LO1) Define supply chain management
Supply chain, marketing channels, and logistics are related.
Marketing channels-a set of institutions that transfer the ownership of and move goods from the
point of production to the point of consumption; as such it consists all the institutions and
marketing activities in the marketing process. This is what makes a marketing channel the same
as a supply chain.
Logistics management- the integration of two or more activities for the purpose of planning,
implementing and controlling the efficient flow of raw materials, in-process inventory, and
finished goods from the point of origin to the point of consumption.
Some activities associated with the process are customer service, demand forecasting,
distribution communications, inventory control, material handling, order processing, parts and
service support, plant and warehouse site selection, procurement packaging, return goods
handling, salvage and scrap disposal, traffic and transportation, and ware housing and storage.
In the past, channel management was handled by the marketing department, and logistics was
overseen by operations. Sometimes they had different views on their goals which could create
conflict. Firms must see the opportunity of coinciding their views.
LO2) Explain how supply chains add value
Supply chains add value.
A component manufacturer supplies the manufacturer with parts and materials. The
transportation company moves the products to the retailer and the retailer old the products until
it is purchased by a consumer. With each step, the process becomes more costly, but the value
grows more to the consumer.
Supply chain management streamlines distribution.
Supply chain distribution has several steps.
Order creation; telephone, online, or mail.
Order processing; using a manual system for credit authorization and segment to a