Supply management is a wider concept than logistics

abril 12, 2010

Logistics is essentially a planning orientation and framework that seeks to create a single plan for the flow of product and information through a business. Supply cahin management biulds upon this framework and seeks to achieve linklage and co-ordination between the process of toher entities in the pipeline, i.e., suppliers and costumers, and the organization itselfs. Thus, for example, one goal of supply chain management might be to reduce or eliminate the buffers of inventory that exist between organizations in a chain through the sharing  of information on demand and current stock levels. this is the concept of ‘Co-Managed Inventory’ (CMI).

It will be apparent thar supply chain management involves a significant change from the traditional arm’s-lenght, even adversarial, relationships, that so often  typified buyer/supplier relationships in the past. The focus of supply chain management is on co-operation and trust and the recognition that, properly managed, the ‘whole can be greater than th sum of its parts’.

The definition of supply chain management that is adopted is:

The management of upstream and downstream relationships with suppliers and costumers to deliver superior costumer value at less cost to the supply chain as a whole’.

Thus the focus of supply chain of management is upon the management of relationships in order to achieve a more profitable outcome for all parties in the chain. This brings with it some significant challenges since there may be occasiones when the narrow self interest of one party has to subsemed for the benefit if the chain as a whole

Whilst the phrase ‘supply cahin management’ is now widely udes, it could e argued  that it should really be termed ‘demand chain management’ to reflect the fact that the chain should be driven by the market, no the suppliers. Equally the word ‘chain’ should be replaced by ‘network‘ since there will normally be multiple suppliers and, indeed, suppliers to supppliers as well as multiple costumners and costumers’ costumers to be included in the total system.

Extending this idea it has been suggested that a supply chain could more acuratelly de defined as:

‘A network of connected and interdependent organisations mutually and co-operatively working together to control, manage and improve the flow of materials and information from suppliers ton end users’



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