What is the Supply Chain?

Definition: the processes from the initial raw materials to the ultimate consumption of the finished product linking across supplier-user companies. The functions within and outside a company that enable the value chain to make products and provide services to the customer.

Supply Chain Management is the planning, administration, coordination and control of activities, resources and information involved in the flow of materials and products from source to final customer.

The supply chain of a company consists of different departments, ranging from procurement of materials to customer service.

The supply chain includes activities associated with inventory (materials) acquisition, storing, and use in production, transit, and delivery to customers.

Supply Chain Management Goal

To evolve a company's supply chain in to an optimally efficient, customer-satisfying process, where the effectiveness of the whole supply chain is more important than the effectiveness of each individual department.

Management focuses on business processes:

product design
planning
order management
stock management

instead of functions:
sales
purchasing
production

Supply chain management activities:
Forecasting demand
Selecting suppliers
Ordering material
Managing inventory
Scheduling production
Shipping and delivery
Organising information exchange

Logistics Management

What is Logistics:

Logistics is the art and science of obtaining, producing, and distributing material and products at the right time, to the right place, at the right cost and in the right quantities.

Elements of Logistics:

Materials management is:
sourcing and receiving of raw materials or unfinished products for subsequent use

Material flow system:

the ability to locate and schedule material through to end production and disposition

Physical distribution:

the delivery of finished goods to customers

Logistic steps:

accepting a customer order
receive and enter
credit clearance / authorize
meeting delivery commitments
supplier ordering
forecasting demand with sales and marketing
scheduling manufacturing
inventory management
delivery to customer.

Drivers of change:

Customers in the past have never demanded the service that they do today. Actual customer demands for increased speed, flexibility and competitive pricing are increasing.
Computers, new software: ERP, DRP, MRP, WMS etc. and sophisticated application software
outsourcing trends

New technologies:

Business to Business connectivity (B2B)
Business to Customer connectivity (B2C)
Internet, intranet, extranet
wireless communications
teleconferencing and telecommuting
bar coding.

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