If three or more companies linked together no matter whether associated with the upstream or downstream flow of products, finances, services or information from one source to another, this set of arrangement is known as Supply chain management.
Supply chain management is a process that helps in systematic and strategic coordination of ethical business functions performed in a company or organization connected in the supply chain that enhances the long-term performance of the company individually and the supply chain as a whole.
The main focus of this arrangement (Supply chain) is to achieve the best possible results for all the components of the supply chain that even includes “customers”.
Though the supply chain is a mixture of various fragmented parts that performs its own functions in the organization, but philosophically, Supply Chain Management opts for a systematic approach that views the chain as a single entity. In short, Supply chain management works for the whole organization not for any individual component in the chain.
Supply chain Management works on the basis of three concepts that are interconnected to each other very tightly. These three concepts are:
- Network Structure
- Business Processes
- Management
The Network structure in the Supply chain plays a very important role and establishes relationships among each component of the chain. Creating an SCM cooperative network and adding all the participants of the business organization in that network is hardly possible and cannot be maintained properly. This accumulation of the available resources within the organization is very important with the point of view of enhancing the competitiveness of the business. Every business has to fulfill some relations that are associated with the current as well as the future trends in terms of supply chain. These relations can be placed under four heads which are as follows:
- Relationships that the business in focus wishes to lead and coordinate.
- Relationships that are non-critical for the business in focus, but which still should be monitored in order to ensure that the activities are completed by the other businesses involved in the network.
- Relationships that the business in focus does not seem to be critical or worth sacrificing management or monitoring resources on.
- Relationships to other supply chains. A business can simultaneously be a supplier for several internally competing supply chains. These relationships are not viewed as part of the relationship with the actual supply chain, but can, of course, have an important influence on the supply chain’s effectiveness and competitiveness.
Business processes involving all the activities that are concerned with the flow of tangible goods/services and flow of information throughout the supply chain and the customers. Some important business processes are mentioned below:
- Order Processing: In this process all the tasks related to the completion of the customer’s orders, including placement and receiving the order, keep a credit and quality check, actual overheads and the method of the distribution. All these activities come under order processing.
- Customer Services: all the services that are being provided before, during and after the transaction has been made falls under this category. Service of customer support is one such example.
- Distribution: After processing the order and making the service, it is necessary to find the modes of its delivery to the ultimate consumer. Here the chain of physical distribution is followed to reduce the burden and cost. Direct selling and one to one selling are some examples.
- Product Development: it is not necessary that the product recently created will get immediately noticed by the customer. The organization needs to follow certain methods to bring it to the customer’s notice.
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