The Origins Of Supply Chain Management Commerce Essay

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According to, Mentzer et al. SCM is concerned to bring profitability and competitive advantage through improving the efficiency and effectiveness in a strategic context. Thomas and Griffin (1996), argued that supply chain can help the organization to minimize their operational cost and provide better customer services, through coordinated planning and they found knowledge is critical point for coordinating and planning between the supply chain partners.

The Origins of Supply Chain Management:

Supply chain management started to emerged in the 80s 0f the last century, however, in the last ten years supply chain management has become very famous in management literature (Cooper et al., 1997). Supply chain management started to emerged at first through building a partnership and collaboration between the industrial and service company and their suppliers, by integrated all the actors processes and functions, which create the purchasing approach of the supply chain management, the main ideas of supply chain management are just-in-time, zero inventory, continuous replenishment, and cut costs through eliminating excess time, redundant efforts and buffer inventory, secondly these organizations also built a strong integration with their wholesalers and retailers, which the researchers name it the logistic approach of the supply chain management, and the main goal was to improve customer service through providing options, visibility and fast delivery, thirdly the integration approach of supply chain management which demonstrate all of the value adding processes from moving the row materials from suppliers through manufacturing or service providers company until the end users, and the critical goal is to gain a new competitive advantages, (Thomas and Griffin,1996, Tan, 2001)

Moreover, supply chain management aimed to improving business performance and competitive advantage through integration several processes such as planning, designing, logistic, production, and selling (Lambert & Cooper, 2000; Lim, 2007), Supply chain management coordinates the process of interdependent decision-making, organizes several supply chain partners and manages information and materials flow (Chandra & Kumar, 2001). In fact, many researchers and practitioners have view SCM as an important subject in their research area (Li, 2002). Currently, supply chain management has become an important modern business concepts.

“SCM is a system that contains multiple entities, processes and activities from suppliers to customers. The basic concept behind SCM is how the raw materials and information flow from the supplier to the manufacturer, before final distributions to customers as finished products or services. In addition, functional areas within the organization also need information that flows through the SCM in order for them to make a decision to produce products. The capability of sharing and exchanging information is essential to improve the effectiveness of the SCM” (Udin et al., 2006).

Supply chain can be viewed as a network containing suppliers, manufacturers, distributors, retailers, and customers. Concisely, a supply chain is the cycle of buy-make-move-store-sell (Akkermans et al., 2000; Sheikh, 2003).

Based on the above, we emphasis that such this integration includes, the row materials and money as a tangible resources, and the knowledge and information as an intangible resources which the supply chain by managing these resources in efficient and effective way will gain a competitive advantages which can improve the supply chain performance.

According to Schroeder (2000), Supply chain is a series of business processes and information that assist the organization to provide goods and services in the supply chain which comes through suppliers, manufacturers, distributors, retailers and finally end-customer, Throughout the supply chain the business environment changes and the supply chain design as opposed to supply chain coordination is becoming a core competitive advantage which force organizations to manage and integrate their supply chain effectively (Fine, 1998).

The above Figure shows the supply chain network supports three kinds of flows at the operational level which requires careful planning and strong coordination, these flows presented as the following:

Material flows: including the flow of physical products from suppliers to customers and also the opposite flow of returning, receiving, and recycling products.

Information flows: involving the flow of information regarding order tracking and transmission. This information coordinates the physical flow of products.

Financial flows: which encompass the flow of credit terms, payment schedule, consignment, and title ownership agreement.

The same Figure (1) also explains that, supply chain network is supported by three props as follows:

Processes, comprising product development, knowledge management and logistics.

Organizational structures, consisting of relationship, integration, networks, management approaches, performance measurement, and reward schemes.

Enabling technology, comprising process and information technology.

Supply chain management “is the integration of key business processes from end user through original suppliers that provides products, services, and information that add value for customers and other stakeholders” (Lambert & Cooper, 2000).

Based on the above conceptualization, it is clear that supply chain management is all about integration, in other words, integration is an important part in SCM. Therefore, efficient integration in the supply chain could lead to successful and effective SCM performance. Thus, in order to achieve efficient integration and then successful SCM, companies need to implement knowledge management processes because these processes such as knowledge sharing, creation and protection provide effective integration among several supply chain partners.