Concepts Of Supply Chain Management

Rigorous and fierce competition in the business world has forced companies to respond more quickly to customer needs through faster product development and shorter delivery time (Simatupang and Sridharan; 2002). With increasing awareness and preferences, end customers are increasingly demanding for products with excellent quality and more specifically for product to be delivered on time. Thus, the companies that succeed in accomplishing the demand of end customers will eventually have a greater and positive impact on the market. However, with increasing demand of customers with product variety, manufacturers find it difficult to predict variety of products that will be accepted on the market. To be effective in matching demand with supply,

This is how the concept of Supply Chain Management (SCM) is born. Supply chain management was originally introduced in the early 1980s (Oliver and Webber, 1992) and since then it has achieved incredible attention. Supply chain management can be defined as the planning and control of materials and information flows as well as the logistics activities not only internally within a company but also externally between companies (Chen & Paulraj; 2004).A more prominent definition of Supply Chain Management is that of the council of supply chain management professionals (CSCMP), that defined Supply chain management as an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance, and information technology (CSCMP,

For instance, Logistics processes in conjunction with evolving information technologies are the key coordinating mechanisms that facilitate successful global management (Fawcett et al.; 1993). The economies of scale that are so vital to the success of today's global policies can only be achieved by managing operations worldwide in a successful supply chain context and also be having proper logistics management. Another important factor is the cost. Rodrigues et al. (2005) stated that logistics is one of the largest costs involved in international trade. Logistics costs incurred in supporting global operations and penetrating global markets can be significant and can offset the benefits of global economies of scale (Fawcett &Clinton 1997). Proper logistics management will eventually help reducing and eliminating unnecessary cost within the supply chain. Another essential factor of logistics management is the seamless performance of multinationals worldwide. Seamless simply mean that the high level of performance provided in the home country