Supply Chain Management (SCM) - Revision history

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 == See Also ==
-*[[Logistics Management]]
+#[[Logistics Management]]
-*[[Enterprise Resource Planning (ERP)]]
+#[[Enterprise Resource Planning (ERP)]]

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 == Principles of Supply Chain Management (SCM)<ref>[http://www.supplychainopz.com/2013/07/principles-of-supply-chain-management.html 7 Principles of Supply Chain Management-Ben Benjabutr]</ref> ==
 *Adapt Supply Chain to Customer's Needs: Both business people and supply chain professionals are trained to focus on the customer's needs. In order to understand the customer better, we divide customers into different groups and we call it "segmentation". The most primitive way to segment customers is ABC analysis which groups customers based on sales volume or profitability. Segmentation can also be done by product, industry, and trade channel. Back then, Anderson et al suggested that customers be segmented based on their service needs, namely, "sales and merchandising needs" and "order fulfillment needs". However, these days customers may not know what they need until the competition offers something different. For example, in 2011 Amazon initiated a program called Amazon Prime (free 2-day shipping and discounted 1-day shipping). Today, people are still discussing if this program makes sense. But one thing is for sure, the customer turns to Amazon more and more. The moral of this story is that you should "anticipate" the customer's needs as well.
-*Customize Logistics Network: When you segment a customer based on the service needs, you may have to tailor the different logistics networks to serve different segments. However, this principle doesn't hold true for all situations. For example, if you were a contract manufacturer in China, you might already have different logistics networks for different customers. Each customer in US or EU might already control the source of raw materials, ask you to provide dedicated production lines and nominate 3rd Party Logistics (3PL) companies and air/sea carriers. So, logistics network design is a kind of initiative driven mainly by customers.
+*Customize Logistics Network: When you segment a customer based on the service needs, you may have to tailor the different logistics networks to serve different segments. However, this principle doesn't hold true for all situations. For example, if you were a contract manufacturer in China, you might already have different logistics networks for different customers. Each customer in US or EU might already control the source of raw materials, ask you to provide dedicated production lines and nominate [[3rd Party Logistics (3PL)]] companies and air/sea carriers. So, logistics network design is a kind of initiative driven mainly by customers.
 *Align Demand Planning Across Supply Chain: Supply chain practitioners are taught to share the demand data with trading partners so nobody has to keep unnecessary stock. In general, this principle holds true. But in the reality, only Walmart is actively sharing the demand data with trading partners. In the paper "Top-Down Versus Bottom-Up Demand Forecasts: The Value of Shared Point-of-Sale Data in the Retail Supply Chain" by Williams and Waller 2011, the result of research found that,
 **If you make the demand forecast based on SKU/Customer level, using your own historical order data is more accurate than using the POS data you get from retailers

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	Customers’ expectations nowadays are more demanding than ever. As described here, companies have responded with global networks, product innovation, and market expansions. This means that companies now rely on supply chain managers to optimize their value chains in order to stay competitive. As such, it’s no surprise that these professionals are in high demand. So customers, rest assured - experts in supply chain management, including our own Grainger Center graduates - are behind the scenes tackling these complexities each and every day and are eager to delight the customer experience.		Customers’ expectations nowadays are more demanding than ever. As described here, companies have responded with global networks, product innovation, and market expansions. This means that companies now rely on supply chain managers to optimize their value chains in order to stay competitive. As such, it’s no surprise that these professionals are in high demand. So customers, rest assured - experts in supply chain management, including our own Grainger Center graduates - are behind the scenes tackling these complexities each and every day and are eager to delight the customer experience.
		+
		+
		+	==See Also==
		+	*[[Value Chain]]
		+	*[[IT Sourcing (Information Technology Sourcing)]]
		+	*[[Business Strategy]]
		+	*[[IT Strategy (Information Technology Strategy)]]

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-'''Supply Chain Management (SCM)''' is an important framework that focuses on cost, time, and quality of products through different operations, from supplier selection to manufacturing means and transportation and logistics modes (Ecer, 2020a).
+'''Supply Chain Management (SCM)''' is an important framework that focuses on the cost, time, and quality of products through different operations, from supplier selection to manufacturing means and transportation and logistics modes (Ecer, 2020a).
