Supply Chain Management - A Beginner's Brief

Updated: June 02, 2010

The essence of supply chain management is applicable to any kind of manufacturing business. For example, an often common sight in America is the young children manning a lemonade stand alongside any street in any town in the US. In this example, the children have to decide how much lemonade that can be sold and after that estimation, they have to get the lemons. How the children go about getting the lemons, arranging for other suppliers should the primary one run out and estimating how many lemons for the next day is part of supply chain management.

In a modern business, demand planning and forecasting estimates the sales and translates that to an available inventory to meet prospective business requirements. In the traditional business of the 1950's and 1960's, companies planned a year's supply of inventory and asked manufacturing to build for that amount of inventory. If mid-year corrections were needed, then either the primary or secondary suppliers needed to change their own capabilities to match the required materials needed.

In today's cyber business where transactions are accumulated at a furious pace, order management must be swiftly translated to the amount of goods that must be available. To feed that rapid fire pace of order management, a robust manufacturing arm must also have an adaptable supply chain management component. By automating the stages of order management to order fulfillment, the buyer is unaware of the complex nature of supply chain management.

In the case of a service or of information, supply chain theory can also be applied because information that is required needs someone or someplace to supply it. There is a prediction and a forecast of how much that is. Supply chain theory means there is collaboration amongst all of the sources of information that is needed to fulfill a request. For instance, in a hospital, if a program was needed to screen by records a thousand patients, having that information available requires all of the suppliers of information to be able to supply it whether it is the hospital or its affiliated doctors.

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