Supply chain Management definition:

Within the organisation, the supply chain refers to a wide range of functional areas. These
include Supply Chain Management-related activities such as inbound and outbound
transportation, warehousing, and inventory control. Sourcing, procurement, and supply
management fall under the supply-chain umbrella, too. Forecasting, production planning and
scheduling, order processing, and customer service all are part of the process as well.
Importantly, it also embodies the information systems so necessary to monitor all of these
activities. Simply stated, "the supply chain encompasses all of those activities associated with
moving goods from the raw-materials stage through to the end user."
A supply chain may be defined as an integrated process wherein a number of various business
entities like • Suppliers • Manufacturers / Producer • Dealers, Retailers, Customer etc., Work
together in an effort to • Acquire raw materials • Convert these raw materials into specified final
products, and • Deliver these final products to retailers. Customer is the integral part of supply
chain.
The main objective of supply chain management is to monitor and relate production, distribution,
and shipment of products and services. This can be done by companies with a very good and
tight hold over internal inventories, production, distribution, internal productions and sales.
Supply chain management basically merges the supply and demand management.
It uses different strategies and approaches to view the entire chain and work efficiently at each
and 3 every step involved in the chain. Every unit that participates in the process must aim to
minimize the costs and help the companies to improve their long-term performance, while also
creating value for its stakeholders and customers. This process can also minimize the rates by
eradicating the unnecessary expenses, movements and handling.

A typical supply chain may involve a variety of stages. These supply chain stages include: •
Customers • Retailers.
Wholesalers/distributors • Manufacturers • Component/raw material suppliers
Each stage in a supply chain is connected through the flow of products, information, and funds.
These flows often occur in both directions and may be managed by one of the stages or an
intermediary.
FUNCTIONS OF SUPPLY CHAIN MANAGEMENT • Customer Relationship Management:
Consistent focus on end customer demands to meet the increasing customer requirements and
ensures a high degree of flexibility. • Flexibility and demand-oriented production: Continuous
cost reduction and resource optimization across all stages of the value chain. • Synchronization
of supply and demand: Increasing the adaptability and development capability of the supply
chain.
Supply Chain integration
Supply chain integration is a process where all the parties involved with the fulfillment of a
product are integrated into a single system. This requires significant coordination and alignment
in order to ensure everyone is effectively working toward the same goal at all times.
When it comes to integrating supply chains within a company, there are quite a few things that
need to come together. The following are some of the key steps that most companies will need to
take during this process:
 Choosing Vendors - Choosing vendors is more than just finding one that can provide the
necessary parts. In addition to that, the vendor must be able to supply their piece at the
needed time and place based on the overall supply chain.
 Internal Teams - Working with the internal teams of a company to work based on the
needs of the overall system rather than just their department. Having set procedures based
on the big picture can help to eliminate waste, and improve efficiency.
 Waste Elimination - While often overlooked, waste elimination should be an important
part of an effective supply chain integration. This can happen when either a vendor or an
internal team will physically relocate in order to more efficiently complete the work that
needs to be done.
There are many other things involved with effective supply chain integration. This can seem like
a very complex process, and in many ways, it really is. Once the initial integration is completed,
the system should run very smoothly for years to come.
In most cases, the initial integration of the supply chain will require that all parties get together to
discuss their abilities, as well as their needs. Going over all the logistics in an open environment
will help provide everyone the opportunity to make suggestions, express concerns, and overcome
obstacles, before it is ever implemented into a production environment.
TYPES OF SUPPLY CHAIN MODELS EXPLAINED:
 Companies use different models to organize and manage their supply chains.
 Selecting the model that best suits a company’s business process can help control
costs and reduce risk.
 Each model has pros and cons, making it crucial to choose the right one.
Establishing and running a global supply chain is a complex activity, and using the wrong supply
chain model can expose an enterprise to risks and disruptions, increasing costs and potentially
damaging the brand. Selecting the right model for your business requirements is thus a critical
task.
Here are six types of supply chain models that can drive supply chain management for a
business:
1.  Continuous Flow
This is one of the most traditional models on the list. The continuous flow model is the best
choice for industries and businesses that operate with stability. Stability is essential for this
model because it is required on both ends, i.e. at the manufacturer and the buyer.
