Functions Of Supply Chain Management

Write an essay on the main functions of supply chain management (SCM) and its processes and components.

Expert Answers
kipling2448 eNotes educator| Certified Educator

The concept of "supply chain management" is fairly simple, but the practice can be enormously complex depending upon the size and nature of the company.

Simply, "supply chain management" (SCM) refers to the network of manufacturers, vendors and associated services that aggregately produces a product and places it in the hands of the customer. The more intricate or multifaceted the end product, the more involved the network. The function of the SCM, then, is to provide the most cost-effective way of putting the end product or service with the customer. The process begins with the accumulation of components or materials required for the manufacture of a product and continues all the way through to final distribution.

Preparing an essay on supply chain management should, as with all essays, begin with some measure of familiarization with the subject matter. A good start is the two descriptive articles provided at the links below. As noted above, the concept of SCM is not in and of itself difficult to comprehend. The devil, as usual, is in the details. Certain graphics or charts illustrating SCM in practice can be pretty involved, but, again, that is contingent upon the type of product in question.

Below, in addition to the two articles linked below, is a helpful eNotes article on how to write a research paper. While an essay is not necessarily the same as a research paper—in fact, they can be two very different things—this primer should be useful in preparing an essay on supply chain management. In general, any essay should begin, obviously, with an introduction, maybe one paragraph in length, and be followed by a more in-depth discussion of the subject that includes a definition of supply chain management and any number of paragraphs on the details and advantages or disadvantages of commonly used concepts. Examples of SCM are available by conducting an Internet search using "supply chain management" in the search box. Describing an example for illustrative purposes would add considerably to the value of the essay.

krishna-agrawala | Student

Supply chain refers to all the facilities and processes used in supply of goods and services; from procurement of raw material, through manufacturing operations, up to delivery to final user, and supply chain management (SCM) refers to Management of all operations within a company impacting and interfacing other sections of the supply chain to improve entire supply chain performance.

The main functions and components of SCM include:

  • Defining business boundaries and relationships
  • Managing demand and supply
  • Logistics
  • Purchasing
  • Selling system interface
  • Manufacturing system interface
  • Product design interface

Defining business boundaries and relationships is at the core of all SCM initiatives. The most important of these business boundaries relates to the decisions on outsourcing. In addition to general concept of what to manufacture and process in-house, these boundaries also refer to the roles played by supplier and buyers in each other’s business decision and operational activities.

Demand management is managing the demand for goods and services along the supply chain. The basic demand is the demand for the ultimate product or service from the end user. To meet this demand of end user, different links in the supply chain need to supply some goods or service to the following link in the chain. In turn to meet their supply commitment they need inputs from the previous link.

Logistics refers to all the processes involved in storing, moving, transporting or in any other way handling material. Role of logistics in activities before start of material and after completion of manufacture up to transportation to the immediate customer has been well recognized in the past also. But the logistics cost and effectiveness is also affected by, and in turn affect all other activities along the supply chain.

Purchasing has the closest links with the supply side of the supply chain. It plays a key role in the total SCM functions. At strategic level, purchasing plays a decisive role in decisions on and implementation of business boundaries. It acts as a link between the vendors and the company to get involvement and help of vendors in matters like purchased material specification, matching of lot sizes and transportation packing.

Selling is the closest link with the demand side of the supply chain. It is directly responsible to help  customer know, select, buy, pay for, and take away company’s product. These products may be sold to the customers directly or through a distribution network. Sales plays an important part in decision on design of the distribution and is directly involved in its day-to-day operations.

Manufacturing represents the core of internal operations of a company. No SCM policies, can operate in isolation from the manufacturing activities. Manufacturing supports SCM in many ways like, reducing manufacturing lead times and supplying material closely matched to customer lot size and time requirements.

Product design has significant impact on efficiency and effectiveness of both supply and demand side of supply chain. In addition the basic quality of the finished product sold to the end user can be improved substantially by better collaboration among channel partners.