Systems Approach and Supply Chain Management

This chapter attempts to provide a comprehensive overview of supply chain management and attempts to show that supply chain management and materials management approach developed in this text are not competing but are complementary to each other. Topics discussed in SCM literature are more strategic, conceptual, and philosophical, whereas in the integrated approach it is more operational with a strategy to guide those operational issues. Inventory in both cases serves as a common performance indicator. Supply chain management manages the flow of materials and information and finances into, through, and out of the system comprising of suppliers, manufacturers, and distributors. Supply chains can be made to stock (MTS), made to order (MTO), or configured to order (CTO). Push-pull boundary of supply chain indicates the customer order penetration point which will determine the nature of the supply chain. Information technology (IT) has transformed the supply chain to enable system integration, enhance efficiency, reduce lead time, and contain bullwhip effect which destroys the value by information distortion. Supply chain optimization, integration, and restructuring are some improvement strategies. Agile supply chains are necessary to handle high demand uncertainty and supply disruptions.