MB0044 | Q5. Define Supply Chain Management (SCM)? What are the aims and objectives of SCM?
Q5. Define Supply Chain Management (SCM)? What are the aims and objectives of SCM?
Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption (supply chain).
Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally."SCM is required by an enterprise as a tool to enhance management effectiveness with the following organizational objectives:
• Reduction of inventory
• Enhancement of participation level and
• Increase in functional effectiveness of existing systems like Enterprise Resource Planning (ERP), Accounting Software, and Documentation such as Financial reports/ Statements/ISO 9000 Documents
• Effective integration of multiple systems like ERP, communication systems, documentation system and security
• Design / Research & Development (R&D) systems
• Better utilization of resources like men, material, equipment, and money
• Optimization of money flow cycle within the organization as well as from external agencies
• Enhancement of value of products, operations, and services. These enhancements will consequently enhance the profitability of organization
• Enhancement of satisfaction level of customers and clients, supporting institutions, statutory control agencies, suppliers and vendors, employees and executives
• Enhancement of flexibility in the organisation to help in easy implementation of schemes involving modernisation, expansion and diversification –even divestments, mergers and acquisitions
• Enhancement of coverage and accuracy of management information systems.