Supply Chain Management and Lean Production
Abstract The system of interconnected businesses used to push a product from supplier to consumer is defined as a supply chain. Supply chain management focuses on managing the supply chain in an effort to improve the quality and time it requires to manufacture a product. In addition to implementing supply chain management, a helpful lean production practice called Just-in-time can be used to remove any waste present along the supply chain.
The marriage of lean production and supply chain management creates lean supply chain management, which provides a much leaner and more economical supply chain for the product to flow through. Supply Chain Management and Lean Production Much uncertainty about what supply chain management entails is present in today’s society. Many people treat supply chain management as being synonymous with logistics, which is the management of the flow of goods from the origin to the consumers
However, supply chain management encompasses much more than the purchasing or management of goods to the consumer. Supply chain management (SCM), as defined by Lambert (2008), is the management of relationships across the supply chain, which includes a network of interconnected businesses involved in providing a product or service to the consumer. The management of the relationships between businesses on the supply chain is significant to ensure successful and efficient processes are used in providing products and goods to the customer. Definition of Supply Chain Management (SCM)
What is a supply chain? A supply chain is defined as a system of organizations, as well as people and information, which are directly involved with the manufacture and delivery of a product (Phelps, Smith, Hoenes, 2004; “Supply Chain,” 2008). The supply chain includes the transformation of raw materials at the site of the supplier to finished goods that can be used by the consumer, as shown in Figure 1. The path the product travels is similar to that of a river. A river, when properly banked, is flowing in one direction towards a goal (Tompkins, 2000).
Mark Twain stated that “Without banks the river is just a puddle. ” A supply chain, like a river, needs communication and integration as its banks to create a force towards the destination, which is the consumer. Without the presence of the banks, the river would go nowhere and therefore be merely a puddle. Effective communication in business relationships that cross over different departments, as displayed by the arrows in Figure 1, is necessary to provide quality products to the consumer. What is supply chain management?
Lambert (2004) defines supply chain management as “the integration of key business processes from the end user through original suppliers than provides products, services, and information that add value for customers and other stakeholders. ” An illustration of supply chain management is displayed in Figure 2. This figure represents a basic supply chain network structure, as well as the flow of information and the product. The eight supply chain management processes, which integrate various tasks within the organization across the supply chain, can also be found in Figure 2 (Lambert, 2008).
The implementation of the eight supply chain management processes is necessary to manage the relationships between various departments and tasks across the supply chain. Supply chain management is ultimately about the management of relationships within the network of businesses in the supply chain. Lambert (2008) expresses that the management of a supply chain is managed “link-by-link, relationship-by-relationship, and the organizations that manage these relationships best will win. ” Role of Supply Chain Management (SCM) Overview of the role
Supply chain management places attention along the entire supply chain, from raw materials at the supplier to finished goods in the hands of the customer. One role that supply chain management plays within a company is producing more efficient, quality products, which creates a competitive advantage among other companies. Today, management of the supply chain can be completed through the use of supply chain management software, such as E2Open. Supply chain management allows a company to document and track data pertaining to the supply chain. Benefits of the supply chain management
Supply chain management places importance on managing the customer relationship, as well as the supplier relationship. By effectively managing these relationships, the company can become more competitive, while increasing the quality of the product to the customer. Placing emphasis on the supplier relationship and the businesses along the supply chain increases product efficiency and quality. The importance placed on the customer relationship focuses on the demands and needs of the customer. Through effective communication within the relationships along the supply chain, a basic balance of supply and demand is established.