Supply chain management is the close linkage and coordination of activities in buying, making, and moving a product. It integrates supplier, manufacturer, distributor, and customer logistics processes to reduce time, redundant effort, and inventory cost. The supply chain is a network of organizations and business processes for procuring materials, transforming raw materials into intermediate and finished products, and distributing the finished products to customers. It links suppliers, manufacturing plants, distribution centers, conveyances, retail outlets, people and information through processes such as procurement, inventory control, distribution, and delivery to supply goods and services from source through consumption. Supply chain also includes reverse logistics in which returned items flow in the reverse direction from buyer back to the seller.
The manufacturer also manages internal supply chain process for transforming the materials, components, and services furnished suppliers into finished goods and for merging materials and inventory.
Information systems make supply chain management more efficient helping companies coordinate, schedule, and control procurement, production, inventory management, and delivery of products and services. Supply chain management systems can be operated using intranets, extranets, and special supply chain management software.
Inaccurate or untimely information in the supply chain causes inefficiencies such as parts shortages, underutilized plant capacity, excessive finished goods inventory, or runaway transportation costs. One recurring problem in supply chain management is the bullwhip effect, in which information about the demand for a product gets distorted as it passes from one entity to next across the supply chain.Supply chain management uses systems for supply chain planning (SCP) and supply chain execution (SCE). Supply chain planning systems enable the firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans for that product. Supply chain execution systems manage the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner.
Second Part: Information systems for supply chain management can help participants in the supply chain in the following activities:
• Decide when and what to produce, store, and move
• Rapidly communicate orders
• Track the status of orders
• Check inventory availability and monitor inventory levels
• Reduce inventory, transportation, and warehousing costs
• Track shipments
• Plan production based on actual customer demand
• Rapidly communicate changes in product design