The key point that helped in the evolution of this new concept was the issue of the relationship between the various agents in the supply chain, firstly the tightening of company-customer relationship, because of the origin of logistics as physical distribution management, and secondly, the tightening of the supplier-company relationship. This internal and external integration of activities includes a series of processes that link suppliers to end customers and initiated the current concept of supply chain management.
This management system provides a number of ways in which we can increase productivity and thus significantly contribute to cost savings through inventory reduction, more advantageous purchasing, rationalisation of transportation, as well as waste reduction. Value creation through SCM can be promoted through more reliable deadlines, better emergency response, easy order placement, effective after-sales service and faster product development.
Through the management of the entire supply chain, it is possible to identify bottlenecks – which refers to where the main delays occur – and focus attention on reducing the time to market these products. In a value and cost analysis, sources for potential cost savings can be revealed.
In the evolution of logistics, it can be said that emphasis is currently placed on it is strategies, taking the name of ‘supply chain management’. This is the last barrier in the attempt to create competitive advantage, which is based on globalisation and the advancement of information technology.
At this point, it is important to highlight that SCM goes far further than logistics. While SCM refers to the internal integration of activities, it is also related to external integration, which also takes into account the coordination of information and material flows to end consumers and suppliers.
The goal of supply chain management is to improve performance in activities such as:
- Planning and forecasting the balance between supply and demand
- The timing of production cycles and inventories
- The search for suppliers of raw materials
- Manufacturing of goods
- Storage of goods
- Return of goods by the consumer, if necessary
- Customer service and identification of the need for process improvements
Without management strategies, SCM becomes precarious and inefficient.