SupplyChain

INTRODUCTION TO
SUPPLY CHAIN
MANAGEMENT

MARIATI BINTI BAHARUN

JABATAN PERDAGANGAN
POLITEKNIK SEBERANG PERAI

eBook PSP | Introduction to Supply Chain Management i

Introduction to Supply Chain Management

Mariati Binti Baharun

2021
Jabatan Perdagangan
Politeknik Seberang Perai

©All rights reserved. No part of this publication may be translated or reproduced in
any retrieval system or transmitted in any form or by any means, electronic,
mechanical, recording, or otherwise, without prior permission in writing from
Politeknik Seberang Perai.

ii eBook PSP | Introduction to Supply Chain Management

All rights reserved

No part of this publication may be translated or reproduced in any retrieval system
or transmitted in any form or by any means, electronic, mechanical, recording, or

otherwise, without prior permission in writing from Politeknik Seberang Perai.

Review and Edited by

Mariati Binti Baharun
Lecturer

Politeknik Seberang Perai

Published by

Politeknik Seberang Perai
Jalan Permatang Pauh, 13500 Permatang Pauh

Pulau Pinang

Tel : 04-538 3322 Fax : 04-538 9266
Email : [email protected] Website : www.psp.edu.my
FB : politeknikseberangperai Ig : politeknikseberangperai

eBook PSP | Introduction to Supply Chain Management iii

Preface

With all the praise and thanks to Allah S.W.T, who has given His love and mercy so that an e-
book entitled “Introduction to Supply Chain Management” can finish in a good manner. This
e-book is written to provide a surface knowledge about supply chain management to a reader.

Introduction to Supply Chain Management is published in a form of e-book mainly to provide
the user especially the logistic lecturers, facilitators and logistic students to understand the
concepts and foundations of supply chain management. At the end of this e-book is
accompanied by exercises to enhance the users understanding.
On this occasion, I would like to thank profusely Commerce Department, Seberang Perai
Polytechnic and all the colleagues for support, effort and motivation for helping me
completing this e-book. Not forgetting to the family members for their endless support and
patience throughout the process of writing. Without those support and courage, this e-book
might not complete.

I am fully aware that the many flaws in the writing of this e-book, in terms of material,
technical and presentation material. Therefore, I expect criticism and constructive suggestions
to further refine the writing of this e-book. Finally, I hope that the writing of this e-book can
be useful for the readers.

MARIATI BINTI BAHARUN
NOVEMBER 2021./ RABIULAKHIR 1443H

iv eBook PSP | Introduction to Supply Chain Management Pages

Table of Content 2
Chapter 5
10
Chapter 1 Introduction to Supply Chain Management 17
19
1.1 Concepts of Supply Chain Management 20
1.1.1 Definition of Supply Chain Management
1.1.2 Importance of Supply Chain Management
1.1.3 Origin of Supply Chain Management

1.2 Foundations of Supply Chain Management
1.2.1 Elements of Supply Chain Management

eBook PSP | Introduction to Supply Chain Management 1

INTRODUCTION TO SUPPLY CHAIN MANAGEMENT

INTRODUCTION TO SUPPLY CHAIN MANAGEMENT is a significant management
and approaches and strategic to increase the efficiency and effectiveness of
organization’s operational. This e-book is designed for the students to
understand the supply chain management decision at operational level.

LEARNING OUTCOMES:
Upon completing this topic, students should be able to:

1. Explain concepts of the supply chain activities among services and manufacturing
companies

2. Explain foundation of supply chain management

CONTENT OUTLINE:

1.1 Discuss the concepts of supply chain management
1.1.1 Define supply chain management
1.1.2 Describe the importance of supply chain management
1.1.3 Describe the origin of supply chain management

1.2 Elaborate the foundation of supply chain management
1.2.1 Describe the elements of supply chain management
a. Supply / Purchasing
b. Operation
c. Logistics / Distribution
d. Integration

2 eBook PSP | Introduction to Supply Chain Management

1.1 Concepts of Supply Chain Management

Supply chain management (SCM) is the management of the flow of goods and services
and includes all processes that transform raw materials into final products. It involves the
active streamlining of a business's supply-side activities to maximize customer value and gain
a competitive advantage in the marketplace. By managing the supply chain, companies are
able to cut excess costs and deliver products to the consumer faster. SCM is based on the idea
that nearly every product that comes to market results from the efforts of various
organizations that make up a supply chain.

