1. .
1. Concept of Supply Chain Management
Supply chain management (SCM) has been defined as "a process-oriented approach to procuring,
producing, and delivering products and services to customers. SCM has a broad scope that
includes sub-suppliers, suppliers, internal operations, trade customers, retail customers, and end
users. . Importantly, it also includes coordination and collaboration with channel partners, which
can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply
Chain Management integrates supply and demand management within and across companies. It
spans all movement and storage of raw materials, work-in-process inventory, and finished goods
from point-of-origin to point-of-consumption. The term supply chain management was coined by
strategy consulting firm Booz Allen Hamilton in 198.Supply chains are dynamic and complex
reaching into many customers and back into many suppliers throughout the world. It exists in
both service and manufacturing organizations, although the complexity of the chain may vary
greatly from industry to industry and firm to firm. The following definitions are the evidence of
role played by the logistics business development.
Supply chain management is facilitated by
- Process,
- Structure and
-Technology
Supply chain serves two functions:
- Physical
- Market mediation
Definitions of Supply Chain Management
A strategic concept that involves the understanding and managing of the sequence of
activities - from supplier to customer - that add value to the product supply chain.
The supply chain encompasses all activities associated with the upstream and
downstream flow and transformation of goods and information from the raw materials
stage (extraction), through to the end user.

2. Supply chain management is the collaborative effort of multiple channel members to
design, implement, and manage seamless value-added processes to meet the real needs of
the end customer
2. Supply Chain Flows
Information;
Materials(product flow)
Money(financial flow)
Manpower; and,
Capital equipment
The product flow includes the movement of goods from a supplier to a customer, as well as any
customer returns or service needs. The information flow involves transmitting orders and
updating the status of delivery. The financial flow consists of credit terms, payment schedules,
and consignment and title ownership arrangements.
The internal and external supply chain
The internal supply chain
Most businesses can be described in terms of the five functions: buy, make, store, buy; make;
store; move and sell. This is known as the „micro‟ or internal supply chain.
The external supply chain
Supply chain shows materials flow from the raw material source through the various stages in
the chain to the final consumer. Money then flows back down the chain. The point is that every
link matters and that value is added, and profit generated, at each link along the way.

3. Managing the Flows
For a supply chain to achieve its maximum level of effectiveness and efficiency, material flows,
money flows and information flows throughout the entire chain must be managed in an
integrated and holistic manner, driven by the overall service and cost objectives. It can be argued
that managing the information flows is the most critical of these activities. This is because the
flow or movement of materials or money is usually triggered by an associated information
movement. Effective management of material and financial flows is, therefore, predicated upon
the effective management of the related information flows. For this reason, information and
communications technology (ICT) is becoming an increasingly important SCM enabler.
Supply Chain Relationships
Finally, this holistic approach requires a reappraisal of the way in which both internal and
external customer/supplier relationships are created and managed. SCM is not a “zero-sum”
game based on adversarial relationships. Rather, it needs to be a “win-win” game based on
partnership approaches. This point is relevant to the interactions between the key “internal”
supply chain functions of buy, make, store, move and sell, as well as to relationships between an
organization and its external customers and suppliers. One of the biggest manifestations of the
application of supply chain philosophy in recent years has involved the move away from
adversarial relationships with key external suppliers towards relationships which are based on
mutual trust and benefits, openness and shared goals and objectives.
3. Difference between supply chain management and market logistics management
Logistic is typically based on the individual business with the objective of making this
enterprise‟s logistic system more efficient through internal and external planning and control. On
the other hand, supply chain management (SCM) is based on the external relationship between
the players in the entire supply channel and focuses on how to improve trading in general. The

4. SCM concept provides broader concept across the supply chain that has been the traditional
approaches within the logistic. A range of activities comprise by SCM concept concern
expansion of the business process reengineering concept to cover the entire supply chain.
It is also interesting to note that logistics management is known by many names such as
materials management, channel management, distribution, business or logistics management,
business or logistics management and supply chain management. This only shows that supply
chain management can be called the subset of logistics but the converse is not true. There is a
thin line of difference between the two.
Logistics deals with strategy and coordination between marketing and production. supply
chain management focuses more on purchasing and procurement.
It is interesting to note that supply chain management can include factors relating to
inventory, materials and production planning too in its concept. On the other hand
logistics includes factors relating to demand management and forecasting in its concept
Experts argue that logistics management is a part of the supply chain management that
plans and implements the flow and storage of goods, services in order to meet the
demands of the consumers. This is indeed an important study made by the experts. On
the other hand supply chain management encompasses the management of all activities
involved in the procurement and conversion. In addition to these activities the supply
chain management takes care of all the logistics management activities. It is important to
note that supply chain management involves all movements and storage of raw materials.
In short it can be said that supply chain management takes care of the design, planning,
execution, control, and monitoring of supply chain activities with the sole objective of
creating net value and leveraging worldwide logistics. On the other hand logistics can be
simply defined as the management of the flow of goods and the services between the
point of origin and the point of consumption in order to meet the requirements of
customers