-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 chain 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 chain. 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.<ref>Understanding Supply Chain Management [https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management NCSU]</ref>
+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 a disjointed and often ineffective supply chain. Supply chain management, then, is the active management of supply chain activities to maximize customer value and achieve 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 materials up and down the supply chain.<ref>[https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management Understanding Supply Chain Management -NCSU]</ref>
@@ Line 8: / Line 8: @@
-Supply chain management has evolved over the past 50 years to become a highly sophisticated, technology-dependent and collaborative discipline that combines the business functions of purchasing, operations, inventory management and warehousing, customer service, and [[logistics]]. Operations and supply chain management is focused on managing the flow of goods, information and cash, while exceeding customer expectations at the lowest total cost possible. Supply chain management occurs globally in organizations and represents a strategic advantage for many companies. In a supply chain role, you will face challenges across operational, tactical and strategic levels of business decisions.<ref>What is Supply Chain Management? [http://business.marquette.edu/centers-and-programs/cfscm-what Marquette]</ref>
+Supply chain management has evolved over the past 50 years to become a highly sophisticated, technology-dependent and collaborative discipline that combines the business functions of purchasing, operations, inventory management and warehousing, customer service, and [[logistics]]. Operations and supply chain management is focused on managing the flow of goods, information and cash, while exceeding customer expectations at the lowest total cost possible. Supply chain management occurs globally in organizations and represents a strategic advantage for many companies. In a supply chain role, you will face challenges across operational, tactical and strategic levels of business decisions.<ref>[http://business.marquette.edu/centers-and-programs/cfscm-what What is Supply Chain Management? -Marquette]</ref>
 In his book, Future Logistics Challenges, Leif Enarsson of Sweden's Gothenburg University wonders why after all these years we still haven't arrived at a common definition of supply chain management......
 Lambert, Cooper, and Pagh offered the following definition: "Supply chain management is the integration of key business processes from end user through original suppliers that provide products, services, and information that add value for customers and other stakeholders."
-That definition covers most business activities. Christopher's definition is more customer-focused: "The management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole."<ref>What do we really mean by supply chain management? [http://www.supplychainquarterly.com/topics/Logistics/scq200901book/ CSCMP]</ref>
+That definition covers most business activities. Christopher's definition is more customer-focused: "The management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole."<ref> [http://www.supplychainquarterly.com/topics/Logistics/scq200901book/ What do we really mean by supply chain management?-CSCMP]</ref>
-'''Supply Chain Management Technology'''<ref>Supply Chain Management - The Need to Invest in Technology [https://www.thebalance.com/introduction-to-supply-chain-management-2221276 the balance]</ref><br />
+'''Supply Chain Management Technology'''<ref>[https://www.thebalance.com/introduction-to-supply-chain-management-2221276 Supply Chain Management - The Need to Invest in Technology -the balance]</ref><br />
 If a company expects to achieve benefits from their supply chain management process, they will require some level of investment in technology. The backbone for many large companies has been the vastly expensive [[Enterprise Resource Planning (ERP)]] suites, such as SAP and Oracle. These enterprise software implementations will encompass a company’s entire supply chain, from purchasing of raw materials to warranty service of items sold. The complexity of these applications does require a significant cost, not only a monetary cost, but the time and resources required to successfully implement an enterprise-wide solution. Buy-in by senior management and adequate training of personnel is key to the success of the implementation. There are now many ERP solutions to choose from and it is important to select one which fits the overall needs of a company’s supply chain. Since the wide adoption of Internet technologies, all businesses can take advantage of Web-based software and Internet communications. Instant communication between vendors and customers allows for timely updates of information, which is key in management of the supply chain.
