What do we really mean by supply chain management?
In this brief excerpt from his book, Future Logistics Challenges , Leif Enarsson of Sweden's Gothenburg University wonders why after all these years we still haven't arrived at a common definition of supply chain management.
Over the years many buzzwords have emerged in the field of logistics, with "supply chain management" (SCM) and all its variants being the most common examples. There is nothing new in these terms. Logistics management is still a developing discipline, and natural development over time does not equate to truly new concepts.
Nevertheless, researchers continue to discuss and debate the meaning of the term supply chain management. Every new book about logistics, it seems, contains another definition of SCM. To me this is an absurd situation, because there is nothing truly new, even if we do give it a new name or definition.
According to the academics Lambert and Stock1 and others, the definition of supply chain management is much broader than that of logistics. This is a common argument. For example, the Council of Logistics Management (CLM) (now the Council of Supply Chain Management Professionals) revised the definition of logistics in 1998:
Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the pointof- consumption in order to meet customers' requirements.
Lambert, Cooper, and Pagh offered the following definition that same year2:
Supply chain management is the integration of key business processes from end user through original suppliers that provide products, services, and information that add value for customers and other stakeholders.
That definition covers most business activities. Christopher's definition3 is more customer-focused:
The management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole.
The standpoint that logistics management is more internal than supply chain management strikes me as somewhat strange given that integration between different players has always been fundamental to logistics management.
To illustrate how the definition and concept of supply chain management have multiplied, consider that in 1999, 30 papers were presented at a conference, resulting in at least 20 different variations on the SCM theme.4 These included:
Supply chain network
Supply management
Capacity-based supply chain
Supply chain dynamics
Networkwide supply chain
Lean supply chain
Supply network
Web supply chain
Supply demand
Seamless supply chain
Supply integration
Demand chain
Information management
Supply coalitions
Similarly Day, Burnett, and Forrester5 found that the term "supply chain management" was frequently used but the concept had inherited a multiplicity of meanings—in other words, there were disagreements about what definition best describes SCM. They also found that literature surveys create more confusion than general agreement on a definition.
Here are some examples of how fragmented the definitions have been. Olsen and Ellram's definition6 had a broad discussion about the "buyer-supplier relationship." New7 argued that supply chain management crosses boundaries between operations and industrial economics, marketing, economic geography, and industrial sociology. (Under that description, supply chain management includes nearly everything in business—hardly a meaningful definition.)
Another definition was that of Mattsson,8 who said the supply chain consisted of a line of actors who are in a dependent relationship with one other, and through which material, payment, and information flow. But this could also be seen as a traditional defi- nition of logistics.
SCM is what you make of it
All of these variations and the lack of clarity in the definition lead to the conclusion that SCM is what you make of it; in other words, it can involve anything, depending on the situation. In that view, it is hardly a new theory, nor is it a new scientific field.
Leaving aside the discussion of the proper definition of SCM and its relationship to logistics for a moment, let's look more closely at the concept itself and its possible advantages. The supply chain concept extends to include a focus on production and involves both the supply and distribution sides of the company. As the chain expands, the distance between the manufacturer and the end consumer increases, both geographically and from an operational point of view. At the same time, there is a strong trend toward more and more customer-oriented products and production, which requires close relationships between suppliers and customers.
This trend points out the need for a form of supply chain or, more generally, a system for integration and closer relationships. But is the "supply chain" concept the solution to this challenge? A chain of companies is only a part of a whole, complex system. There has to be a focus on all of the relationships and the dependencies, which is a big challenge indeed.
Currently, SCM research is dominated by information technology (IT)-related projects that often involve IT-based modeling and simulation. As a result, SCM consultants and researchers are building models in one limited field, often without a deeper knowledge of established theory, practical usefulness, economic benefits, or the effects of their developments on the system as a whole.
In today's world, businesses are shaped by complexity, fast-changing conditions, and constant development. This causes instability in many respects, but is this situation really new? Have not people in all periods of history thought that their own times were more dynamic and more changeable than any before them? Today, however, we can better predict change than we could in the past. This means that we can control development and that the rate of development is low today compared to previous periods.