This model is well-suited for businesses that produce a uniform set of goods and can expect a
stable level of demand from the market. As the name suggests, goods are in continuous flow in
this model, and it is based on the stability of supply and demand in the market. The systems in
this type of supply chain management method are aligned so that a continuous flow of goods can
be ensured.
2. Fast chain
The fast chain model is one of the new names in supply chain strategies. It is suitable for
businesses that have product lines with short life cycles. For instance, a fashion designer might
have a specific line of designs in a season. The business needs to take the fashion line to the
market to maximize returns, as it is usually based on current trends. As supply chain efficiency
can increase a business’s competitive edge, this model is usually considered the best among the
several types of supply chain integration.
3. Efficient Chain
The efficient chain model has been crafted for hyper-competitive industries. Under this model,
the end goal is to maximize efficiency. Following the efficient chain model, the organization is
expected to create proper production forecasts so that it can prepare machinery and raw materials
accordingly.
The biggest drawback of this model is that a disruption in the production or sales cycle can
create a lot of ripple effects across the supply chain network.
For instance, challenges like labor shortages or raw material shortages could cause long delays,
and the organization may have to bear additional costs due to the delay in supply.
4. Agile
The agile model is well-suited for businesses dealing with specialty items where products may
require extra care in the supply chain. This model is usually fine-tuned for the product that it is
being used for. The agile model is known for the expertise it requires to transport the goods from
point A to point B and not so much for the automation or technology involved.
Supply chain companies that follow the agile model can charge a premium price for their
services. Compared to the efficient chain model that thrives on high volumes, the agile model is
only profitable till a threshold of volume is met. After that, it may prove costly to follow this
model.
5. Custom-configured
The custom-configured model needs custom setups in the assembly and production stages. It is a
mix of agile and continuous flow methods where the product that is being manufactured may
require some extra customization, but it needs to operate on an end-to-end basis. It is usually
used for prototype design and manufacturing of small batches. The custom-configured model
requires additional investment from the company as compared to more traditional models.
6. Flexible
The flexible model can handle high demand during peak season and quickly adjust to a lean
period with low demand. To run a flexible model efficiently, a business requires the right supply
chain management software and the right people with the knowledge base to operate a flexible
model with high efficiency.
These are the top six different supply chain models for enterprises, and they all come with their
own pros and cons. It is essential for businesses to identify a suitable model for their supply
chains that will meet their specific needs while helping them to avoid any additional costs.
Having the right supply chain model in place is as important as having the right people,
processes and technology to manage the supply chain. It enables an enterprise to improve
efficiency and can help it build resilience to disruptions and mitigate exposure to various risks.
With the right model, companies can turn their supply chains into a competitive advantage.
Networks Models
Supply chain networks present different types of models that help us understand the various
optimization methods used for studying the uncertainty and scenario modeling. There are six
distinct supply chain network models, as given below.
 Producer storage with direct shipping
 Producer storage with direct shipping and in-transit merge (cross docking)
 Distributor storage with package carrier delivery
 Distributor storage with last mile delivery
 Producer or distributor storage with costumer pickup
 Retail storage with customer pickup
The supply chain network basically deals with three major entities: Producer, Distributor and
Merchant. Two different options are available, i.e., customer pickup or door delivery. For
example, if the door delivery option is opted for, there is transport between producer and
distributor, distributor and merchant and producer and merchant.
The distribution system decision is made on the basis of the choice of the customers. This in turn
results in the demand for the product or products and cost of the distribution arrangement.
New companies may come to a halt through the application of a single type of distribution
network. Mostly, companies go for merging of different types for distinct products, different
customers and different usage situations, coming back to the different optimization models
mentioned above. Now we will discuss each model in brief.
Producer storage with direct shipping
In this model, goods are moved directly from the manufacturer’s location as the starting point to
the end customer’s location as the destination point bypassing the retailer. The retailer is the
person who takes the order and initiates the delivery request. This option is also called drop-
shipping, with product delivered directly from the manufacturer’s location to the customer’s
destination.
