term plans, and to
control the day-to-day flow of goods and material up and down the supply
chain.
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