Every time you walk into a store and pick up a product to purchase you are holding the end result of a supply chain. A supply chain is the cumulative effort of multiple organizations to get a product to the customer. Although it was in practice long before 1982, the term “supply chain management” was first coined by Keith Oliver in 1982. These organizations are connected because each chain in the link depends on the organization (the link) that comes before them and the one that comes after them. The reality is that many of these organizations are focused only on what happens within their own organization, creating a need for supply chain management.
Supply chain management is the process of actively managing these processes to ensure products are making it into the hands of the customer in the most efficient and effective way possible. Supply chain management is responsible for overseeing the physical exchange of products and also the communication between the various links of the chain.
The physical exchange of products includes overseeing the coordination of moving pieces of a product from one facility to another in order to assemble the final product. This also includes storage of the product and transportation to wherever the product will be distributed to the customers. Managing the physical aspect of the supply chain involves overseeing a variety of vendors, timelines and clients to ensure the process is smooth from start to finish.
While the physical exchange of products is something that everyone can see, the exchange of information is just as important. Being able to communicate information effectively and efficiently ensures that all parties along the supply chain are kept up-to-date with pertinent information. This exchange of information serves as a way to make sure that everyone is on the same page and moving towards the same shared goal.
The physical exchange of products and exchange of information happens at five basic stages within supply chain management, Plan, Source, Make, Deliver and Return. A plan needs to be created for both the physical product and the information that will be shared. Once the plan is created, then materials can be sourced. To create one product, quite a few different materials may need to be sourced and managed to lead to the creation of the product. These sourced materials will then be combined to make the product, which is then delivered to the customer with a return plan in place if needed.