Producer storage with direct shipping and in-transit merge
It is somewhat congruent to pure drop-shipping or moving, but the difference is that pieces of the
order come from different locations and they are merged into one so that the customer gets a
single delivery.
Distributor storage with package carrier delivery
This comes into action when the inventory is not owned by the manufacturers at the plants;
instead, it is owned by the merchants/retailers in intermediate warehouses and package carriers
are used for shipment of goods from the intermediate location to the final customer.
Distributor storage with last mile delivery
This type results when the merchant/retailer delivers the goods ordered by the customer to the
customer’s home instead of using a package carrier.
Producer/distributor storage with customer pickup
In this type, the inventory is stored at the warehouse owned by the manufacturer or producer but
the customers place their orders online or through phone and then come to pick up points allotted
for collecting their orders.
Retail storage with customer pickup
This is mostly applied on situations when inventory is locally stored at retail stores; customers
walk into the retail shop or order something online or on the phone and pick it up at the retail
store.
There are four kinds of participants in every supply chain. They perform the activities that make
a supply chain work and provide a reason for it to exist. These participants are: 1) producers; 2)
distributors or wholesalers; 3) retailers; and 4) customers or consumers. Supplying customers
demand for products and services is the reason for supply chains to exist.
Supply Chains are Combinations of Organizations
In its simplest form, a supply chain is composed of a company and its suppliers and customers.
Combinations of these three – supplier, company, customer – create a simple supply chain.
Extended supply chains contain an additional kind of organization called a service provider (as
illustrated below).
In extended supply chains there is the supplier’s supplier, or ultimate supplier at one end, and the
customer’s customer, or ultimate customer at the other end.  And there are service providers that
assist other participants in the supply chain.  They provide services in areas such as: logistics;
finance; marketing; forecasting; and information technology to name just a few. These
organizations in an extended supply chain belong to one or more of the four kinds of participants
in any supply chain:
1) Producers
Producers (manufacturers or service providers) are organizations that make products or services. 
This includes companies that are producers of raw materials and companies that are producers of
finished goods.  Producers of raw materials are organizations that mine for minerals, drill for oil
and gas, and cut timber.  It also includes organizations that farm the land, raise animals, or catch
seafood.  Producers of finished goods use the raw materials and sub-assemblies made by other
producers to create their products. Service providers are producers of services, and
manufacturers are producers of products. Some producers are also consumers or customers of
products made by other producers. Producers supply the products and services used by other
supply chain participants.
2) Distributors
Distributors (or wholesalers) are companies that take inventory in bulk from producers and
deliver a bundle of related product lines to customers. They typically sell to other businesses and
they sell products in larger quantities than an individual consumer would normally buy. 
Distributors buffer the producers from fluctuations in product demand by stocking inventory
purchased from producers, and doing much of the sales work to find and service customer needs.
In addition to product promotion and sales, distributors also perform activities such as inventory
management, warehouse operations, product movement, customer support and post sales service.
A distributor can also be an organization that only brokers a product between the producer and
the customer and never takes ownership of the product.  As the needs of customers evolve, and
the mix of available products changes, distributors continually track customer needs and match
them with products to meet those needs.
3) Retailers
Retailers stock inventory and sell in smaller quantities to customers in the general public. 
Retailers closely track the preferences and demands of their customers.  They advertise to their
customers and use combinations of price, product selection, service, and convenience as their
primary draw to attract customers.  Discount stores attract customers using low price and wide
product selection.  Upscale stores offer a unique line of products and high levels of service. 
Retailers offer products and services to meet the demand of individual customers who buy in
smaller quantities.
4) Customers
Customers (or consumers) are individuals or organizations that purchase and use a product or
service.  A customer may be an organization (a producer or distributor) that purchases a product
in order to incorporate it into another product that they in turn sell to their customers (ultimate
customers). Customers depend on producers, distributors, and retailers to meet their needs for
products and services.

Service Providers
Service providers are producers of services that support the operation of supply chains by
delivering a mix of services tailored to meet the particular needs of each supply chain participant.
As the mix of supply chain participants evolves over time, the blend of service providers also
evolves along with the services they offer. In some supply chains the needed services are
provided by the producers, distributors, and retailers. In other supply chains services are
provided by separate service provider companies.