Operation Management

Essay by aswitha June 2006

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Supply chain management is one of the most important strategic aspects of any business enterprise. Decisions must be made about how to coordinate the production of goods and services, how and where to store inventory, whom to buy materials from and how to distribute them in the most cost-effective, timely manner.

Figure 1

Consider a typical manufacturer. The supply chain is made up of many interrelated firms (Figure 1). There are parts suppliers, component suppliers and subassembly suppliers. Further up the chain are the suppliers' suppliers, finally reaching the raw materials suppliers at the far end of the chain.

Going downstream, back through the producing firm, the supply chain continues through the warehousing and distribution channels and then through the retail channels, ending with the consumer.

The supply chain encompasses all activities associated with the flow and transformation of goods and services from the raw materials stage (at one end of the supply chain) through to the customer (at the other end of the chain), including all associated information flows.


After defining and explaining supply chain management, its evolution and transforming effects on the design and structure of corporations will be reviewed. Then, specific components within the supply chain will be identified and several metrics to gauge the level of supply chain improvements over time will be examined. Of particular interest here is the impact of new information technologies on supply chain operations now and into the future. Finally, the macroeconomic benefits of improved supply chain operations will be explored.Supply Chain Management: The Science of Better, Faster, Cheaper.

Figure 2

Supply chain management is getting the right things to the right places at the right times, for profit (Figure 2). While supply chain management is as old as trade itself, new information and communications technologies have revolutionized today's...