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supply chain management
supply chain management is the process of efficiently planning, implementing, and controlling the operations of the supply chain. supply chain management includes all movement and storage of raw materials, work-in-process inventory, and finished goods from the point-of-origin to the point-of-consumption, or point-of-final-sale. the purpose of this process is to improve trust and collaboration among supply chain partners, thus enhancing inventory visibility and velocity.
supply chain management is a cross-functional approach to coordinating the movement of raw materials into an organization, internally processing those materials into finished goods, and then transporting them from the organization to the end-consumer. as organizations strive to focus on core competencies and becoming more flexible, they have reduced their ownership of raw materials sources and distribution channels. these functions are increasingly being outsourced to external entities that can perform the activities better or more cost effectively. the effect has been to increase the number of organizations involved in product development, manufacturing, logistics, and satisfying end-customer demand.
it is also important to note that supply chain management is not only an organizational and strategic effort, but is also a category of software products.
organizations increasingly find that they must rely on effective supply chains to successfully compete in the global market and networked economy. during the past few decades, globalization, outsourcing and information technology have enabled organizations of all scales to successfully operate collaborative supply networks in which each specialized business partner focuses on only a few strategic activities.
in the 21st century, there have been a few changes in the business environment that have contributed to the development of supply chain networks. first, as an outcome of globalization and the proliferation of multi-national companies and joint ventures, "just-in-time," "lean management" and "agile manufacturing" practices have been invented to dramatically collapse time, effort and cost metrics while increasing product and organizational flexibility. second, technological changes, particularly the dramatic fall in informational communication costs, which are a paramount component of transaction costs, have led to increased coordination and a global footprint of members of the supply chain network.
many researchers have recognized that these supply network structures are a new organization form, using terms such as "keiretsu," "extended enterprise," "virtual corporation" and "global production network" to describe them.