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1.1 Concepts of Supply Chain Management

A Supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable.

Internal Supply Chain

Figure: 1.1-

An illustration of a company's supply chain; the arrows stand for supplier-relationship management, internal SCM and customer-relationship management

In simple words a supply chain consists of all the parties involved, directly or indirectly, in fulfilling a customer request. The supply chain not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers and customers themselves.

1.2 Definitions of supply chain management

The structure of SCM requires traditionally separate materials functions to report to an executive responsible for coordinating the entire materials process, as well as requiring joint relationships with suppliers across multiple tiers. The authors also argue that a strategic, proactive approach to managing the supply chain is critical for survival beyond the year 2000 because the best supply chain will have a competitive advantage. By the same token, Christopher (1992) argues that the real competitions is not company against company, but rather supply chain against supply chain (Monczka, Trent and Handfield, 1998) .

Compared a supply chain strategy to alliances and partnering strategies and suggested that they generally involve elements including

“Two or more firms in a supply chain entering into a long-term agreement;... the development of trust and commitment to the relationship;... the integration of logistics activities involving the

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