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Lecture 15 Supply Chain Management

Lecture 15 Supply Chain Management

The concept of supply chain management is crucial in understanding how organizations produce and deliver products or services. It involves the coordination and management of various organizations, facilities, functions, and activities to ensure the efficient flow of goods, services, cash, and information. Logistics, on the other hand, is a part of the supply chain that focuses on the forward and reverse flow of these elements.

There are different types of supply chains, such as goods supply chains and service supply chains. In a goods supply chain, products are sourced from suppliers, go through storage and manufacturing processes, and are then distributed to retailers and customers. In a service supply chain, the flow is relatively simple, with fewer suppliers involved, storage of services, and direct provision to customers.

Within a supply chain, there are several functions and activities that need to be managed effectively. These include forecasting, purchasing, inventory management, information management, quality assurance, production and delivery scheduling, and customer service. Supply chain managers are responsible for planning, coordination, sourcing, procurement, transformation activities, and logistics across the supply chain.

Key aspects of supply chain management include matching supply to demand efficiently, managing suppliers, procurement, customer relationships, and quickly identifying and responding to problems. There are various trends in supply chain management, such as measuring return on investment, greening the supply chain, re-evaluating outsourcing decisions, integrating information technology, adopting lean principles, and managing risks.

Outsourcing is a common strategy in supply chain management. It offers benefits like lower prices, the ability to focus on core strengths, converting fixed costs to variable costs, freeing up capital, and accessing expertise. However, there are also risks involved, such as longer lead times, increased transportation costs, language, and cultural barriers, loss of jobs and control, lower productivity, and intellectual property concerns.

Supply chain management also involves managing risks and ethical issues. Risks can include supply chain disruption, supplier problems, quality issues, liability claims, negative publicity, and loss of sensitive information. Managing risks requires identifying and assessing potential risks, developing strategies to address them, and implementing risk avoidance, risk reduction, and risk-sharing approaches.

International trade and the complexities it brings are essential considerations in supply chain management. Product design often uses inputs from different countries, manufacturing and service activities can be outsourced to countries with lower costs, and products are sold globally. However, language, culture, currency fluctuations, political instability, transportation costs, and trust among supply chain partners are challenges faced in global supply chains.

Addressing ethical issues is crucial in supply chain management. Developing an ethical supply chain code of behavior, monitoring supply chain activities, choosing suppliers with good ethical behavior, and incorporating compliance into supplier contracts are ways to deal with ethical concerns.

Small businesses also face specific concerns in supply chain management, such as inventory management, international trade, management responsibilities, and challenges related to vulnerability, uncertainty, and response time.

Logistics is an essential part of supply chain management, involving the movement of materials, services, cash, and information. It includes activities within a facility, incoming and outgoing shipments, and traffic management. Technology like radio frequency identification (RFID) can enhance logistics by increasing supply chain visibility, improving inventory management, quality control, and supplier-customer relationships.

Third-party logistics (3PL) is another aspect of supply chain management, where logistics management is outsourced. It includes services like warehousing, distribution, and even customer service.

Managing returns, also known as reverse logistics, is a critical process within supply chain management. It involves the transportation of returned items to companies or third-party handlers for various reasons and conditions. Gatekeeping and avoidance strategies help manage returns effectively.

Creating an effective supply chain requires strategic sourcing, trust, effective communication, information velocity, supply chain visibility, event management capability, and performance metrics.


  • Supply chain management
  • Logistics
  • Outsourcing
  • International trade
  • Ethical issues
  • Small business concerns
  • Inventory management
  • Procurement
  • Supplier management
  • Reverse logistics
  • Third-party logistics (3PL)
  • RFID
  • Traffic management
  • Returns management
  • Effective supply chain


  1. What is supply chain management?
  2. What are the challenges in global supply chains?
  3. How can ethical issues be addressed in supply chain management?
  4. What are the key responsibilities in procurement?
  5. What is the role of logistics in supply chain management?
  6. How can small businesses effectively manage their supply chain?
  7. What is reverse logistics, and why is it important?
  8. What is third-party logistics (3PL)?
  9. How can technology like RFID enhance logistics in supply chain management?
  10. What is required to create an effective supply chain?