The concept of Supply Chain Management (SCM) is based on two core ideas:

1. The first is that practically every product that reaches an end user represents the
cumulative effort of multiple organizations. These organizations are referred to collectively
as the supply chain.
2. The second idea is that while supply chains have existed for a long time, most
organizations have only paid attention to what was happening within their “four walls.” Few
businesses understood, much less managed, the entire chain of activities that ultimately
delivered products to the final customer. The result was disjointed and often ineffective
supply chains.

The organizations that make up the supply chain are “linked” together through physical
flows and information flows.

Physical Flows
Physical flows involve the transformation, movement, and storage of goods and materials.
They are the most visible piece of the supply chain. But just as important are information
flows.

eBook PSP | Introduction to Supply Chain Management 3

Information Flows
Information flows allow the various supply chain partners to coordinate their long-term plans,
and to control the day-to-day flow of goods and materials up and down the supply chain.

The key concepts are the following: planning, implementing, controlling, business
processes, customer requirements, processing, movement, storage, point-of-origin, point-of-
consumption, relationship, integration, logistics activities, coordination, managerial
processes, collaboration, organizing, motivating, customer value, competitive advantage,
suppliers, manufacturers, warehouses, stores, costs, service level, business function,
performance, transportation.

Picture 1.1: Illustration of supply chain management

4 eBook PSP | Introduction to Supply Chain Management

Table 1.1: Definition of supply chain management

Example of SCM: Colgate.
The main toothpaste brand made by Colgate-Palmolive, dedicated to producing,
distributing, and selling oral hygiene and home cleaning products since the last part of the
19th century. Colgate keeps presenting all aspects of product diversity, effectiveness,
optimization, and customer support and it uses an effective distribution channel that
encompasses all aspects of care and maintenance. Their products are sold in many venues
such as pharmacies, supermarkets, convenience stores, and small wholesalers, thus
creating an excellent impact within their distribution channels and management.

eBook PSP | Introduction to Supply Chain Management 5

1.1.1 Definition of Supply Chain Management

The supply chain management (SCM) definition has continued to change and evolve
to fit the needs of the growing global supply chain. With the supply chain covering a broad
range of disciplines, the definition of what is a supply chain can be unclear.

Some definitions are available in the literature and among various professional
associations. The following are the definition of SCM from various associations:

1. The Council of Supply Chain Management Professionals (CSCMP)
The planning and management of all activities involved in sourcing and
procurement, conversion, and all logistics management activities. Importantly, it
also included coordination and collaboration with channel partners, which can be
suppliers, intermediaries, third-party service providers, and customers. Supply
chain management integrates supply and demand management within and across
companies.

2. The Institute for Supply Management (ISM)
The design and management of seamless, value-added processes across
organizational boundaries to meet the real needs of the end customers.

3. The Singapore-based Logistics & Supply Chain Management Society
The coordinated set of techniques to plan and execute all steps in the global
network is used to acquire raw materials from vendors, transform them into
finished goods, and deliver both goods and services to customers.

4. The Supply Chain Council
Managing supply and demand, sourcing raw materials and parts, manufacturing
and assembly, warehousing and inventory tracking, order entry and order
management, distribution across all channels, and delivery to the customer.

6 eBook PSP | Introduction to Supply Chain Management

5. The Council of Logistics Management
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 to improve the long-term performance of the
individual companies and the supply chain.

