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Supply chain management (SCM)

  involves the coordination of all supply activities of an 

organisation from its suppliers and delivery of products to its customers.  Figure   6.2    intro‑

duces the main players in the supply chain. In  Figure   6.2   (a) the main members of the supply 

chain are the organisations that manufacture a product and/or deliver a service.  

  What is supply chain management?

  Supply  chain 

management (SCM) 

  The coordination of all 

supply activities of an 

organisation from its 

suppliers and partners to 

its  customers.   

Table 6.1

Continued

 Problems of supply chain 

management 

 How digital technology can reduce problems 

in SCM 

 Demand  forecasting 

 Sharing of demand by customers with suppliers as part 

of efficient consumer response (ECR) 

 Failure to deliver products on time 

consistently or lack of items on 

shelf in retailer 

 Supplier becomes responsible for item availability 

through   vendor‑  managed  inventory 

 Failure to deliver or ship correct 

product 

 Human error reduced. ‘Checks and balances can be built 

into system’ 

 High inventory costs 

 Inventory reduced throughout the supply chain through 

better demand forecasting and more rapid replenishment 

of inventory 

 Time for new product development   Improved availability of information about potential 

suppliers and components, for example through online 

marketplaces 

 Figure 6.2 

 Members of the supply chain: (a) Simplifi ed view, (b) Including 

intermediaries       

Inbound logistics

(b)

Outbound logistics

Organisation

Supplier

Customer

Inter-

mediaries

Inter-

mediaries

Buy-side e-commerce

Sell-side e-commerce

Upstream supply chain

Downstream supply chain

(a)

Organisation

Supplier

Customer

Buy-side e-commerce

Sell-side e-commerce

Upstream supply chain

Downstream supply chain

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Chapter 6  Supply chain management

For most commercial and  not‑  for‑  profit organisations we can distinguish between