-Understanding the importance of SCM to its business, Walgreens Boots Alliance Inc. has placed focused effort on transforming its supply chain in 2016. The company operates the second largest pharmaceutical chain in the United States and needs to efficiently manage and revise its supply chain so it stays ahead of the changing trends and continues to add value to its bottom line. As of July 5, 2016, Walgreens has invested in the technology portion of its supply chain. It implemented a forward-looking SCM that synthesizes relevant data and uses analytics to forecast customer purchase behavior, and then works its way backward up the supply chain to meet that expected demand. For example, the company can anticipate flu patterns, which allow it to accurately forecast needed inventory for over-the-counter flu remedies, creating an efficient supply chain with little waste. Using this SCM, the company can reduce excess inventory and all of the inventories' associated costs, such as the cost of warehousing and transportation.<ref>Example of SCM [http://www.investopedia.com/terms/s/scm.asp investopedia]</ref>
+Understanding the importance of SCM to its business, Walgreens Boots Alliance Inc. has placed focused effort on transforming its supply chain in 2016. The company operates the second largest pharmaceutical chain in the United States and needs to efficiently manage and revise its supply chain so it stays ahead of the changing trends and continues to add value to its bottom line. As of July 5, 2016, Walgreens has invested in the technology portion of its supply chain. It implemented a forward-looking SCM that synthesizes relevant data and uses analytics to forecast customer purchase behavior, and then works its way backward up the supply chain to meet that expected demand. For example, the company can anticipate flu patterns, which allow it to accurately forecast needed inventory for over-the-counter flu remedies, creating an efficient supply chain with little waste. Using this SCM, the company can reduce excess inventory and all of the inventories' associated costs, such as the cost of warehousing and transportation.<ref>[http://www.investopedia.com/terms/s/scm.asp Example of SCM -investopedia]</ref>
-'''Principles of Supply Chain Management (SCM)'''<ref>7 Principles of Supply Chain Management [http://www.supplychainopz.com/2013/07/principles-of-supply-chain-management.html|Ben Benjabutr]</ref><br />
+'''Principles of Supply Chain Management (SCM)'''<ref>[http://www.supplychainopz.com/2013/07/principles-of-supply-chain-management.html 7 Principles of Supply Chain Management-Ben Benjabutr]</ref><br />
 *Adapt Supply Chain to Customer's Needs: Both business people and supply chain professionals are trained to focus on the customer's needs. In order to understand customer better, we divide customers into a different group and we call it "segmentation". The most primitive way to segment customer is ABC analysis that groups customer based on the sales volume or profitability. Segmentation can also be done by product, industry and trade channel. Back then, Anderson et al suggested that customer be segmented based on the service needs, namely, "sales and merchandising needs" and "order fulfillment needs". However, these days customers may not know what they need until the competition offers something different. For example, in 2011 Amazon initiated a program called Amazon Prime (free 2-day shipping and discounted 1-day shipping). Today, people are still discussing if this program makes sense. But one thing for sure, customer turns to Amazon more and more. The morale of this story is that you should "anticipate" the customer's needs as well.
 *Customize Logistics Network: When you segment a customer based on the service needs, you may have to tailor the different logistics networks to serve different segment. However, this principle doesn't hold true for all situations. For example, if you were a contract manufacturer in China, you might already have different logistics networks for different customers. Each customer in US or EU might already control the source of raw materials, ask you to provide dedicated production lines, nominate 3rd_Party_Logistics_(3PL) companies and air/sea carriers. So, logistics network design is a kind of initiative driven mainly by customer.
@@ Line 34: / Line 34: @@
-'''Levels of Supply Chain Management''' (SCM)<ref>The Three Levels of Supply Chain Management [http://paksupplychain.blogspot.com/2010/11/three-levels-of-supply-chain-management.html paksupplychain]</ref><br />
+'''Levels of Supply Chain Management''' (SCM)<ref>[http://paksupplychain.blogspot.com/2010/11/three-levels-of-supply-chain-management.html The Three Levels of Supply Chain Management -paksupplychain]</ref><br />
 There are three levels of SCM: strategic, tactical, and operational.
 *Strategic SCM deals with future planning than in looking at market evaluation, capacity issues, new products, and technology changes.  This planning is addressing issues that may be factors several years out.  This is accomplished at the executive management level.
@@ Line 41: / Line 41: @@
-'''Difference Between Logistics and Supply Chain Management''''<ref>The Difference Between Logistics and Supply Chain Management [http://www.supplychainopz.com/2012/04/what-is-logistics-and-supply-chain-management.html Ben Benjabutr]</ref><br />
+'''Difference Between Logistics and Supply Chain Management''''<ref>[http://www.supplychainopz.com/2012/04/what-is-logistics-and-supply-chain-management.html The Difference Between Logistics and Supply Chain Management -Ben Benjabutr]</ref><br />
 The difference between logistics and supply chain management is as below: (see also figure below)
@@ Line 51: / Line 51: @@
-'''Importance of Supply Chain Management'''<ref> The Importance of Supply Chain Management (SCM) [http://cscmp.org/imis0/CSCMP/Develop/Starting_Your_SCM_Career/Importance_of_SCM/CSCMP/Develop/Starting_Your_Career/Importance_of_Supply_Chain_Management.aspx CSCMP]</ref><br />
+'''Importance of Supply Chain Management'''<ref>[http://cscmp.org/imis0/CSCMP/Develop/Starting_Your_SCM_Career/Importance_of_SCM/CSCMP/Develop/Starting_Your_Career/Importance_of_Supply_Chain_Management.aspx The Importance of Supply Chain Management (SCM) -CSCMP]</ref><br />
 It is well known that supply chain management is an integral part of most businesses and is essential to company success and customer satisfaction.
