Defining the Supply Chain Management
Over the past decade, the term supply chain management has become a prominent topic with numerous discussions on its definition, management process and practice. The popularity of this concept can be based on several developing trends in the global markets with increasing and competitive global supply chains. However, despite the prominence of this contemporary business concept, there is still confusion over its definition both in academia and in practice. Therefore, the objective of this paper is to develop a standard and comprehensive definition of the term supply chain management that can be used and understood easily by managers and future researchers.
What is a supply chain?
In order to articulately define the concept of supply chain management, a proper understanding of supply chains is required. Unlike SCM, the concept of supply chains is more common among academia authors this is because normally it is the primary basic in every distribution channel. A supply chain is defined as a set of different entities either organizations or individuals, involved in the upstream and downstream flow and distribution of products, services, information and finances from the main source to the ultimate consumer.
What is Supply Chain Management?
The definition of SCM differs across many authors because of the broadness of the concept. However, many definitions are classified into three unique categories: where SCM is considered as a
- A management philosophy
- An implementation of a management philosophy
- A set of management processes
Under the above stated categories, the definition of SCM can be summarized as an integrative philosophy whose objective is to integrate and manage the sourcing, flow and distribution of goods and services from the supplier to the ultimate consumer. It can also be defined as the management of distribution channels and synchronization of consumer requirements while creating a balancing effect between low inventory management and low unit costs.
As a management philosophy, SCM views the supply chain as a whole entity where the actions of one entity will affect the actions of the other entity and ultimately affect the entire performance of the supply chain. Under this approach, firms are integrated into cooperating together with an objective of developing innovative solutions to consumers. Primarily, SCM as a management philosophy has the following characteristics:
a) An approach that views the supply chain as a single entity, with focus of total flow of goods and services from the supplier to the ultimate consumer.
b) A strategic orientation that aims at synchronizing and converging intra-firm and inter-firm operational capabilities into a completely unified market force.
c) A consumer oriented strategies that focus on specialized, unique consumer sources with an aim of consumer satisfaction.
As a set of activities to implement management philosophy, SCM takes the view that all firms must establish management practices that are in consistence with the set supply chain management philosophy. This is to say that, the management practices of a firm should incorporate various activities of SCM to ensure a successful implementation of a SCM philosophy. Such SCM activities that should be adapted include:
- Mutual sharing of information among supply chain members
- Cooperation among supply chain members
- Mutual sharing of rewards and risks
-Same goals and focus on consumer satisfaction
As a set of management processes, some authors of this concept shift the focus from the SCM activities to management processes. This means that SCM is considered a process of managing relationships between different entities in the supply chain, managing the flow of material and information across different enterprises and delivery of enhanced consumer services. Therefore, to successfully implement SCM as management processes, all firms involved should adapt a process approach where each firm has its own key processes to implement keeping in mind the ultimate consumer.
The paper has discussed the basic definitions of supply chains and supply chain management that are applicable in academia, research and practice. The relationship between supply chains and SCM is clearly stated since they are both interlinked in the distribution of products and services to the final consumer. Unlike the supply chains, SCM is concept that cannot exist without management. Therefore, it is considered a management philosophy and processes that are interlinked for the provision of consumer- valued products and services.
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