Supply chain management is one of the most important strategic aspects of any business enterprise. Decisions must be made about how to coordinate the production of goods and services, how and where to store inventory, whom to buy materials from and how to distribute them in the most cost-effective, timely manner.

      Consider a typical manufacturer. The supply chain is made up of many interrelated firms. There are parts suppliers, component suppliers and subassembly suppliers. Further up the chain are the suppliers’ suppliers, finally reaching the raw materials suppliers at the far end of the chain.

      Going downstream, back through the producing firm, the supply chain continues through the warehousing and distribution channels and then through the retail channels, ending with the consumer.

      The supply chain encompasses all activities associated with the flow and transformation of goods and services from the raw materials stage (at one end of the supply chain) through to the customer (at the other end of the chain), including all associated information flows.

Better, faster, cheaper

      Supply chain management is getting the right things to the right places at the right times, for profit. While supply chain management is as old as trade itself, new information and communications technologies have revolutionized today’s supply chains, making them extraordinarily better, faster, and cheaper.

      For example, one way to buy a computer today is to get on Dell’s web site and configure and price a system exactly as you want it. As soon as you click the mouse and submit the online order to Dell, all of Dell’s global suppliers — those supplying chips, monitors, and so on — are immediately notified of the sale and react as necessary so that you receive your computer within a week.

      Contrast this direct sales model with yesterday’s supply chain where you went to a store in search of a product that the manufacturer thought you wanted. Now, the middlemen between you and the manufacturer can be eliminated, and Dell’s upstream suppliers play a key real-time role in keeping production and distribution flowing smoothly.

            Better supply chain models don’t just help manufacturers of physical goods, but also service businesses, including those that require great creativity, imagination, and specialized knowledge...

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