After many years of using supply chain terms in business, there is confusion in its definition. In this article, we will review step by step how SCM definition is developed. 

Supply chain management (SCM) is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.

“The concept of SCM was mentioned in business literature as early as Forrester (1961), who suggested that the success of industrial companies hinged on the ‘interactons between flows of information, materials, manpower and capital equipment’ .”

Giunipero, et al. (2008)

“The early beginnings of supply chain management can be traced to the tex3le industry with the Quick Response program (a partnership where retailers and suppliers work together to respond more quickly to consumer needs by sharing informa’on) and later to Efficient Consumer Response in the grocery industry”

Lummus, et al. (2001)

“The term ‘supply chain management’ is rela3vely new in the literature, appearing first in 1982”

Cooper, et al. (1997)

“the term SCM first appeared in the literature more than twenty years ago (Oliver and Webber, 1982)”

Gibson, et al. (2005)

“only a handful of ar3cles men3oned the phrase ‘supply chain’ between 1985 and 1997.”

Giunipero, et al. (2008)

“About 1990, academics first described SCM from a theore3cal standpoint to clarify the difference from more tradi3onal approaches”

Cooper, et al. (1997)

“the diffusion of the field did not take place un3l the late 1990s, with most of the theore3cal and empirical inves3ga3on commencing in 1997”

Giunipero, et al. (2008)

Modern logistics’, as defined in Bowersox 1978, is “the process of strategically managing the movement and storage of materials, parts, and finished inventory from suppliers, between enterprise facilities and to customers”.

Business logistics’,

Integrated logistics’,

  • “the management of all inbound and outbound materials, parts, supplies and finished goods”
  • “the integrated management of purchasing, transporta3on, and storage on a func3onal basis”
  • “the management of the pre-­‐produc3on, in-­‐ produc3on and post-­‐produc3on channels”

Calvinato (1982)

“In a true business context … this definition expands

logistics beyond merely physical distribution”

Lummus, et al. (2001)

“The 1986 CLM defini3on of logis3cs has been augmented to include services along with goods and informa3on movement.

In addition to conforming to customer requirements, others view the output of the logistics process as creating value for the ultimate customer (1992) and contributing to current and future profitability of the firm (1994).”

Cooper, et al. (1997)

“it is unclear what specific characteristics differentiate the two disciplines … for many, the contemporary understanding of SCM is not appreciably different from the understanding of integrated logistics management”

Cooper, et al. (1997)

“The terms ‘supply chain management’ and ‘logistics’ are o_en confused and viewed as overlapping, depending on the definition used by an organization”

Lummus, et al. (2001)

SCM “is a discipline in the early stages of evolution” “Academics have attempted to provide some structure to SCM by re-­‐examining previous SCM definitions and offering more complete SCM definitions that include scope, functions and relationships.”

“Bechtel and Jayaram (1997) classified more than 50 existing SCM definitions into five schools of thought and identified functional and process areas covered.”

Gibson, et al. (2005)

“The relevant question that we need to gain consensus on is whether SCM is simply new words for properly implemented logistics across organizations”

Cooper, et al. (1997)

“The discipline of supply chain management is going through a normal maturation process of reaching a consensus agreement on what is included, and what is not included in the discipline”

Gibson, et al. (2005)

“supply chain management is not:

  • inventory management
  • logis3cs management
  • supplier partnerships
  • driven from the supply side
  • a shipping strategy  (Lummus and Vokurka (1999))
  • distribu3on management
  • the logis3cs pipeline
  • procurement management
  • a computer system” (!)

“Effective January 1, 2005, the Council of Logistics Management (CLM) became the Council of Supply Chain Management Professionals (CSCMP).”

“This is more than a name change.”

Larson, et al. (2007)

“Reflecting expanded roles … the Council is adopting ‘a broader emphasis on the entire supply chain,’ incorporating ‘not only logistics but also procurement, manufacturing, operations, and sales/marketing functions’”

“CSCMP, and other professional associa3ons, such as the Ins3tute for Supply Management (ISM), have developed defini3ons of supply chain management and revised their missions accordingly”

Larson, et al. (2007

Defining supply chain first:

“a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, services, finances, and/ or information from a source to a customer.”

Direct: a company, a supplier and a customer

Extended: + supplier’s suppliers + customer’s customers

Ultimate: all entities upstream and downstream

Mentzer, et al. (2001)

  • a systems approach to viewing the supply chain as a whole
  • a strategic orientation towards cooperative efforts to synchronize and converge intra-­‐ and inter-­‐firm capabilities
  • a customer focus, to create sources of customer value

Mentzer, et al. (2001)

Mentzer, et al. (2001), call this management philosophy a Supply Chain OrientaYon, and defines it as

the recognition by an organization of the systemic, strategic implications of the tactical activities involved in managing the various flows in a supply chain.”

Mentzer, et al. (2001)

To adopt a supply chain management philosophy, the firm must establish management practices consistent with it. Including: (1) integrated behavior, (2) mutual sharing of information, (3) mutual sharing of risks and rewards, (4) cooperation, (5) shared goals and focus on customer service, (6) integration of processes, (7) partnerships in long-­‐term relationships.

Mentzer, et al. (2001)

Mentzer, et al. (2001 equate supply chain management with “the sum total of all the overt management actions undertaken to realize the SCO philosophy.”

Mentzer, et al. (2001

The systemic, strategic coordination of the traditional business functions and the tactics across these 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.

Mentzer, et al. (2001)

In Mentzer’s model of supply chain management, the following traditional business functions are included:

  • Marke3ng
  • Sales
  • R & D
  • Forecasting
  • Production
  • Purchasing
  • Logis3cs
  • Informa3on Systems
  • Finance
  • Customer Service

References:

  • The main reference:

    Dr Roberto Perez-­‐Franco MIT Global SCALE Network – GCLOG 2015 – MIT Campus -­‐ July 9, 2014

  • Cooper, et al., (1997) “Supply chain management, more than a new name for logisYcs”, The InternaYonal Journal of LogisYcs Management, 8:1.
  • Gibson, et al., (2005) “Supply chain management: the pursuit of a consensus definiYon”, Journal of Business LogisYcs, 26:2.
  • Giunipero, et al. (2008) “A decade of SCM literature: past, present and future implicaYons”, Journal of Supply Chain Management, 44:4.
  • Larson, et al. (2007) “PerspecYves on logisYcs vs SCM: a survey of SCM professionals”
  • Lummus and Vokurka (1999), “Defining supply chain management: a historical perspecYve and pracYcal guidelines”, Industrial Management and Data Systems, 99:1.
  • Lummus, et al. (2001) “The relaYonship of logisYcs to supply chain management: developing a common industry definiYon”, Industrial Management and Data Systems, 101:8.
  • Mentzer, et al. (2001) “Defining supply chain management”, Journal of Business LogisYcs, 22:2.
  • Tan (2000), “A framework of supply chain management literature”, European Journal of Purchasing and Supply Management, 7, p.39-­‐48.

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