Supply Chain Management (SCM)

The explanation is relatively simple, and all of us have already had something to do with it either directly or indirectly. The people who come into direct contact with SCM are mainly employees in large corporations (such as the automotive industry or the food industry), they are an important part within teams or departments. In some cases they may not even know that the processes around their workplace is the cog in the clockwork. Indirectly, you come every day as consumers in contact with it. The Supply Chain Management is the interaction of developers, financiers, producers and suppliers of almost all the things of daily life. It shortens the processes in these areas and provides among other things for shorter delivery times. Mention an example: You buy a new car and do not have to wait months for delivery because each part of the vehicle is made in sequence. There are simultaneously produced in different factories and assembled the items end up in the final assembly, tested and delivered within a much shorter waiting time than before to the customer.

What is Supply Chain Management
The beginnings of this management system can be found in Switzerland, where it was used in 1981 for the first time. Over the years, this system has been established and has been used as an integrative approach to control the flow of a paragraph between suppliers and end consumers and to keep going. To explain the system specifically, it is probably easiest to divide the term again:

Considered literally sets the term of three parts, namely

• supply (to) - supply, deliver,
• chain - the chain and management - the management. This shows already that a literal translation is not possible here, but the confusion still more increases.
• Supply chain management is referred to in German as supply chain management, supply teaching or alternatively "value chain". The Supply Chain Management describes the inter-company production and logistics network, it includes all procurement, production, storage and transportation activities from raw material supplier to end customer. The SCM has the goal of all tasks, to plan any material and information flows within the supply chain to control and coordinate. Often the supply chains have unnecessary operations that include cycle times, increase storage and delivery times and unnecessarily consume capital or bond. The aim is to improve customer service, increase the competitiveness of all companies involved. Basically it comes to reducing costs through more effective processes. The ultimate goal is to win a competitive advantage, increase market share and increase the profit.

Supply Chain Management - Problem

When the SCM involved in the supply chain, companies in different industries work closely together. It uses a gear to another, so to speak. This brings in some respects not only advantages but can for example lead to the following problems:

In all integrated business process structures with all the associated factors must be coordinated. The more precise these are defined, the smoother the finish.

To provide transparency with each other, the computer systems and programs must be identical to ensure access. You can use standard software or to tailor individual responding to the needs, software. Which variant is chosen depends largely on the operating purpose. It is important, however, that on all machines of the companies use the same software is implemented. If this hurdle is taken, for example, allows companies to quantities of raw materials, inventories, production numbers and dates to query. This can be important in order to control the company's own processes optimally. With the modern technology of today, there should be no problem to use the same software. Development in this area falls into "Miles steps" forward. Improvements and new features are available on the market every day. It is important to ensure that all parties are willing to go with each of these steps.

It may come to disadvantages, if not the same information is available in all companies. The problem of the unequal distribution of knowledge, should be avoided by intense flow of information as possible. Otherwise, it may lead to the so-called bullwhip effect (the whip effect).

The following allocations must be made:

• Tasks / Processes
• Disposition Rights
• Cost and financial burdens and risks
• share of value added

Of supply chain management goals

The smooth delivery flow within the supply chain is to be ensured.

Improve the flow of information, communication problems lead to delays. But also the financial aspect here is the top priority, but that goes by itself and is sure to be regarded as self-evident. Improvements and the avoidance of problems or stalling within the overall flow of the way is open to a liquid "money power" and easily accessible.

Reduction in storage costs through shorter storage times can be achieved in time (JIT) production with the so-called just. The production schedule is coordinated so that the individual components are passed on swiftly to or for the next production step.

Total throughput times decrease when interfaces are perfectly matched. Material flows are simplified and shortened when they are optimally coordinated.

Reactions to changes in competition may take place adequately if the networking of raw material suppliers, producers and distributors to the customer is given. Due to the reduced lead times it is quicker to respond to this change and adjust production to it.

Increase customer satisfaction and expand is not magic, but hard work and the result of a functioning network. If the customer receives the product on time, this has of course a positive impact on customer satisfaction. The faster the customer gets his product, the happier he is.

Synergies (positive effect resulting from the cooperation of the company arises) by trustful cooperation in the network exploit. This can for example be the case in the following areas:

• joint product development or progression
• optimal utilization of transport
• Shared storage

The whiplash effect - bullwhip effect

The main reason for the so-called "whiplash effect" is not sufficient or miscalculated disclosure of information. For example, if the customer demand, ie, the customers have an increased demand for the product is unsatisfactory communication, there may be serious consequences throughout the network, the, effecten come '. The retail purchases to avoid supply shortages, as a precaution more of the goods at wholesale. The wholesale in turn ordered a larger amount of the producer, who in his turn increases the production quantity due to the apparently increased demand. The result of inadequate communication of the company is a completely wrong assessment of customer demand. In the worst case, a too large quantity is produced, which then has to be stored until it is collected by wholesalers. This capital is tied up in the fabric and creates unnecessary storage costs.

Deferred supply chain management to logistics

The Logistics has put their focus on the individual company and deals on the information and goods flows and on-farm processes with the direct stakeholders. The SCM looks at the entire structure of raw material suppliers, manufacturers, wholesalers and customers. In addition to the information and material flows is explicitly paid attention to the flow of money.

In business administration, for example, the supply chain management is viewed as a new approach, because it includes not only the logistics, but rather the whole package, ie controlling, management, advertising (marketing), corporate accounting and of course the production. This means that, ultimately, is the logistics virtually only one component of supply chain management. Thus, the definition of logistics explains.

"Width" and "depth" of supply chain management

The boundaries of traditional business features including logistics, manufacturing, accounting, and research and development are blurred by the width of the SCM installation. The depth of the SCM results from the strategic, tactical and operational phase of management, namely the following three key stages:

• The first phase, the strategic supply chain management, and supply chain strategy or design phase, identifies long-term effects of business decisions. These include location planning for production and storage, and supplier selection decisions regarding outsourcing individual branches of industry (outsourcing).

• The second phase, the tactical supply chain management, and supply chain planning phase builds on the first phase and affects medium-term decisions in the period of 3 months to a year. This period allows more accurate predictions as the basis for business decisions in the area of inventory policies, production volume, building relationships with raw material suppliers and the creation of production schedules.

• The third phase, the operational Supply chain management is characterized by a short-term time frame of a few days or weeks. In the period you have very little uncertainty about the demand situation. The first and second phase is no longer held here. It's just about the incoming customer orders to act promptly. Typically this phase to include the following decisions: scheduling, packing lists, truck loads and the ratio of order and inventory.


It is ultimately the SMC to an almost perfect cooperation between suppliers, partners involved, for example, sub-suppliers, customers and logistics companies. Only if this collaboration between all stakeholders working smoothly and without problems, is a business that should be satisfactory to all and ensures profit possible. The Supply Chain Management has done a great deal in recent years, to an improvement in this overall flow has occurred. Tension, stress and problems were minimized. A relaxed "business atmosphere", if one may call it that encourages you to seek further transactions. It is in the business world is now crucial times that savings be kept in view. All companies strive course at the most cost-and time-saving business opportunity. Rumor has it that the supply chain management in this area is a very high success factor. Therefore it is important to deal with this topic to understand it and live. But in recent years it has been for many entrepreneurs almost passed and adopted "the blood". The system is a "sell themselves" and has meant that companies are prudent and forward-looking and headed out. With regard to the unemployment rate, this is sure to be recorded as a success.


Write a comment


The fields marked with * are required.