Supply chain management

Supply chain management (SCM) is the management of the network of processes involved in manufacturing.Supply chain managers follow the production process from where it begins with the acquisition of raw materials through the work-in-process inventory, and finished goods and then from point-of-origin to the point-of-consumption by the customer.This chain of events is appropriately named the supply chain.

Supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities.Supply chain management can be tailored to meet the needs of just about any manufacturing organization.For example, some manufacturers deal more heavily with third-party service providers or other types of intermediaries.The involvement of these entities as it pertains to the course that the product follow until it is ultimately purchased is part of the supply chain.Other manufacturers incorporate the use of software into their supply chain management because they have developed modules that they use in the executing of supply chain transactions, managing supplier relationships and controlling associated business processes.

The purpose of supply chain managers is to address and resolve a variety of problems.The first problem that supply chain managers must address is called the Distribution Network Configuration.The Distribution Network Configuration refers to the number, location and network missions of suppliers, production facilities, distribution centers, warehouses, cross-docks and customers.It is the manager's responsibility to look at each of these elements and evaluate how efficiently they are fulfilling their role in the overall supply chain.The next problem that supply chain managers are responsible for handling is called the distribution strategy.The distribution strategy includes questions of "operating control (centralized, decentralized or shared); delivery scheme (e.g., direct shipment, pool point shipping, Cross docking, DSD (direct store delivery), closed loop shipping); mode of transportation (e.g., motor carrier, including truckload, LTL, parcel; railroad; intermodal, including TOFC and COFC; ocean freight; airfreight); replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated, private carrier, common carrier, contract carrier, or 3PL)."

Supply chain management is ultimately also responsible for assuring that all of the activities in the supply chain are working well enough together that the manufacturer is consuming the least total costs.If there is one activity within the supply chain that is working better than others, that activity is referred to as a trade-off.The job that the supply chain manager has is to find a way to use these trade-offs or parts of the supply chain that are working optimally, and find ways for that activity to strengthen and improve connecting activities in the process.Trade-offs are usually optimized through the development of information, inventory management or cash flow.Information is shared by optimally performing sections of the supply chain by the sharing of such things as demand signals, forecasts, inventory, transportation, and potential collaboration etc.Inventory management looks to spread the benefits of optimally improving sectors of the supply chain by better controlling the quality and location of inventory.This includes the both raw materials that are considers to be part of a work in progress and finished goods.The last way that trade-offs can be used is in cash flow.This can be done by arranging the payment terms and the methodologies for exchanging funds across entities within the supply chain.

It is the job of the supply chain management to ensure that their job is executed by coordinating the movement of materials, information and funds across the supply chain in such a way that the company's resources and time are optimized and as little wasted time and materials are spent. This process is ongoing as the company will consistently encounter the need to change their operations as the needs of their customers change.Additionally, supply chain managers must work with the supply chain in a bi-directional way, looking for improvements in all their possible forms.