Fundamentals of Supply Chain Management

LOGISTICS SOLUTIONS

ISSUE 1 2002 / 14

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scm

fundamentals of supply chain management

EDWARD SWEENEY provides a primer on the fundamentals of supply chain management

the four

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INTRODUCTION

Since its inception in 1998, NITL has been attempting to evolve a definition of supply chain management (SCM).This process has been driven by a number of factors. Firstly, there is no universally accepted definition of SCM. Secondly, many of the "definitions" that do exist are no more than trivial restatements of the overall objectives of SCM (e.g. "SCM is concerned with ensuring that the right products, are in the right place at the right time and cost, in the right quantity and quality"). Thirdly, there is an ongoing debate about the relationship between logistics and SCM. In an earlier article on SCM training and education in Logistics Solutions (Issue 2, 2001), I made reference to NITL’s Four Fundamentals of SCM. In response to many enquiries about this, this article explains these fundamentals in some more detail. It is essentially an attempt to elucidate the essence of SCM in a way which goes beyond the trite one-liners but retains a compactness and clarity which is an essential ingredient of any worthwhile definition.

WHAT IS SUPPLY CHAIN MANAGEMENT?

A product or service is delivered to the ultimate customer through a complex interaction of several companies on the way, i.e. through a supply chain. The manufacturer’s ability to give customers what they want, when they want it, at the price and quality that they want, is not just determined by the manufacturer’s skill or expertise in running his/her own operation. No degree of improvement in the company itself can make up for suppliers not delivering, delivering wrongly or late. High inventory levels are

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MANY COMPANIES DO NOT EVEN REALISE THE IMPORTANCE OF SUPPLY CHAIN MANAGEMENT TO THEIR FUTURE SURVIVAL. IT APPLIES TO SMALL OR LARGE COMPANIES

Figure 1

Final Customer

The Source of...