DEFINITION

Definition

a)Supply chain

• All facilities, functions, activities, associated with  flow and transformation of goods and services from raw materials to  customer, as well as the associated information flows.
• An integrated group of processes to “source,” “make,” and “deliver” products.
• The system of suppliers, manufacturers, transportation, distributors, and vendors that exists to transform raw materials to final products and supply those products to customers. 

Diagram 1 shows a supply chain illustration

Diagram 2 shows a supply chain process

Diagram 3 shows a supply chain process

b) Definition SCM

Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers. The following are five basic components of SCM.

1.    Plan: This is the strategic portion of SCM. Companies need a strategy for managing all the resources that go toward meeting customer demand for their product or service. A big piece of SCM planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers.

2.   Source: Next, companies must choose suppliers to deliver the goods and services they need to create their product. Therefore, supply chain managers must develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And then, SCM managers can put together processes for managing their goods and services inventory, including receiving and verifying shipments, transferring them to the manufacturing facilities and authorizing supplier payments.

3.   Make: This is the manufacturing step. Supply chain managers schedule the activities necessary for production, testing, packaging and preparation for delivery. This is the most metric-intensive portion of the supply chain—one where companies are able to measure quality levels, production output and worker productivity.

4.    Deliver: This is the part that many SCM insiders refer to as logistics, where companies coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments.

5.     Return: This can be a problematic part of the supply chain for many companies. Supply chain planners have to create a responsive and flexible network for receiving defective and excess products back from their customers and supporting customers who have problems with delivered products.

Supply Chain management is the network of activities where the raw material is purchased then transformed into the usable goods and then finally delivered to the customers through the distribution systems. Managing  flow of information through supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lower the costs.

Supply chain management is the integration of the activities that procure materials and services, transform them into intermediate goods and final products, and deliver them through a distribution system.

Supply chain management deals with linking the organizations within the supply chain in order to meet demand across the chain as efficiently as possible.  In our example, Li & Fung is creating and managing the links.  In non-brokered supply chains, one or more of the chain’s organizations can provide the management function. The objective is to build a chain of suppliers that focuses on maximizing value to the ultimate customer.