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Supply Chain Management Basics

According to APICS (Americam Prodcution and Inventory Control


Society, Inc.,
A Supply Chain is a network of facilities and distribution options that
performs the functions of procurement of material, transformation of these
into intermediate and finished products and the distribution of finished
products to customers
Principally there are three parts of any Business Process
S3

C1

S1

C4
S4

Raw Material
Semi-Finish

Manufacturing
Assembly

C2

S2

C5
S5

Suppliers
Procurement

C3

Plants / Assembly /Warehousing


Manufacturing and Storage

Customers
Sales And
Distribution

Supply chain is the net work of suppliers providing Raw material or spare parts
to the facilities / assembly lines. In the facilities raw material are converted
into semi-finish goods, in some cases into finally finish goods. Semi-finished
Are converted into Finished Goods. These Finish Goods are finally distributed
To customers and end consumers through channel partners.
In the facilities the raw material and semi-finished goods passes through
many phases and channels.

So, in layman language , supply chain management is flow of material


Through different channels and phases. During the movement of the
Material, there needs to be a perfect and agile coordination between
the different stages or we can say different supply chain partners.
There are three kind of flow in any of the Supply Chain Management.
1)
2)
3)

Product Flow,
Information Flow,
Finance Flow.
Information Flow
Finance Flow

Procurement

Manufacturing

Market/Sales

Material Flow
Information Flow
Market gives information about the product, prices, competition, type
of products, variety, etc., Based on the market requirement company plan
Either to produce or procure. If decision is to procure directly the final
Product, then the company buy the product and distributes into the
Market, paying the suppliers. In case the company plan to produce the
final product, then the company install the machines and facilities.
Raw Material is procured and transformed. Finance flow from Market to
Supplier.
Material and Information flows from Supplier to Manufacturing and
Assembly units, from transformation to customer.
2

Some of the other important definitions are as under "design, planning, execution, control, and monitoring of supply chain
activities with the objective of creating net value, building a competitive
infrastructure, leveraging worldwide logistics, synchronizing supply with
demand and measuring performance globally.
Supply chain management is the systemic, strategic coordination of the
traditional business functions and the tactics across these business
functions within a particular company and across businesses within the
supply chain, for the purposes of improving the long-term performance of
the individual companies and the supply chain as a whole (Mentzer et al.,
2001).[2]
For more about SCM and re-engineering, keep visiting
www.scm-re-engineering.com

Written by - Rajinder Singh Mann, B.Sc., PGDCS, MBA, MPhil., Experience of 25


years in Sales & Distribution, Education, Logistics, Supply Chain. Has worked in
various industries like Publishing, Fasteners, Paints and Varnishes, Food Processing
(Rice Processing), Steel wares and Table Wares and presently associated with
Ceramics Industry.
Web Site - www.scm-re-engineering.com, www.posititude.com

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