Picture 1.2: Tier in supply chain management
Nowadays, many large firms are moving away from in-house vertical Integrated/
relationship structures to horizontal integrated/ relationship as known as Supply Chain
Management. In the old paradigm or traditional relationship, the firm gained cooperation as
a vertically integrated which firm encompassing the ownership and coordination of several
supply chain activities. Organizational cultures emphasized short-term contract and the
company focused on individual performance and benefits.
On the other hand, new paradigm or horizontal relationship, the firm in a supply chain
focuses activities in its area of specialization and enters voluntary and trust-based
relationships with supplier and customer firms. All participants in the supply chain will get the
benefit. Boundaries are dynamic and extend from “the firm’s suppliers’ suppliers to its

eBook PSP | Introduction to Supply Chain Management 7

customers’ customers (i.e., second- tier suppliers and customers).” Supply chains now deal
with reverse logistics to handle returned products, warranty repairs, and recycling.

As per definition, a supply chain consists of the flow of products and services from
raw materials manufacturers, component and intermediate manufacturers, final product
manufacturers, wholesalers, distributors, and retailers. It is also connected by
transportation and storage activities, integrated through information, planning, and
integration activities.

In simple language, managing all the above activities in tandem to manage demand
and supply on a global scale is Supply Chain Management. As per definition, SCM consist of
planning, organizing, implementing, motivating, and controlling efficiently all the activities
involving transportation, processing, and storage of raw materials, work-in-process
inventory, and finished goods from original suppliers, through warehouses, production
facilities, stores, and other intermediaries to the final customers to satisfy customer
requirements and achieve a competitive advantage by adding value to products/ services.
SCM is also called the art of management of providing the Right Product, At the Right Time,
Right Place, and the Right Cost to the Customer.

Picture 1.3: Illustration of supply chain management

8 eBook PSP | Introduction to Supply Chain Management

Think !
If you go to a Supermarket and pick up a few items off the shelf from electronics and white
goods or even clothes and look at the labels, the chances are that you will find them having
been manufactured in China or Mexico. The coffee pods you buy to use for your everyday
use come from Africa. Computers have been shipped out of South American Factories and
Soft furnishings on the shelves are from India and Hong Kong.

With the above scenario, you find companies procuring materials globally from
various vendors to supply raw materials to their factories situated in different continents. The
finished goods out of these different factory locations then pass-through various chains of
distribution networks involving warehouses, exports to different countries or local markets,
distributors, retailers, and finally to the end customer.

Global markets are expanding beyond borders and redefining the way demand and
supplies are managed. Global companies are driven by markets across continents. To keep
the cost of manufacturing down, they are forced to keep looking to set up production centres
where the cost of raw materials and labour is cheap. Sourcing of raw materials and vendors
to supply the right quality, quantity, and at right price calls for a dynamic procurement
strategy spanning across countries.

Picture 1.4: Illustration of supply chain management

eBook PSP | Introduction to Supply Chain Management 9

Table 1.2: Definition of supply chain management

10 eBook PSP | Introduction to Supply Chain Management

1.1.2 Importance of Supply Chain Management

Picture 1.5: Importance of supply chain management
The success of a business is linked to the efficiency of its supply chain. A business with
a well-managed supply chain may significantly reduce all of the operating expenses connected
to that chain, which contributes to a greater profit. Supply chain management is not only a
process that served to generate a cost reduction in the budget or a mission to create greater
operational efficiencies within an organization. While these are a part of the whole
ecosystem, modern supply change management encompasses the strategic alignment of end-
to-end business processes to realize market and economic value, as well as giving a firm the
competitive advantage over its business rivals.

eBook PSP | Introduction to Supply Chain Management 11

WHY IS SUPPLY CHAIN MANAGEMENT SO IMPORTANT?

Picture 1.6: Importance of supply chain management
The supply chain has been an integral part of every company and organization, no
matter the size of the company. Supply chain management pertains to the activity of
managing the movement of materials or products throughout an organization while also
maximizing customer value and achieving/maintaining a sustainable competitive advantage.
Inventory management and keeping track of finished goods is also a very important aspect of
the supply chain and is extremely important to profitability and cost reduction. Overall, there
is no reason to ever believe that supply chain management is not important to any operation
or company. SCM easily covers areas of design, planning, execution, control, and monitoring
supply chain activities to create net value, maintaining a competitive advantage, leveraging
worldwide logistics, and more.
Today, more than ever before, supply chain management has become an integral part
of business and is essential to any company’s success and customer satisfaction. Supply chain

12 eBook PSP | Introduction to Supply Chain Management

management has the power to boost customer service, reduce operating costs and improve
the financial standing of a company.

