All About Supply Chain Management
Were you aware that as early as the 13th century B.C., Supply Chain Management (SCM) played an important role in business?* Now, eight centuries later, SCM is an acronym that is as common to the business world, as Starbucks® is to coffee or Krispy Kreme® is to donuts! Even national advertising is using the phrase, as indicated in one recent television commercial. A father asked his five year old daughter what type of bedtime story she would like him to read to her, and she replied: "How about Supply Chain Management?"
Just as the young actress posed the question to her T.V. father, do the majority of professionals working in the industry truly understand what SCM means? For the last few years, the phrase has been closely related to electronic commerce type software. However, particularly with the downfall of many dot coms, companies are beginning to realize there is much more to this than simply a "one-size fits all" computer program.
The scope and magnitude of SCM is illustrated in the varied audience that attends our educational programs, particularly, our professional certifications' training. In analyzing the skill sets of hundreds of individuals, representing numerous corporations, we tend to find such common areas as negotiation, strategic alliances, relationship management, cost/price analysis, legal, performance measurement, supplier evaluation, contract development, strategic planning, team building, logistics, transportation, forecasting, production and inventory management, and marketing.
In one CPIM review class conducted by our President, he noticed that two of his students were accountants with one of the Big Five firms. Out of curiosity, he asked these students what drew them to this program. Their reply was that "they must understand Supply Chain Management in order to be able to talk the language of their customers!" Although SCM had a limited application in the 13th century, as illustrated above, it is now very cross-functional.
Which brings us down to our main point, how does our firm define SCM? We believe that "Supply Chain Management is the streamlined, efficient and cost-effective flow of products and services, from the initial source supplier to the final customer. It must also include the reverse flow of feedback from the final customer back to the initial source supplier, with the end result to maximize profit." Therefore, the activities of logistics, purchasing, production/inventory management and distribution are key to successful SCM.
* Dobler, Donald W., Burt, David N., Purchasing and Supply Management Text and Cases, 6th edition, McGraw-Hill, New York, 1996.
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