Supply chain management

Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.

Some suggest that the "people dimension" of SCM, ethical issues, internal integration, transparency/visibility, and human capital/talent management are topics that have, so far, been underrepresented on the research agenda.

[11] In 1982, Keith Oliver, a consultant at Booz Allen Hamilton, introduced the term "supply chain management" to the public domain in an interview for the Financial Times.

[12] In 1983 WirtschaftsWoche in Germany published for the first time the results of an implemented and so called "Supply Chain Management project", led by Wolfgang Partsch.

As organizations strive to focus on core competencies and become more flexible, they reduce ownership of raw materials sources and distribution channels.

The effect is to increase the number of organizations involved in satisfying customer demand, while reducing managerial control of daily logistics operations.

"[32] This approach allows companies to leverage the strengths and capabilities of various partners to achieve greater efficiency and innovation, ultimately enhancing overall business performance.

[32][33] In recent decades, globalization, outsourcing, and information technology have enabled many organizations, such as Dell and Hewlett-Packard, to successfully operate collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities.

[36] Traditionally, companies in a supply network concentrate on the inputs and outputs of the processes, with little concern for the internal management working of other individual players.

[56] A popular implementation of this idea is given by measuring the time-to-survive and the time-to-recover of the supply chain, allowing to identify weak points in the system.

Adaptation means to accept that the system has reached a "new normal" state and to act accordingly; here, this can be implemented by redirecting ships around the African cape or use alternative modes of transport.

Six major movements can be observed in the evolution of supply chain management studies: creation, integration, globalization,[60] specialization phases one and two, and SCM 2.0.

However, the term became widely adopted after the publication of the seminal book Introduction to Supply Chain Management in 1999 by Robert B. Handfield and Ernest L. Nichols, Jr.,[61] which published over 25,000 copies and was translated into Japanese, Korean, Chinese, and Russian.

Contract manufacturers had to manage bills of material with different part-numbering schemes from multiple OEMs and support customer requests for work-in-process visibility and vendor-managed inventory (VMI).

Market forces sometimes demand rapid changes from suppliers, logistics providers, locations, or customers in their role as components of supply chain networks.

The term SCM 2.0 has been coined to describe both changes within supply chains themselves as well as the evolution of processes, methods, and tools to manage them in a new era of globalization and specialization.

It is the pathway to SCM results, a combination of processes, methodologies, tools, and delivery options to guide companies to their results quickly as the complexity and speed of the supply chain increase due to global competition; rapid price fluctuations; changing oil prices; short product life cycles; expanded specialization; near-, far-, and off-shoring; and talent scarcity.

Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, common systems, and shared information.

Tapping into suppliers as a source of innovation requires an extensive process characterized by development of technology sharing, but also involves managing intellectual[70] property issues.

[86] The presence of the intermediaries elongated the time in the process of procurement, which sometimes led to delays in the supply of the commodities in the stores, thus, customers finding empty shelves.

Wal-Mart realized that in order for it to ensure consistency in the quality of the products it offers to the consumers and also maintain a steady supply of goods in its stores at a lower cost, it had to create strategic vendor partnerships with the suppliers.

For example, in July 2009, Wal-Mart announced its intentions to create a global sustainability index that would rate products according to the environmental and social impacts of their manufacturing and distribution.

This law requires SEC-regulated companies to conduct third party audits of their supply chains in order to determine whether any tin, tantalum, tungsten, or gold (together referred to as conflict minerals) is mined or sourced from the Democratic Republic of the Congo, and create a report (available to the general public and SEC) detailing the due diligence efforts taken and the results of the audit.

Incidents like the 2013 Savar building collapse, with more than 1,100 victims, have led to widespread discussions about corporate social responsibility across global supply chains.

Finally, they highlight that collaboration with local partners, across the industry and with universities is crucial to successfully managing social responsibility in supply chains.

[103] Circular Supply Chain Management (CSCM) is "the configuration and coordination of the organizational functions marketing, sales, R&D, production, logistics, IT, finance, and customer service within and across business units and organizations to close, slow, intensify, narrow, and dematerialise material and energy loops to minimize resource input into and waste and emission leakage out of the system, improve its operative effectiveness and efficiency and generate competitive advantages".

Andrew Cox, Joe Sanderson and Glyn Watson argue that the power resources of buyers and suppliers should be analyzed in order to understand how a supply chain relationship operates.

Tony Hines defines value as follows: "Ultimately it is the customer who pays the price for service delivered that confirms value and not the producer who simply adds cost until that point".

[143] In this regard, firms may either build internal teams of consultants to tackle the issue or engage external ones: companies choose between these two approaches taking into consideration various factors.

In the past, supply chain professionals emphasized logistics skills, such as knowledge of shipping routes, familiarity with warehousing equipment and distribution center locations and footprints, and a solid grasp of freight rates and fuel costs.