WHY SCM STRATEGY IS IMPORTANT FOR AN ORGANIZATION?

Picture 1.7: Importance of SCM strategy
Supply Chain Strategies are the critical backbone of Business Organizations today.
Effective Market coverage, Availability of Products at locations that hold the key to revenue
recognition depends upon the effectiveness of the Supply Chain Strategy rolled out. Very
simply stated, when a product is introduced in the market and advertised, the entire market
in the country and all the sales counters need to have the product where the customer can
buy and take delivery. Any glitch in the product not being available at the right time can result
in a drop in customer interest and demand which can be disastrous. Transportation network
design and management assume importance to support sales and marketing strategy.
Inventory control and inventory visibility are two extremely critical elements in any
operation for these are the cost drivers and directly impact the bottom lines on the balance
sheet. Inventory means value and is an asset to the company. Every business has a standard

eBook PSP | Introduction to Supply Chain Management 13

for inventory turnaround that is optimum for the business. Inventory turnaround refers to
the number of times the inventory is sold and replaced over for twelve months. The health of
the inventory turn relates to the health of the business.

In a global scenario, the finished goods inventory is held at many locations and
distribution centers, managed by third parties. A lot of inventory would also be in the pipeline
in transportation, besides the inventory with distributors and retail stocking points. Since any
loss of inventory anywhere in the supply chain would result in loss of value, effective control
of inventory and visibility of inventory gains importance as a key factor of the Supply Chain
Management function.

THREE MAIN IMPORTANCES OF SUPPLY CHAIN MANAGEMENT

1) IMPROVE CUSTOMER SERVICES

Picture 1.8: Importance of supply chain management
 Customers expect to receive the correct product mix and quantity to be delivered on

time. For example, if you buy five books from Amazon and only two of the actual titles
arrive, one is an entirely different book and two are missing, the customer will lose faith
in Amazon, prompting them to leave a bad review and hinder them from returning to
the platform.

14 eBook PSP | Introduction to Supply Chain Management

 Products need to be on hand in the right location. Customer satisfaction is tarnished if
your car’s brake pads fail and the auto repair shop is delayed in making the repairs
because parts are not available in-house.

 Follow up support after a sale must be done quickly. When an appliance store sells a
furnace with a warranty and it breaks down when temperatures are below freezing, it is
a great possibility the customer will be irate if the heating unit cannot be fixed
immediately.

2) REDUCE OPERATING COSTS

Picture 1.9: Importance of supply chain management
 Decreases Purchasing Cost - Retailers depend on supply chains to quickly distribute

costly products to avoid sitting on expensive inventories.
 Decrease Production Cost - Any delay in production can cost a company tens of

thousands of dollars. This factor makes supply chain management ever more important.
Reliable delivery of materials to assembly plants avoids any costly delays in
manufacturing.
 Decrease Total Supply Chain Cost - Wholesale manufacturers and retailer suppliers
depend on proficient supply chain management to design a network that meets
customer service goals. This gives businesses a competitive edge in the marketplace.

eBook PSP | Introduction to Supply Chain Management 15

3) IMPROVE FINANCIAL POSITION

Picture 1.10: Importance of supply chain management

 Insert Profit Leverage - Businesses value supply chain managers because they help
control and decrease supply chain expenditures.

 Decrease Fixed Assets - Supply chain managers decrease the use of large fixed assets
such as plants, warehouses , and vehicles, essentially diminishing cost.

 Increases Cash Flow - Firms appreciate the added value supply chain management
contributes to the speed of product flows to customers.

