Transportation, logistics, supply chain management, materials handling, and inventory control continue to evolve. This evolution has created cross-fertilization among these functions, driven by factors both conceptual—matching demand to supply—and technological—an enhanced ability to communicate and collaborate.
This cross-fertilization has also blurred the definition of some terms. For example, is logistics the same thing as supply chain management?
People working in different functional areas of logistics often define supply chain management (SCM) as it relates to what they do. A recent survey of Inbound Logistics readers supports this. Some respondents say SCM is the same old thing with a new handle, while others note it is more encompassing than logistics.
Many logistics veterans believe we have progressed from transportation to physical distribution to logistics to supply chain management. By contrast, purchasing managers have evolved their thinking from purchasing management to procurement and now to supply management (SM). Some couch supply management as SCM. Others don’t want to give up the term purchasing, and now refer to this functional area as purchasing and supply management.
Manufacturing professionals hold yet another perception of SCM: as the task of allocating and committing resources for obtaining necessary supplies and capacity, handling, and positioning products to meet customer demands. MRP and ERP systems now address resource commitments that go beyond manufacturing to include other enterprise and supplier resources, ultimately directed to satisfying customer demands with limited and efficient use of resources.
Other departments in the company also wonder about SCM and its orientation. In marketing—as well as the broader functionality that includes business and consumer research, promotions, and sales—SCM addresses the needs and market potential of not only immediate customers and consumers who buy products and services, but also end users. Naturally, market research analyses of end product usage are extremely important.
By its nature, SCM encapsulates inter-enterprise, cross-functional processes that target end users of products and services. It requires integrated teams who are open and trustful in their value engineering and activities analysis.
Initially, logistics practitioners focus on supply chain applications that interface with immediate customers, suppliers, and intermediaries. Economic functional “activity” tradeoffs are analyzed in terms of who can best perform functions that are for the good of all trading partners. The long-term vision is inter-enterprise teams working seamlessly across all functions and activities to meet end user needs.
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