What is Supply Chain Management?
A company's supply chain consists of geographically dispersed facilities where raw materials, intermediate products, or finished products are acquired, transformed, stored, or sold, and transportation links connecting the facilities along which products flow. There is a distinction between plants, which are manufacturing facilities where physical product transformations take place and distribution centers, which are facilities where products are received, sorted, put away in inventory, picked from inventory, and dispatched, but not physically transformed. The company may operate these facilities, or they may be operated by vendors, customers, third-party providers or other firms with which the company has business arrangements. The company's goal is to add value to its products as they pass through its supply chain and transport them to geographically dispersed markets in the correct quantities, with the correct specifications, at the correct time, and at a competitive cost.
Supply chain management is a relatively new term. It crystallizes those concepts of integrated business planning that have been espoused for many years by logistics experts, strategists, and operations research practitioners. Today, integrated planning is possible due to advances in Information Technology (IT), but most companies still have much to learn about implementing the new analytical tools needed to achieve it. They must also learn about adapting their business processes to exploit insights provided by these tools.
There are four dimensions to integrated supply chain management. The First is functional integration of purchasing, manufacturing, transportation and warehousing activities. Spatial integration of these activities across vendor ...