The role of information systems in Supply Chain Management.
The purpose of this essay is to explore and evaluate the various approaches that can be taken to facilitate the management of supply chains.
Supply Chain Management - A terminological background.
The Institute for Supply Chain Management has defined supply management as "the identification, acquisition, access, positioning and management of resources an organisation needs or potentially needs in the attainment of its strategic objectives." The essence is a shift of focus away from business units such as warehouses or factories to a more holistic view of a supply chain. For a given company this might include parts suppliers, manufacturers, transport, logistics and retailers.
Origins of SCM.
SCM has is origins in organisational extension theory first proposed by Mallen in 1963. Mallen's theory was developed within the context of marketing and advocated the extension of an organization to include all members of the distribution channel.
Why use SCM?.
Supply chain management as a concept has been evolved to address a number of issues that effect modern companies as follows.
The number of suppliers that companies use has tended to increase greatly, for example Sun Microsystems has three factories of its own but uses its supply base to increase its productivity by a factor of a hundred. Sourcing from such a large supplier base allows a company to choose the best value components available from the world market giving added value to the customer; the downside is the obvious extra management burden that comes as a result.
Economic factors such as global recessions and increased global competition have forced companies to focus not just on their product but also on streamlining every process across the value chain from the component suppliers to the end vendor.
As supply chains grow in size and complexity it can become apparent that there are dependencies between companies in the supply chain.