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Despite the popularity on the term Supply Chain Management (SCM), both in academic and
practise, there remains considerable confusion to its meaning. Some authors define SCM in
operational terms involving the flow of materials and products, some view it as a management
philosophy, and some view it in terms of a management process [Tyndall 1998]. Authors have
even conceptualized SCM differently within the same article: as a form of integrated system
between vertical integration and separate identities on one hand, and as a management
philosophy on the other hand [Cooper 1993].
The next section is, thus, dedicated to reviewing, classifying, and synthesizing some of the
widely-used definitions of supply chain and supply chain management in both academic
and practice area.
Upstream are the processes which occur before manufacturing of production into a
deliverable product or services, typically processes dedicated to getting raw materials
from suppliers.
Downstream are the processes which occur after manufacturing or production, typically
those processes dedicated to getting goods and services to customers and consumers.
Encompassed within this definition, we can identify three degrees of supply chain complexity:
a direct supply chain, an extended supply chain, and an ultimate supply chain. A direct
supply chain consists of a company, a supplier, and a customer involved in the upstream
and/or downstream flows of products, services, finances, and information (Fig. 1a). An
extended supply chain includes suppliers of the immediate supplier and customers of the
immediate customer, all involved in the upstream and/or downstream flows of products,
services, finances, and information (Figure 1b). An ultimate supply chain includes all the
organizations involved in all the upstream and downstream flows of products, services,
finances, and information from the ultimate supplier to the ultimate consumer.
Figure 1c illustrates the complexity that ultimate supply chains reach. In this example, a third
party financial provider may be providing financing, assuming some of the risk, and offering
financial advice; a third party logistics provider is performing the logistics activities between
two of the companies; and a market research firm is providing information about the ultimate
customer to a company well back up the supply chain. This very briefly illustrates some of the
many functions that complex supply chains can and do perform.
Supplier
Organization
Customer
Supplier
Suppliers Supplier
Organization
Customer
Customers Customer
Third party
Logistics Supplier
Ultimate Supplier
Supplier
Organization
Financial Provider
Customer
Ultimate Customer
Market Research
Firm
phenomena of business still exists. Thus, we draw a definite distinction between supply
chains as phenomena that exist in business and the management of those supply chains.
The former is simply something that exists (often also referred to as distribution channels),
while the latter requires overt management efforts by the organizations within the supply
chain.
Given the potential for countless alternative supply chain configurations, it is important to
note that any one organization can be part of numerous supply chains. We note also that
within adopted definition of supply chain, the final consumer is considered a member of the
supply chain.
Definitions of Supply Chain Management
Although definitions of CSM differ across authors (see Table 1 for a representative sample),
they can be classified into three categories: a management philosophy, implementation of a
management philosophy, and a set of management processes. The alternative definitions and
categories they represent suggest that the term supply chain management presents a source
of confusion for those involved in researching the phenomena, as well as those attempting to
establish a supply chain approach to management. Research and practice would be improved
if a single definition were adopted.
Table 1: Definitions of supply chain management (by chronological order)
Jones and Riley (1985)
Houlinan (1988)
Stevens (1989)
With the intensifying competition in industry, product design and development is becoming
more vital to the prosperity or survival of companies. Product design and development is a
complicated task which involve different disciplines, such as management, virtual reality,
design, manufacturing, marketing and organization.
In addition, application of the European directive in 2002, relating to a harmonization of the
consumer protection (in particular in terms of periods of guarantees, and thus of reliability),
push the companies to develop increasingly reliable products. Consequently, systems
engineering is becoming a more and more important approach for tackling product integration
and life cycle considerations including quality and reliability of the products and processes
approach which must integrate product-process-organization design stage.
Strictly speaking, the supply chain is not a chain of businesses with one-to-one, business-tobusiness relationships, but a network of multiple businesses and relationships. SCM offers the
opportunity to capture the synergy of intra- and inter-company integration and management.
In that sense, SCM deals with total business process excellence and represents a new way of
managing the business and relationships with other members of the supply chain.
The definition of SCM as developed and used by the Global Supply Chain Forum (GSCF) is
as follows:
Supply Chain Management is the integration of key business processes from end user through
original suppliers that provides products, services, and information that add value for
customers and other stakeholders.
This broader understanding of the SCM concept is illustrated in Figure 1, which depicts a
simplified supply chain network structure; the information and product flows; and the key
supply chain business processes penetrating functional silos within the company and the
various corporate silos across the supply chain. Thus, business processes becomes supply
chain business processes linked across intra- and inter-company boundaries.
References
[Simchi-Levi 1999]
[Tyndall 1998]
[Cooper 1993]
[La Londe 1994]
[Lambert 1998]