Supply Chains (SC) have their earliest existence when merchants exchanged goods. The acquired goods had to be delivered to the acquirer for an inclusive or additional fee. This was relatively simple against today's ever-increasing complexity of goods and services handling and delivery.
With the advent of the personal computer, the tools to analyse and direct a supply chain from a technical perspective, increased significantly. During this time the information gathered from different phases increased exponentially. Hand in hand with the added bottom line profit pressure, created an environment to analyse information and adjust the outcome. This is how modern day Supply Chain Management (SCM) came about.
SCM is the analysis and study of supply chain information with the objective to direct the supply activities through suppliers and processes to minimize the cost of fulfillment of demand.
The aspects and aims involved in SCM are:
-The Planning and Sourcing of products and services;
-The Production/Manufacturing of the products and services;
-The increasing usage of Information Technology to analyse;
-Metrics to measure Performance;
-Coordination and Synchronisation of SC;
-Innovation to increase performance and decrease cost;
-Analysing and taking hold of SC opportunities;
-Strategically using SC for competitive advantage; and
-Working towards a SC with ZERO stock or investory in the system.
In most goods and services organisations, the SC is distinctly divided into the Inbound or Primary SC and Outbound or Secondary SC.
The Inbound SC consist of:
-The logistics of the incoming materials/services supplied to the SC Hub, which is a manufacturing plant or assembling plant;
-The Manufacturing or Assembly of the final goods/products or services;
-Making sure that the product or service conform to the consumer/customer requirement 100%; and
-The Packaging of the goods or services.
The Outbound SC consist of:
-The dispatching, fulfillment and logistics of the final goods or services to the consumer or customer.
-The distribution networks required to deliver into a vast regional or global market.
-The measurement of client satisfaction and retrieving of competitor information.
SCM keeps these different stages balanced and synchronised so that as demand fluctuates for goods or services the SC can accommodate the fluctuation with the least amount of disruption, through either inventory in different stages of the chain or pushing the fluctuation to the suppliers in the Inbound Supply Chain.
The cost of a SC is directly proportional to the frequency of demand fluctuation. This why SCM forecasts demand using models to minimise the shock on the system.
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