 Supply Chain Management has benefited most to the company with:
 Large inventories
 Many suppliers
 Complex products
 Customers with large purchasing budgets

 The benefit of Supply Chain Management:
 Lower purchasing and inventory costs
 Improved quality
 Higher levels of customer service

16 eBook PSP | Introduction to Supply Chain Management

 Supply Chain Management also can Reduce Bullwhip Effect - the magnified reduction
of safety stock costs based on coordinated planning and sharing of information

Picture 1.11: Bullwhip Effect
 Collaborative planning, forecasting, and replenishment activities reduce the

Bullwhip Effect and lead to better customer service, lower inventory costs, improved
quality, reduced cycle time, better production methods, and other benefits.

eBook PSP | Introduction to Supply Chain Management 17

1.1.3 Origin of Supply Chain Management

1950s & 1960s
U.S. manufacturers focused on cost reduction and productivity improvement strategies

1960s-1970s
Introduction of new computer technology leads to development of Materials Requirements
Planning (MRP) to coordinate inventory management and improve internal communication

1980s & 1990s
Intense global competition led U.S. manufacturers to adopt Supply Chain Management
(SCM) along with Just-In-Time (JIT), Total Quality Management (TQM), and Business

Process Reengineering (BPR) practices
2000s and Beyond

Industrial buyers will rely more on third-party service providers to improve purchasing and
supply management. Wholesalers/retailers will focus on transportation and logistics more &

refer to these as quick response, service response logistics, and integrated logistics.

Picture 1.12: Origin of supply chain management

A business entity in the earlier 1950s, revolved more around its self-Merger and
acquisitions though prevalent a firm used to engage its resources for all the activities needed
from buying raw materials to manufacturing and then distributing the products to stockiest,
dealers and retailers. The aim was to produce more, reduce costs, sell more, and increase
profit, all by oneself. Creating partnerships with upstream or need for effective Materials
management was duly recognized. The advancement in Information Technology, witnessing
the application of complicated software for tracking and managing inventories through LAN
and WAN became competitive factors. Concepts such as JIT and TQM helped the processing
on the shop floor. The origin of supply chain management can be traced to the 80s.

The 80s saw a dramatic change in the business scenario all over the world due to
globalization and liberalization. Low-cost, high-quality product, and customer delight became

18 eBook PSP | Introduction to Supply Chain Management

the buzzwords for the industry. Increased dependence on JIT and TQM methodologies
created the vision for strategic partnerships.

Development in IT further reduced the national boundary concepts. The first mention
of the term supply chain management was found in a paper published in 1982 in the US.
Market globalization also presented a terrific opportunity to reach out to high potential global
markets. This needed a relook of the way inventory and logistics were being done. The
challenges associated with an enhancement in quality, manufacturing efficiency, customer
service, and new product design and development also increased.

To deal with these challenges, manufacturers began buying from a select number of
certified, high-quality suppliers with excellent service reputations and involved these
suppliers in their new product design and development activities as well as in cost, quality,
and service improvement initiatives. Obviously, supplier management and customer
management became focused activities for a firm and Supply Chain Management became
popular as a source of competitive advantage for the firms.

Today, Supply Chain Management has concretized for itself into the purchasing and
supply management emphasis from industrial buyers and the transportation and logistics
emphasis from the wholesalers and the retailers. The new wells talked about concepts are
supply chain spanning from the supplier's supplier on the one hand to the customer's
customer on the other hand.

In the future, it is expected that supply chain management emphasis will concentrate
on supply chain expansion, increasing supply chain responsiveness, and further reducing
supply chain costs.

eBook PSP | Introduction to Supply Chain Management 19

Picture 1.13: Evolution of supply chain management

1.2 Foundation of Supply Chain Management

A supply chain is a sequence of processes that must be completed to produce and
distribute a commodity. Manufacturing businesses have long referred to the process of
getting goods to customers as the supply chain. However, since so many businesses rely on
manufacturers, the term has made its way into the corporate world as well. Each process
relies on the others to provide a seamless path from plan to completion. Having a strong
supply chain is crucial to that goal, and so is managing it effectively for the supply chain to
achieve the best results. So it is important to consider the elements of supply chain
management regularly and discuss the need for supply chain management to your employees
and managers.

