In companies, supply chain management (SCM) means “the strategic coordination between the traditional business functions and the tactical decisions between these business functions and the tactical decisions between these business functions with the aim of improving the long-term performance of individual companies and the supply chain as a whole, both within the company and along the supply chain.
Due to the tendency to concentrate on core competencies (e.g. through outsourcing) and to reduce vertical integration, supply chains based on the division of labor are increasingly developing. Competition in global markets, short time-to-market, short product lifecycles, and high customer expectations have put supply chains at the center of business decisions.
As a result, it is not vertically integrated individual manufacturers who compete in the respective target markets, but instead complex structured supply chains made up of connected but independent companies. Such decentralised systems gain competitive advantages through a market-appropriate configuration of their structure as well as through the coordination and integration of autonomously controlled activities in the supply chain. This consideration has led to supply chain management (SCM). SCM thus goes beyond the classic orientation of business administration on the “company” system and deals with the “supply chain” system.
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The special characteristics of the overall “supply chain” system result from the dynamic interaction of the supply chain links. These system characteristics cannot be deduced from the sum of the characteristics of the individual members involved, which relate solely to the individual undertakings. Rather, as a result of the complex, dynamic interaction of the individual members, new properties of the overall system emerge. As far as the mathematical side is concerned, the scientific examination of SCM is therefore based, among other things, on the findings of systems theory as well as chaos and complexity research. From a business point of view, the analysis of SCM problems is based on the explanatory approaches of the new institutional economics as well as resource orientation. Another approach to describing the supply chain system is the relational view, which has developed from resource orientation.
Practical Implementation
An early expression of the industry’s turn to SCM concepts can be seen in just-in-time production (JIT), which began around 1980. JIT aims at a closely coordinated coupling of the production processes of manufacturer and supplier. This concept received particular attention in the automotive industry. In addition to the targeted flexibilisation and qualitative stabilisation of the service processes on the supply side, the prerequisites for the successful implementation of the JIT concept were, in particular, the logistical coupling of the production processes of supplier and manufacturer via consumption determination, largely dispensing with inventories as a problem buffer, as well as using standardised load carriers and processes. In this context, the Kanban control system coming from Japan (pull principle in production control) has gained exemplary significance.
In retail and the consumer goods industry, supply chain management manifests itself in particular as part of the Efficient Consumer Response (ECR) concept. This is an industry-wide initiative to optimize the supply structure for consumers in retail stores while streamlining supply chain processes. The concept building is based on a set of specific basic technologies (e.g. barcodes, standards for electronic data interchange), standard logistical processes and a process of marketing-oriented offer optimisation: category management, which is implemented in an overarching joint planning process are linked.
With the development of the “Supply-Chain Operations Reference” (SCOR) model, a cross-industry initiative of major companies has created the basis for the model representation, performance measurement and comparison as well as for the reengineering of supply chain processes. The SCOR model aims to facilitate communication about supply chain structures and supply chain processes between the companies involved by creating a general conceptual and conceptual framework for this.
Specific software systems aimed at the operational planning and control of supply chain activities are increasingly being used. These systems are e.g. as Advanced Planner and Optimizer (APO), APS (Advanced Planning and Scheduling) system, or also known as ERP II systems. Large electronic marketplaces are particularly suitable as operators of such planning systems.
Supply chain management software has recently tended to show the state of the supply chain in near real-time. For this purpose, the goods along the chain are recorded at specific transfer points with the help of PDA systems. This can be done, for example, by scanning an individual barcode or by reading an RFID tag. The possibility of linking this real-time data with target times stored in the system makes it possible to intervene in the logistics system in a targeted manner with the help of Supply Chain Event Management (SCEM).
Recently, there has also been increasing discussion about the explicit consideration of financial aspects of SCM in the context of supply chain financing. The aim is to finance fixed and working capital in supply chains in such a way that the capital costs of the companies involved are minimized.
