SUPPLY CHAIN MANAGEMENT

Time for some serious Business folks......
We will go through the one of the most important cycles in Oracle Applications.

SUPPLY CHAIN MANAGEMENT :
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What is Supply Chain Management?
A SUPPLY CHAIN is a network of supplier, manufacturing, assembly, distribution, and logistics facilities that perform the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these products to customers. Supply
chains arise in both manufacturing and service organizations. SUPPLY CHAIN MANAGEMENT (SCM) is a systems approach to managing the entire flow of information, materials, and services from raw materials suppliers through factories and warehouses to the end customer.

Let us first understand what these two terms, namely, LOGISTICS and SCM mean.
Simply stating, LOGISTICS is a logical extension of transportation and its related areas to achieve an efficient and effective goods distribution system. Thus, logistics encompasses the activities of inventory management, order processing, warehouse and materials handling and physical distribution.
SCM is the design and operation of the physical and managerial systems needed to transfer goods and services from vendor to customer in an effective and efficient manner.Thus, SCM integrates various links involved in the customer order fulfilment, viz., supplier, transporter, manufacturer, wholesaler, retailer and consumer and transforms the business processes that bring products and services to the market place. In this way, SCM includes all those business process involved in the value chain of an organisation that transform a concept into product and take it to the market.

SCM

SCM can easily be differentiated from logistics. While logistics is a function, SCM is a process involving entire business activity.
Phase 1: Physical distribution management: This phase is better characterised as ‘inventorypush phase when manufacturing was handled in isolation and output was pushed down to the finished goods warehouses.
Phase II : Integrated logistics management : This phase recognised the importance of integrating operations within the organisation like sales, procurement, manufacturing, warehousing, distribution and transportation to achieve an efficient and effective goods distribution system.
Phase III : The graduation of logistics management to its modern day avatar is better known as ‘SCM’. SCM extends the scope to link external partners like suppliers, vendors, distributors and customers with a view to deliver enhanced customer and economic value through synchronized
management of the flow of physical goods and associated information from source to consumption.

INVOLVES
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• Order management.
• Fulfilment and logistics.
• Planning and scheduling.
• Supplier relationship and sourcing.
• Manufacturing.
• Asset management and maintenance.
• Product lifecycle management.
• Projects.
• Service.

MOTO
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• Reduced operational costs.
• Improved flow of supplies.
• Reduction of delays in distribution and increased customer satisfaction.
• Brings compelling bottomline benefits to enterprise.

The corporate profitability can be linked to the deliverables of a supply chain with the help of following equation :
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Profit = Revenue + Customer service / Cost + Capital employed # ##############################################

DRIVERS
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First, the expectations of customer for increased value addition, response time sensitivity, need for reliability, cost consciousness and information sensitivity.
Second, the nature of competition favouring firms that have been in a position to decrease lead times as well as operational costs.
Third, the recent revolution taken place in the field of information technology has enabled and encouraged the firms to initiate newer means in the field of distribution management.
Fourth, managers have realized and recognised the need for continuous improvement of process involved in marketing activity. The attitude of managers has changed in favour of integrating all activities in the chain from sourcing to consumption.
Fifth, perception of firms to have inventories has changed to JIT philosophy. While money locked up in inventories leads to poor use of working capital, higher inventories lead to higher lead times for procurement, manufacture and distribution.

CONCLUSION
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Though customer has been dictated in the market for long, of late, customer has become supreme in the context of global competitiveness intensifying on an unabated manner. Obviously, only those companies are going to be successful that are able to provide goods and services to customer in time and in a cost effective manner to provide customer delight. This requires to have competitive advantage. Evidences indicate that every link in supply chain adds to competitive advantage.
The suppliers (of raw materials, components, and sub-assemblies), manufacturing/assembly plants, warehouses (central, local, etc.), distributors, retailers, and customers make up the important players in a supply chain.
The logistics function is also a key element for effective functioning of a supply chain. Logistics elements are required for agile delivery of raw material/components/sub-assemblies to the plants (supply logistics); and for rapid delivery of finished products to the customers (distribution logistics). A realistic supply chain may have multiple end products with shared components, facilities, and capacities. The Council of Logistics Management defines SCM as “the process of planning, implementing and controlling efficient flow of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirements”

Reference to this information is from
http://www.iimm.org/knowledge_bank/9_e-weste-management.htm