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Supply Chain Management

Supply chain management is one of the most important parts of product management. By general/international definition, supply chain management is the process of planning, organizing, and controlling the flow of materials and services from suppliers to the end-user/consumer. As a result of the interconnection among organizations and also as a consequence of globalization, the concept of supply chain management appeared in the 1980’s. This enabled the producers to increase their level of customer service, market share and profits. The supply chain consists of a number of companies working together - either directly or indirectly - to meet the demands of consumers. The supply chain includes not only producer and suppliers, it also includes transport companies, storage companies, retailers, and end- users/consumers.


The concepts of supply chain management through history

Period from  1950 –to 1960. - procurement is carried out at all costs

Period from  1960 –to 1970. - procurement is carried out at more favorable prices

Period from 1980 to  1990. - focus is on the creation of transient flows of information and materials

90’s - complete domination of marketing concepts in procurement


The aim of the supply chain

The main purpose of the existence of any supply chain is to satisfy the needs of the consumer and at the same time to create profit for the producer. The process begins when a customer orders goods and ends when the satisfied customer pays for the purchased goods. The goal of any supply chain is to maximize the total produced value. The profitability of the supply chain's profits need to be distributed among all involved (directly or indirectly) companies of the supply chain.


Cycles of the chain supply

There are four basic cycles of chain supply. The first is the cycle of orders, the next is the cycle of inventory replenishment, and the third is the production cycle, and the fourth is acceptance of the product by the consumer.

The cycle of orders occurs between the consumer and the retailer:

  1. the arrival (in person, online, from a catalog, etc.) of customers
  2. ordering by customers
  3. fulfillment of orders by producer
  4. acceptance of product by the consumer

Cycle inventory replenishment occurs between the retailer and distributor of:

  1. initiating orders in retail
  2. arrival of orders in retail
  3. fulfilling orders in retail and
  4. receipt of orders at retail

The production cycle usually occurs between dealers and manufacturers:

  1. the arrival of orders from the distributor, retailer or consumer
  2. production planning
  3. production and delivery
  4. acceptance by the distributor, retailer or consumer

Procurement or final cycle manufacturing appears between manufacturers and suppliers and includes all processes related to the provision of materials for the realization of the planned production.


Stages in making decisions about the management of supply chain

There are three main stages to making decisions about the management of the supply chain:

1) stage of strategic design stages of the supply chain

2) stage of the supply chain planning phase

3) stage of the supply chain of operationalization

Nowadays, a precondition for business success of any distribution company is a well-developed and modern supply chain, along with logistics solutions tailored to customer requirements. Without good supply chain management there is no possibility for profitable business.


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