In 1993, group of grocery industry leaders formed a task force to examine grocery industry Supply Chain Management (ECR Working Group). They identified best practices of and take implementation of Supply Chain Management concept into action. They projected an overall reduction in supply chain inventory of 37 percent (Lummus, Krumwiede and Vokurka 2001)
According to APICS Dictionary, Supply Chain is "The global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash". Then, Supply Chain Management covers lots of activities to plan, implement and control products from point of origin to point of consumption. Each researcher defines Supply Chain Management differently. Johnson and Pyke (2000) then compiled the contents taught in many management and engineering schools then develop a framework for Supply Chain Management education consists of 12 components as below,
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| Supply Chain Management Concept |
2) Transportation and logistics includes all aspects of material flows through the supply chain including issues in transportation and warehousing such as vehicle routing, fleet management and material handling.
3) Inventory and forecasting includes various techniques used to develop good forecasting models for both existing and new product forecasting. Reducing inventory cost by providing right amount of stock level is the basic concept that can lead to more understanding about other issue in Supply Chain Management.
4) Marketing and channel restructuring explores fundamental structure of Supply Chain Management and the use of relationship management to enhance the coordination among each supply chain members. This area encompasses mainly the activities from manufacturers to end customers.
5) Sourcing and supplier management pays much attention to determine source of products, whether they should be produced internally or bought from vendors. Managing supplier networks can prevent raw material shortage, material quality problem and delivery reliability.
6) Information and electronic mediated environments addresses application of information technology in many aspects such as to reduce inventory, to better communication between trading partners, integrated software system (ERP, MRP,WMS) and electronic commerce.
7) Product design and product development handles the method used to design new product and how to introduce new products to customers successfully.
8) Service and after sales support deals with problem providing support, spare parts and repair service after the purchase of customers. This area helps to retain customers.
9) Reverse logistics and green supply chain issues examine the best way to return products back to manufacturers to repair, reuse, recondition and disposal. Information obtained from returned products will help makers diagnose production problem to avoid possible defects. Environment related issues are also determined.
10) Outsourcing and strategic alliances consider what kind of activities we should ask specialists to handle and how to create firmed relationship with service providers. Outsourcing is the great way to reduce capital investment because important assets will be shared.
11) Metrics and incentives of Supply Chain Management control the business performance between trading partners to ensure that every members do their best to provide products and services to customers. Economic incentives from performance compliance will be explored as well. Scor Model is one of the most popular metrics in supply chain management.
12) Global issues and global logistics examine how well each company operates their supply chain management in multiple countries. This category is the widest span of supply chain management.
