Supply Chain Management (SCM)

SCM is strategic thinking: Effective SCM improves both efficiency and effectiveness in a strategic context (Quiett, 2002)

Information about Supply Chain Management (SCM)

The modern concept of supply chain management (SCM) derives from the shipyards of Japan in the early 1950s and was subsequently developed in the car manufacturing industry, in particular by Toyota. One of the enduring outcomes of Toyota's just-in-time (JIT) SCM system was that organisations became increasingly aware of the cost of sitting on warehouses full of stock (Hindle, 2008). Prior to JIT, companies would hold large quantities of components to be used as and when required in the production process. Nowadays, it is more common for companies to manage supply chains by ordering inputs to arrive only when needed (Hindle, 2008). This is not a simple task, as more and more organisations are tasked with managing supplies and production on an international scale.

Many organisations now have as much as 80% of their turnover comprising bought-in goods and services (CIPS: Positions on practice). Owing to these complexities, issues of supply chain management are of great importance to organisations, practitioners, and researchers, alike - and supply chain managers have a vital role to play in managing costs. Yeo and Ning (2002:256) describe SCM as the 'latest procurement and logistics philosophy' to be adopted.

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