A supply chain, logistics network, or supplynetwork is a coordinated system of organizations, people, activities,information and resources involved in moving a product or service in physicalor virtual manner from supplier to customer. Its management dealswith the process of planning, implementing, and controlling its operations withthe purpose of satisfying customer requirements as efficiently as possible.


Supply chain managementspans all movement and storage of raw materials, work-in-process inventory, andfinished goods from point-of-origin to point-of-consumption. It integratessupply and demand management within and across companies If a supply chainmanagement system is properly implemented, strategic and competitive areas canbe used to their full advantage. Fulfillment is enabled through efficientcommunication, ensuring that orders are placed with the appropriate amount oftime available to be filled. The supply chain management system also allows acompany to constantly see what is on stock and making sure that the rightquantities are ordered to replace stock.


Logistics is enhanced, keeping the cost of transportingmaterials as low as possible consistent with safe and reliable delivery.Production can run smoothly as a result of fulfillment and logistics beingimplemented correctly without delays due to ordering and transportation. Thecompanys flexibility to respond to unforeseen changes in demand and supply isimproved.


Because of this, a company has the ability to produce goodsat lower prices and distribute them to consumers quicker than companies withoutsupply chain management thus increasing the overall profit. And mostespecially, cooperation among supply chain partners and consumers isestablished ensuring mutual success.


Supply chain management must address the problems regardingdistribution network configuration numberand location of suppliers, production facilities, distribution centers,warehouses and customers; distribution strategycentralized versusdecentralized, direct shipment, cross docking, pull or push strategies, thirdparty logistics; informationintegration of systems and processes through thesupply chain to share valuable information, including demand signals, forecasts, inventoryand transportation; and inventory managementquantity and location of inventoryincluding raw materials, work-in-process and finished goods.


Supply chain management is a cross-functionalapproach to managing the movement of raw materials into an organization and themovement of finished goods out of the organization toward the end-consumer. Itssuccess relies on the corporations focus on core competencies and beingflexible. In some circumstances, operations should be outsourced to other corporationsthat can perform the activities better or more cost effectively.


In effect, the number of companies involved in satisfyingconsumer demand would increase, while reducing management control of dailylogistics operations. Less control and more supply chain partners would lead tothe creation of supply chain management concepts. The purpose of supply chainmanagement is to improve trust and collaboration among supply chain partners,thus improving inventory visibility and improving inventory velocity.


Copyright 2007 Ismael D. Tabije


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