Background of the article
Many fundamental concepts in supply chain management are not made clear. Hence, from the standpoint of people who wish to learn more about the subject, they might find the subject confusing if they are connecting random and confusing audio and video explanation from those “so-called expert”. Reason being, most of the guru failed to bring the core business problem and solution fit across to the audience.
Let’s not dive too deep into the academic definition of the supply chain regarding various kinds of management. You have to understand it like this:
Seven points to take away from this article
1. The concept of chain: Supply chain management (SCM-supply chain management) is a concept of a chain, highlighting this “chain”, from customers to suppliers, and even from customers’ customers to suppliers’ suppliers ( The concept of SCOR), the so-called end-to-end (E2E, Flextronics is so defined), can also be defined by IBM, supply chain management is an “integrated” concept (ISC);
2. Demand is not equal to forecast: Demand management is the purpose of supply chain management. In other words, supply management is to meet demand, and demand management is to better balance supply. However, it needs to be noticed that demand management is not forecasting. Demand management is a matter of the supply chain, and forecasting is a matter of customers and sales. Seeing that there is an article saying that “the essence of supply chain management is a market problem,” I agreed with it. People can not understand the market, not just the sales market, including the supply market, but people who understand the market do not necessarily understand the supply chain. This is two different things because the essence of supply chain management is how to balance the contradiction between demand and supply. Regarding how to meet the biggest customer needs with minimal inventory and logistics costs. How to improve the accuracy of forecasting data is a matter of sales and customers, but I have a saying that the first half is what others say and the latter part is what I say. Adding it up is, “The prediction is always wrong, but it is not Excluding you can make a relatively correct judgment,” This is a S & OP process, and the person responsible for this process is the supply chain, not sales.
3. Logistics management is not supply chain management: the so-called logistics management, logistics management, is only part of the supply chain management; the so-called logistics, information flow, cash flow, is most appropriate for the supply chain management. Things are stocks, stocks are goods, and the flow of goods depends on the correct flow of information before you can generate the right cash flow. Logistics is passive, and information flow is active. Therefore, from this perspective, supply chain management, the most critical part is the management of information flow, and the management of information flow, from the perspective of flow, its core is planning, not logistics. Not even cash flow. Of course, the ultimate purpose of logistics and information flow is capital flow, otherwise, it is “cost” flow;
4. Sourcing does not mean that procurement is performed: Many people say that they are engaged in supply chain management. In fact, strictly speaking, They may be engaged in source procurement, source-sourcing and supply chain management. It is not the same thing to say that procurement is performed within the procurement process. The supply chain is more concerned with timing and quantity, whereas, sourcing is more concerned with technical and business issues. Sourcing is called at many companies as sourcing engineer, and they need to understand the commodity, understand the process, quality, and implementation of procurement in many companies called the buyer. They were maybe not having a full depth of the product that their company manufacturing, but they still capable of performing the procurement job well.
Additional info on production management, planning and technology portion
5. Production management is part of the supply chain management: In many companies, supply chain management is controlled by the production manager. Lets put the external “supply-chain” aside if you split a long production line into a few smaller module, each module has input and output. That input can be a semi-product from a process of a module. Hence, this formed an “Internal” supply chain within the production floor.
6. The plan is not the job of the clerk: Many company planners are clerk born, which in my opinion this does not make sense at all. Planners are similar to the military’s operational staff. They must be those who have actual combat experience and a certain theoretical level. Otherwise, they cannot make suggestions. A combat command issued by an army officer, even if you are a major general, you have to obey. Otherwise, you will be shot is disregard whether you are a major general;
7. Information Technology is not part of supply chain management: The reason is simple. IT is an enabler for the supply chain, but IT cannot represent supply chain management. It is only a tool for supply chain management.
Hope you find this article userful and welcome to share your comment and view.