 *Boost Customer Service: Customers expect the correct product assortment and quantity to be delivered. Customers expect products to be available at the right location. (i.e., customer satisfaction diminishes if an auto repair shop does not have the necessary parts in stock and can’t fix your car for an extra day or two).
@@ Line 67: / Line 67: @@
-'''Challenges in Supply Chain Management'''<ref>The Challenges in Supply Chain Management [https://bus.wisc.edu/mba/current-students/mba-specializations/supply-chain-management/blog/2014/03/06/challenges-in-supply-chain-management David Berrios, WSB class of 2014]</ref><br />
+'''Challenges in Supply Chain Management'''<ref>[https://bus.wisc.edu/mba/current-students/mba-specializations/supply-chain-management/blog/2014/03/06/challenges-in-supply-chain-management The Challenges in Supply Chain Management -David Berrios, WSB class of 2014]</ref><br />
 Current supply chains are growing in complexity due to several factors. We, the customers, are demanding innovative products at the right time and at a reasonable price. This creates challenges for companies since creating both responsive and cost-effective supply chains is critically difficult. I find these challenges exciting and that’s why I decided to pursue a career in the field. Let me expand on today’s main supply chain challenges.
 *Globalization: One of the biggest challenges that companies are facing is how to reduce their supply chain cost. In order to satisfy customers’ price expectations, companies have opted to relocate manufacturing to low cost countries around the world in an effort to reduce direct and indirect costs and to minimize taxes. But, having global suppliers contributes significantly to complexity that comes from extended delivery lead times. Customers not only want lower prices, but they also want their products on time.

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−	[[Supply]] chain [[management]] has evolved over the past 50 years to become a highly sophisticated, technology-dependent and collaborative discipline that combines the [[business]] functions of purchasing, operations, [[inventory]] management and warehousing, [[customer]] [[service]], and [[logistics]]. Operations and supply chain management is focused on managing the flow of goods, information and cash, while exceeding customer expectations at the lowest total cost possible. Supply chain management occurs globally in organizations and represents a strategic advantage for many companies. In a supply chain role, you will face challenges across operational, tactical and strategic levels of business decisions.<ref>What is [[Supply Chain]] Management? [http://business.marquette.edu/centers-and-programs/cfscm-what Marquette]</ref>	+	'''Supply chain management (SCM)''' is an important framework that focuses on cost, time, and quality of products through different operations, from supplier selection to manufacturing means and transportation and logistics modes (Ecer, 2020a).
		+
		+	Supply chain management has evolved over the past 50 years to become a highly sophisticated, technology-dependent and collaborative discipline that combines the [[business]] functions of purchasing, operations, inventory management and warehousing, [[customer]] [[service]], and [[logistics]]. Operations and supply chain management is focused on managing the flow of goods, information and cash, while exceeding customer expectations at the lowest total cost possible. Supply chain management occurs globally in organizations and represents a strategic advantage for many companies. In a supply chain role, you will face challenges across operational, tactical and strategic levels of business decisions.<ref>What is [[Supply Chain]] Management? [http://business.marquette.edu/centers-and-programs/cfscm-what Marquette]</ref>

← Older revision		Revision as of 13:19, 16 October 2019
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−	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\|supply chain]]. The second idea is that while [[Supply_Chain\|supply chain]] 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_Chain\|supply chain]]. Supply chain management, then, is the active management of [[Supply_Chain\|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\|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\|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\|supply chain]].<ref>Understanding Supply Chain Management [https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management NCSU]</ref>	+	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\|supply chain]]. The second idea is that while [[Supply_Chain\|supply chain]] 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_Chain\|supply chain]]. Supply chain management, then, is the active management of [[Supply_Chain\|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\|supply chain]] activities cover everything from [[Product Development\|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\|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\|supply chain]].<ref>Understanding Supply Chain Management [https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management NCSU]</ref>