Wikipedia defines supply chain management (SCM) as, “…the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996).

Supply Chain Management 101

” A lot is involved in achieving the goals laid out in the definition above. Supply chain management is a general term covering a wide variety of functionality within an organization. It is the axle to which all the spoke in the wheel are connected and the hub and interchange for communications within an organization.

Supply chain consists of the root organization its materials erp vendors, logistics and end customer. The subset of that within the root organization are customer service, development, planning, procurement, IT, production, warehousing and transportation. From the root organization to all the suppliers and the suppliers and the suppliers’ suppliers all constitute a single, very complex supply chain between which data, materials and products move. The success of the supply chain is dependent upon the accurate, smooth and speedy transfer of information between individuals, departments and organizations and ERP (enterprise resource planning) systems are the means by which such transactions are made.

Supply chain serves not only its end customer but also the internal customer and the vendor supplying the materials for development, production and ultimately delivery. An order is placed and the process begins that will ultimately end with order fulfillment and delivery.

Planning and scheduling receives the order, procurement is informed of what materials are required by what date and production is informed of the upcoming scheduling demands as is the warehouse who will arrange for delivery to meet the customer deadline.

Via the ERP system, this information is provided to all parties necessary to get the order completed and delivered on time and prompt the cycle for accounting, etc. The key to receiving pertinent details in a timely manner is communication. The planner enters the order and deadline into the system where the buyer can pick up the requisition and proceed with sourcing the materials in accordance with the timeline provided by the planner and cuts a PO for the supplier and can check the system for receipt of order. Production has received the information necessary to schedule the production and shipping can take care of the orders logistical requirements.

Whereas all of these functions were once handled manually, electronic tools have evolved to the point that transactions occur with lightening speed and free up individuals for the more important tasks. Less time is wasted running around to obtain updates as the system makes many readily available.

Customer and supplier relations benefit greatly from the use of ERP systems and most are configured to provide internet portals for status updates. Automating transactions has increased accuracy across the board. A chain of transactions traces supply chain activity and cash flow positively affected by timely, accurate billing and payment processing. ERPs have also made electronic data interchange (EDI) and automated clearing house (ACH) possible. Orders and payments now pass directly from one organization to another via the web. Supply chain management now reaches out farther than ever before thanks to ERP systems and the World Wide Web.

Written by :

tracey boxer