Principle of SCM
SCM is the management of a network of interconnected businesses (such as distributors, wholesalers and retailers) involved in the ultimate provision of product and service packages required by end customers. It spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption (supply chain).
Principles of SCM are:
Internal integration of purchasing and supply, manufacturing and physical distribution management -
External integration with suppliers (and their suppliers) and customers (and their customers)
Its Strategic Importance
We can see SCM’s development from the internal focus and conflicts of traditional purchasing roles, through the internal but wider optimization of logistics and onto the fully intergrated management encompassing external elements of SCM.
The main objectives of supply chain management include:
satisfying the end-customers
devising/implementing strategies to capture and retain end-customer business 3.
managing the chain effectively and efficiently
Determines the scope and span of operations; vertical integration; make or buy decisions 5.
Long term relationships with suppliers and customers
Many organisations have yet to grasp the totality of supply chain management and have settled for logistics. Logistics is the combined management of production materials and finished product distribution. As such, logistics is concerned with managing the supply of products through manufacture and the down-stream supply chain. In essence it gives an increased span for more strategic control and provides a closer link to market and better management of finished product stocks.
We can see the emergence of thinking in terms of Porter’s value chain model of competitive advantage: Firm infrastructure (e.g. finance, accounting, legal)
Human resource management
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