Supply Chain Management Overview

Supply Chain Management Definition

• Supply chain management is the coordination and management of goods, services, information and finances across the complete supply chain
• The supply chain spans from supplier to manufacturer to wholesaler to retailer all the way to the consumer
• The goal of supply chain management is to ensure goods are created, transported and delivered:
  • At the right time
  • At the right place
  • At the right cost

Key Aspects of Supply Chain Management

• Planning: production planning and demand forecasting are essential for a successful supply chain
• Sourcing: Selecting reliable and cost-effective suppliers based on quality and business needs
• Manufacturing/Production: Ensuring efficient production processes that meet high quality standards
• Logistics: Managing the movement and storage of goods throughout the supply chain
• Returns (Reverse Logistics): Handling returns of defective or unwanted products for repairs, recycling or disposal
• Integration: Aligning processes and optimizing communication between all entities in the supply chain from supplier to consumer

Supply Chain Management Terms

• Supply Chain: The whole network of entities involved in producing and delivering goods from raw materials to the end consumer.
• Logistics: The part of supply chain management that manages the movement, storage and transportation of goods.
• Procurement: The process of obtaining goods and services from suppliers. It includes negotiating contracts and ensuring timely delivery.
• Supplier: An entity that provides goods, raw materials, or services to a company.
• Demand Forecasting: Predicting future demand for a product based on data and analysis.
• Lead Time: The time between placing an order and receiving a product.
• Just-in-Time: An inventory management system focused on ordering and manufacturing materials only as needed to reduce waste and costs.
• Inventory: Goods held by a company for resale or production. Effective inventory management avoids stockouts and overstocking.
• Warehouse Management: Managing the storage, handling and movement of goods within a warehouse.
  • Includes receiving goods, inventory control, and order fulfillment.
• Distribution: The process of delivering finished products from the manufacturer to the end consumer via a network of distributors, retailers, and logistics providers.
• Third-Party Logistics: Outsourced logistics companies that provide warehousing, transportation, and distribution services to other companies. They allow businesses to focus on core operations.
• Reverse Logistics: The process of managing returns from customers to the supplier or manufacturer for repairs, recycling, or disposal.
• Bill of Materials: A complete list of raw materials, components, and assemblies required to create a product.
• Supplier Relationship Management (SRM): Optimizing interactions with suppliers to ensure best performance, quality and cost-effectiveness.
• Order Fulfillment: The entire process from receiving a customer order to the delivery of the product. It includes order processing, packaging, and shipping.
• Capacity Planning: Determining the production capacity needed to meet future demand.
• Safety Stock: Extra inventory kept to avoid stockouts due to unexpected demand or supply chain disruptions. It acts as a buffer for smooth operations.
• Freight Forwarder: An intermediary that arranges international transportation and logistics for goods. They help with documentation, customs clearance, and selecting carriers.
• Supply Chain Visibility: Real-time tracking of all aspects of the supply chain, from raw materials to finished products, for better decision-making and responsiveness.
• Sustainability in SCM: Minimizing the environmental and social impact of supply chain operations.
  • Examples include reducing carbon emissions, improving labor conditions, and adopting eco-friendly sourcing methods.

Explore the essential principles of supply chain management in this quiz. Test your knowledge on key aspects including planning, sourcing, manufacturing, logistics, and returns. Understand how these elements work together to ensure efficient delivery of goods.