20 eBook PSP | Introduction to Supply Chain Management

1.2.1 Describe the elements of supply chain management

Picture 1.14: Elements of supply chain management
The four elements of supply chain management must work cohesively for everyone’s benefit.
Not only do end customers reap the rewards; employees themselves also reap the rewards.
A well-oiled supply chain is a key to a harmonious work environment because when everyone
does what they are supposed to do, there is less stress for everyone.

eBook PSP | Introduction to Supply Chain Management 21

ELEMENTS

Picture 1.15: Elements of supply chain management
FOUR MAIN ELEMENTS TO SUPPLY CHAIN MANAGEMENT:
1) SUPPLY / PURCHASING

22 eBook PSP | Introduction to Supply Chain Management

This department sources the materials, products, or other goods needed to generate
the company’s products. Purchasing creates relationships with suppliers and also identifies
the qualities and quantities of necessary items. It’s very important for those in purchasing to
keep an eye on the budget for things to be cost-effective for the company, as well as adhering
to high-quality standards.

THINK !
You cannot make something from nothing. The purchasing area of supply chain
management makes sure a company has everything it needs to manufacture products,
including materials, supplies, tools, and equipment. This means often staying ahead of the
process so that you have everything you need on hand well before you need it. Without the
right purchasing personnel, you could find that you end up running out of the materials you
need, delaying production, or that you overbuy and strain the company’s budget.

Before supply management is evolving, many firms are into traditional purchasing
strategies, which are more into many suppliers, competitive bidding, and short-term contract.
They are more focused on purchase price rather than supplier capabilities and contribution
to long-term competitiveness. For the past 15 years, purchasing shifted to a more strategic
approach called: Supply Management

Supply Elements:
1. Supplier management - improve performance through
A. Supplier evaluation (determining supplier capabilities)
B. Supplier certification (third party or internal certification to assure product
quality and service requirements)

2. Strategic partnerships - successful and trusting relationships with top-performing
suppliers

3. Ethics and sustainability – recognizing suppliers’ impact on reputation and carbon
footprint (a firm’s total carbon emissions per period)

eBook PSP | Introduction to Supply Chain Management 23

2) OPERATIONS

Picture 1.16: Elements of supply chain management

This link in the supply chain coordinates the specifics of day-to-day operations for the
company. It plans the company’s output to make sure everything is running well and that
advantages are maximized. Operations will keep an eye on company inventory. They use
business forecasting to predict which supplies will be needed when and by whom and also to
find ways to predict the effectiveness of products, marketing approaches, as well as end-user
results. Overall, the company’s production is overseen by operations.

Your operations require an accurate, real-time representation of your inventory and
production schedules to monitor your output and forecast production and distribution
patterns. With the right software, you can align your operations with the rest of your business,

24 eBook PSP | Introduction to Supply Chain Management

provide accurate and reliable information on the production and current inventories for more
efficient fulfillment processes. Improve your profitability by predicting likely interruptions and
challenges to reduce their impact on your business, and streamline your operational
processes to facilitate a smoother, less expensive path to fulfillment.

THINK !
As important as strategy is to keep a strong supply chain, day-to-day operations are the
backbone of the work manufacturers do. Managers monitor the work being performed and
make sure everything remains on track. Many of today’s manufacturers operate using lean
manufacturing strategies, which means that processes are constantly evaluated to identify
where things can be done more efficiently. Whether it’s monitoring equipment to make
sure you’re getting the most out of it or cutting back work hours when production slows
down, the operations team can bring major improvements to the supply chain.

3) LOGISTICS / DISTRIBUTION

eBook PSP | Introduction to Supply Chain Management 25

Picture 1.17: Elements of supply chain management
How do businesses commodities end up where they are supposed to? Distribution
coordinates that. The logistics of communications among retailers, clients, or wholesalers is
the responsibility of the distribution part in the supply chain of command. These groups must
keep an eye on shipments, and know not only what is needed in-house to produce products
but also that the products get to the end customer on time and in good shape.
The transport, delivery, and return of goods is a component of your supply chain that
can always be simplified, optimized, and corrected for better client service and reduced
operating costs. With varying options of stock origin, your delivery and returns process should
be centralized for a real-time view of inventory, order status, and stock location regardless of
whether an order originated in-store or online.

