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Supply Chain Management

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Supply Chain Management is the systematic, strategic coordination of the traditional business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.

A basic supply chain consists of a company, an immediate supplier, and an immediate customer directly linked by one of the upstream and downstream flows of products, services, finances, and information.

An extended supply chain includes suppliers of the immediate supplier and customers of the immediate customer, all linked by one or more of the upstream and downstream flows of products, services, finances, and information.

An ultimate supply chain includes all the companies involved in all the upstream and downstream flows of products, services, finances and information from the initial supplier to the ultimate customer.

Seven Principles of Supply Chain Management:

Successful supply chain management is extremely complex; the number of players involved means that each company's supply chain management process will be unique. Some general principles that every company should follow when managing across the supply chain are:

1. Begin with Customer

2. Manage Logistics Assets

3. Organize Customer Management

4. Integrate Sales and Operations Planning

5. Leverage Manufacturing and Sourcing

6. Focus on Strategic Alliances and Relationship Management

7. Develop Customer-driven Performance Measures

Supply Chain Management is about competing on value – collaborating with customers and suppliers to create a position of strength in the marketplace based on the value delivered to the end customer. The main objective is to create customer value superior to the competitor's value offering and to enhance customer satisfaction, either through improving efficiency (lower cost) or effectiveness (added benefits). The degree to which the value created is perceived as important to the customer influences the customer's satisfaction. The customer's perception of differential value and degree of satisfaction influences behavior toward the supplier firm as well as the value delivered to downstream customers.

The supply chain as a whole can be considered a complete value system delivering products and services to the end customer. Value can be created at many points along the chain. The ultimate basis for value at each step along a supply chain is the role of the product or service in the value created. Thus, an understanding of the entire supply chain is critical in identifying and delivering value that improves the competitiveness of the chain

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