LSM 573
STRATEGIC SUPPLY CHAIN MANAGEMENT
DORCAS NUERTEY (PhD)
KNUST SCHOOL OF BUSINESS
Jan 2018
MODULE 2
THE CONCEPT OF
SUPPLY CHAIN MANAGEMENT
1
MODULE OUTLINE
1. Introduction
2. Supply Chain Management Schools of Thought
3. Supply Chain Management Defined
[Link] Concepts in SCM
5. The Evolution of Supply Chain Management
3
LEARNING OUTCOMES
After studying this unit, you should be able to :
1. Explain the meaning of Supply Chain Management (SCM)
2. Appreciate the evolution of supply chain management and factors
driving such evolution
3. Demonstrate understanding of SCM Concepts
4
INTRODUCTION
Today, many companies are finding that
effective supply chain management is the new
strategy to pursue if they will reduce cost, be
competitive, and increase their market share
and profitability.
WHAT IS SUPPLY CHAIN MANAGEMENT?
Information Flow
PRODUCER
SUPPLIER
CUSTOMER
Product
Flows Product
Flows
Cash Flows
DEFINING SCM: SCHOOLS OF THOUGHT
The Functional Chain The Linkage/Logistics
Awareness School School
The Information Integration/Process
School School
THE FUNCTIONAL CHAIN AWARENESS SCHOOL
SCM deals with the total flow of materials from
suppliers through to end users.
Source: Jones & Riley (1985)
THE LINKAGE/LOGISTICS SCHOOL
SCM is a technique that looks at all the links in the chain from raw
material suppliers through various levels of manufacturing and
distribution to the final customer.
Source: Turner (1993)
THE INFORMATION SCHOOL
SCM is an operations approach to procurement that requires all
participants of the chain to be properly informed.
Source: Johannson (1994)
INTEGRATION/PROCESS SCHOOL
SCM is an integrative philosophy to manage the total flow of a
distribution channel from the supplier to the ultimate user.
Source: Cooper et al. (1990)
WHAT IS SUPPLY CHAIN MANAGEMENT?
The Global Supply Chain Forum defines Supply Chain Management as:
the integration of key business processes across the supply chain for
the purpose of creating value for customers and stakeholders.
DEFINITION OF SUPPLY CHAIN MANAGEMENT
According to the Council of Supply Chain Management Professionals,
Supply Chain Management encompasses the planning and management
of all activities involved in sourcing, procurement, conversion, and
logistics management.
KEY CONCEPTS FROM THE DEFINITIONS
Network of Interconnected Businesses
– i.e. two or more businesses with links of cooperation and coordination.
KEY CONCEPTS
• Overseeing of Materials, Information, and Finances
i.e. supervising, monitoring, directing, organizing and coordinating the
flow of materials, information and finances.
KEY CONCEPTS
Effectiveness
doing the right things, i.e. identifying and achieving those goals and
objectives which are the “most appropriate” given the entity’s purpose
of existence.
KEY CONCEPTS
Efficiency
The degree to which the ratio of outputs produced to inputs used are
maximized.
KEY CONCEPTS
Reduced Inventory
reducing the quantity of goods held in
stock.
HISTORICAL DEVELOPMENTS IN SCM
19 Source: Singh and Pusa (2013)
KEY EMPHASIS OF THE EVOLUTION PHASES
ERA KEY EMPHASIS
Creation Era Large-scale changes, re-engineering, downsizing driven by cost reduction programmes, and
widespread attention to Japanese management practices.
Integration Development of electronic data interchange (EDI) systems in the 1960s, and developed through
the 1990s by the introduction of enterprise resource planning (ERP) systems.
Characterized by both increasing value added and cost reductions through integration.
Globalization Era Global systems of supplier relationships and the expansion of supply chains beyond national
boundaries and into other continents.
Specialization Era 1 Supply chain management works as a service. Thus creates manufacturing and distribution
networks composed of several individual supply chain specific to producer to end consumer.
Specialization Era 2 Transportation Management, Storage and Inventory Management, Planning Development
Management, Performance Management
SCM 2.0 Increased creativity, information sharing and collaboration among users.
20
Source: Singh and Pusa (2013)
FACTORS DRIVING THE EVOLUTION OF SCM
Customer
Globalization Competition Advances in
Expectations
Technology
BENEFITS OF EFFECTIVE SUPPLY CHAIN MANAGEMENT
Reduced uncertainty along the chain
Proper inventory levels in the chain
Minimized delays
Reduced rush (unplanned) activities
Good customer service
END OF CLASS
THANK YOU
Thank You
For any concerns, please contact
elearning@[Link]
elearningknust@[Link]
0322 191132
Jan 2021