THINK !
The supply chain ends when the product lands on store shelves where customers can buy
them. But getting products there means having a well-planned shipping process. Most
companies today use logistics software to manage their shipments, whether they handle it
on their own or source shipping to a third-party provider. When handled correctly, products
are moved expeditiously from the warehouse to the customer.

26 eBook PSP | Introduction to Supply Chain Management

4) INTEGRATION

Picture 1.18: Elements of supply chain management
This element can be considered as the brains and heart of the supply chain.
Overseeing supply chain integration means coordinating communications between the rest
of the supply chain to produce effective and timely results. Often, this means exploring new
software or other technological means to foster communications among departments. Those
in charge of integration are responsible for making sure that things are happening on time
and the budget, without sacrificing quality.

eBook PSP | Introduction to Supply Chain Management 27

Integration starts at your strategic planning phase and is critical throughout your
communications and information sharing and data analysis and storage. A single-view,
accurate, and reliable source of information on your supply chain activities and details
reduces human error, delays, shortages, and over/under-stocking, and allows you to plan for
and mitigate supply issues or interruptions.

Assess your technology needs, and ensure your choice gives you the right tools to
integrate your full supply chain solution while being flexible enough to change and grow with
your business.

THINK !
As with any project, planning is essential to long-term success. Part of good planning is
setting up the integration, which means that everyone involved in the manufacturing
process communicates and collaborates. Instead of functioning in separate divisions, or
silos, integrated teams work together to make sure the product gets to the distribution
phase. This improved communication reduces errors that cost time and money. Since
everyone is working together, leaders can also monitor the entire operation and easily
identify areas along the supply chain that can be improved.

28 eBook PSP | Introduction to Supply Chain Management

SELF TEST ACTIVITY

QUESTION 1

a. Organizations’ improvement needs to collaborate with upstream suppliers and
downstream distribution partners to effectively and efficiently serve their customers.
Define each of the following :

i. Supply Chain (3 marks)
ii. Supply Chain Management (3 marks)

b. Describe briefly THREE (3) importance of Supply Chain Management to a
company.
(6 marks)

c. Distinguish between supplier management and demand management.

(6 marks)

d. Main elements in Supply Chain Management are supply, operations, logistics, and
integration. Each of the elements act as the foundation of a good Supply Chain
Management. Describe TWO (2) of the elements.
(7 marks)

eBook PSP | Introduction to Supply Chain Management 29

QUESTION 2

a. Supply chain management is the integration of trading partners’ key business processes
from initial raw material to the final or end consumers.
i. Define the term of supply chain management
(2 marks)
ii. The supply chain consists of the flow of products and services. List down FOUR
(4) types of industry players in the supply chain.
(4 marks)

b. i. List TWO (2) importance of good supply chain management.
(2 marks)

ii. What are the FOUR (4) foundation elements of supply chain management?
(4 marks)

c. The definition of Supply Chain Management is available among various professional
associations such as The Institute of Supply Management U.S., The Supply-Chain
Council, and The Council of Supply Chain Management Professionals. Define Supply
Chain Management from ONE (1) of the professional associations mentioned above.
(5 marks)

d. Describe briefly THREE (3) importance of Supply Chain Management to a company.
(6 marks)

eBook PSP | Introduction to Supply Chain Management v

REFERENCES

Giunipero, L. C., & Brand, R. R. (1996). Purchasing's role in supply chain management. The
international journal of logistics management.

Habib, M. (2011). Supply Chain Management (SCM): Theory and Evolution. Supply chain
management-applications and simulations, 1-14.

Larson, P. D., & Rogers, D. S. (1998). Supply chain management: definition, growth and
approaches. Journal of Marketing Theory and Practice, 6(4), 1-5.

Stadtler, H. (2008). Supply chain management—an overview. Supply chain management and
advanced planning, 9-36.

Wong, C. Y., Arlbjørn, J. S., & Johansen, J. (2005). Supply chain management practices in toy
supply chains. Supply Chain Management: An International Journal.

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