Unit 4
Unit 4
Unit 4
includes all processes that transform raw materials into final products. It involves the active
streamlining of a business's supply-side activities to maximize customer value and gain a
competitive advantage in the marketplace.
SCM represents an effort by suppliers to develop and implement supply chains that are as
efficient and economical as possible. Supply chains cover everything from production to
product development to the information systems needed to direct these undertakings.
SCM is based on the idea that nearly every product that comes to market results from the
efforts of various organizations that make up a supply chain. Although supply chains have
existed for ages, most companies have only recently paid attention to them as a value-add to
their operations.
In SCM, the supply chain manager coordinates the logistics of all aspects of the supply chain
which consists of five parts:
The supply chain manager tries to minimize shortages and keep costs down. The job is not
only about logistics and purchasing inventory. Supply chain managers, “make
recommendations to improve productivity, quality, and efficiency of operations.”
Improvements in productivity and efficiency go straight to the bottom line of a company and
have a real and lasting impact. Good supply chain management keeps companies out of the
headlines and away from expensive recalls and lawsuits.
Supply Chains
A supply chain is the connected network of individuals, organizations, resources, activities,
and technologies involved in the manufacture and sale of a product or service. A supply chain
starts with the delivery of raw materials from a supplier to a manufacturer and ends with the
delivery of the finished product or service to the end consumer.
SCM oversees each touchpoint of a company's product or service, from initial creation to the
final sale. With so many places along the supply chain that can add value through efficiencies
or lose value through increased expenses, proper SCM can increase revenues, decrease costs,
and impact a company's bottom line.
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• Supply chain management (SCM) is the centralized management of the flow of goods
and services and includes all processes that transform raw materials into final
products.
• By managing the supply chain, companies are able to cut excess costs and deliver
products to the consumer faster.
• Good supply chain management keeps companies out of the headlines and away from
expensive recalls and lawsuits.
Example: Understanding the importance of SCM to its business, Walgreens Boots Alliance
Inc. placed focused effort on transforming its supply chain in 2016. The company operates
one of the largest pharmacy chains in the United States and needs to efficiently manage and
revise its supply chain so it stays ahead of the changing trends and continues to add value to
its bottom line.
As of July 5, 2016, Walgreens has invested in the technology portion of its supply chain. It
implemented a forward-looking SCM that synthesizes relevant data and uses analytics to
forecast customer purchase behavior, and then it works its way back up the supply chain to
meet that expected demand.
Example: the company can anticipate flu patterns, which allow it to accurately forecast
needed inventory for over-the-counter flu remedies, creating an efficient supply chain with
little waste. Using this SCM, the company can reduce excess inventory and all of the
inventories' associated costs, such as the cost of warehousing and transportation.