MyCIMA

Supply Chain Management

Posted: Tuesday 09 February 2010 by Naheed Shoukat Ali
Replies : 1
Keywords: SCM, supply chain, supply chains

Hello All,

I would like to start a discussion about Supply Chain Management. What is its importance in Management accounting. I am considering to do a diploma in Supply Chain Management but I want to learn more about as if it's worth it or not to do a training diploma.

Naheed 

Supply Chain Management

Posted by Sangeeth Raj on Tuesday 09 February 2010 13:14

 

Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer.

Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed).

As a solution for successful supply chain management, sophisticated software systems with Web interfaces are competing with Web-based application service providers  who promise to provide part or all of the SCM service for companies who rent their service.

Supply chain management flows can be divided into three main flows:

  • The product flow
  • The information flow
  • The finances flow
The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. The information flow involves transmitting ordersand updating the status of delivery. The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements.

There are two main types of SCM software: planning applications and execution applications. Planning applications use advanced algorithms to determine the best way to fill an order. Execution applications track the physical status of goods, the management of materials, and financial information involving all parties.

Some SCM applications are based on open data models that support the sharing of data both inside and outside the enterprise (this is called the extended enterprise, and includes key suppliers, manufacturers, and end customers of a specific company). This shared data may reside in diverse database systems, or s, at several different sites and companies.

By sharing this data "upstream" (with a company's suppliers) and "downstream" (with a company's clients), SCM applications have the potential to improve the time-to-market of products, reduce costs, and allow all parties in the supply chain to better manage current resources and plan for future needs.

Increasing numbers of companies are turning to Web sites and Web-based applications as part of the SCM solution. A number of major Web sites offer  marketplaces where manufacturers can trade and even make auction bids with suppliers.