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Supply chain is the co-ordination of the production, inventory, location, and

transporta tion among the participants in a supply chain to achieve the best mix of

Managing a supply chain is more complex and difficult than managing an individual

firm. But, the principle of management is used to integrate a firm own internal function

(value management) also apply to managing the entire supply chain. Those firms the

successfully integrated their purchasing, operation and distribution functions did improve their

performance in the past. The power of supply chain management is its potential to include

the customer as a partner in supplying the goods or services provided by a supply chain.

Integrating the customer into the management of supply chain has several advantages. First,

integration improves the flow of information throughout the supply chain; a second

advantage of integrating the customer into the supply chain is that this integrates the products

development function (QFD analysis) with the other function in the firm. By focusing a

customer, all members of supply chain see the need and benefits of obtaining and using

information about the end customer.

Supply chain management, just-in-time, quick response manufacturing, total quality

management, vendor management, agile manufacturing, etc all share the goal of improving

customer satisfaction. All this attempt to improve customer service by eliminating waste

from the system in all of its forms including wasted time. Supply chain management embraces

the other philosophies and extends the scope from one firm to all the firm in a supply chain.

There is difference between the concept of supply cha in manage ment and traditional

concept of logistics, logistic typically refers to activities that occur within the organization

and supply chain refers to network of organizations that work together and coordinate

their actions to deliver a product to market. Also, traditional logistics focusing its attention

to activities such as purchasing, distribution, maintenance, and inventory management. In

the wider view of supply chain thinking, these additional activities are now seen as part of

the work needed to fulfill customer request. Supply chain management views the supply

chain and the organization in it as a single entity. Supply chain brings a system approach to

understanding and managing the different activities needed to co-ordinate the flow of

products and services to best serve the ultimate customer. Effective supply chain management

requires simultaneous improvements in both customer service levels and the internals

operating efficiencies of the companies in the supply chain. There is a basic pattern to the

practice of supply chain ma nagement. Companies in any supply chain must make decisions

individually and collectively regarding their actions in productions, inventory, Location,

Transportation and Information. So far, we have discussed the concept of both supply

chain and its management. Let us now try to understand the importance of supply chain in

the next section.