Companies are trying to respond to dynamic developments and complexity, striving to achieve stability and to carry out operations more efficiently. The goal of IT development, to a great extent, is to create a better (which often means simpler and easier) way to conduct business.
In this dynamic world, we create new theories and new concepts such as supply chain management. What are the criteria for the new theories, and how are new conceptions related to them? Sometimes it seems that the degree of popularity—how often it is used, mentioned, or referred to—is the determining factor.
What kind of chain?
If we want to keep the "chain" concept, then the most appropriate name might be "value chain." But in some respects, it would be more correct to call the supply chain the "demand chain." One important reason is that demands for more effective support often come from customers. A discussion about supply and demand, moreover, leads to the conclusion that all actors in the supply chain can be seen both as customers and suppliers, depending on the position from which you view the chain. Regardless of the viewpoint, the end of the chain is always the final customer.
If we treat the supply chain as a theory, we can compare it with other theories and draw some conclusions. For instance, the marketing channel theory focuses on the distribution and demand side of a company; it can be argued that this is only part of the chain, but this depends on where the company is situated in the chain. The value chain primarily focuses on internal activities and physical flows, so that support activities are related to external activities. In comparison with supply chains, the value chain pays very little attention to information systems. The network theory considers the whole network, its actors, activities, and relationships. The supply chain is only one part of a network, and therefore it only gives us one part of the entirety. Finally, the business logistics theory includes the whole material flow and the different activities within it. Business logistics does not focus on integration and the information system in the same way that the supply chain concept does. In logistics, information systems are natural and necessary tools for managing the flow in all its aspects; it is not the major management focus that it is in the supply chain theory.
It is quite possible to compare and find differences between the supply chain concept and established concepts. Yet isn't the supply chain concept a result of striving for new ideas—ideas that contain very little in the way of substantial new facts? In fact, we could just as well call supply chain management "cash flow management" or "information management."
It should be obvious to anyone that I have a reserved attitude towards new concepts, and in my logistics research world, I believe that this is a healthy approach.
Endnotes: 1. Douglas M. Lambert and James R. Stock, Fundamentals of Logistics Management (New York: McGraw-Hill, 1993).
2. Douglas M. Lambert, Martha C. Cooper, and Janus D. Pagh, "Supply Chain Management: Implementation Issues and Research Opportunities." The International Journal of Logistics and Management (1998).
3. Martin Christopher, Logistics and Supply Chain Management. (London: Prentice Hall, 1998)
4. Leif Enarsson, "Supply Chain Management: Just a Simple System, or a Determining Solution?" Paper given at the 15th International Conference on Production Research, University of Limerick, Ireland (1999).
5. Marc Day, John Burnett, and Paul Forrester, "Assessing Control Sspects in U.K. Ceramic Tableware Supply Chain." Paper presented at the 15th International Conference on Production Research, University of Limerick, Ireland (1999).
6. Rasmus F. Olsen and Lisa M. Ellram, "Buyer-Supplier Relationships: Alternative Research Approaches," European Journal of Purchasing & Supply Management (1997).
7. Steve New, "Supply Chains: Some Doubts." Paper presented at the International Purchasing and Supply Education and Research Association, Cardiff, United Kingdom (1994).
8. Stig-Arne Mattsson, "Effective Material Flow in Supply Chains Through Integration." Paper presented at the Federation of European Production and Industrial Management Societies (FEPIMS) Conference, Helsinki, Finland (1998).
Editor's Note: This article is an edited excerpt from Future Logistics Challenges, (ISBN 9788763001700). The book can be purchased for UK £36, US $64, or EUR 53. For more information, go to International Specialized Book Services (www.isbs.com) or visit the Copenhagen Business School Press web site, www.cbspress.dk. Reprinted by permission of the publisher.
Artificial intelligence (AI) tools can help users build “smart and responsive supply chains” by increasing workforce productivity, expanding visibility, accelerating processes, and prioritizing the next best action to drive results, according to business software vendor Oracle.
To help reach that goal, the Texas company last week released software upgrades including user experience (UX) enhancements to its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite.
“Organizations are under pressure to create efficient and resilient supply chains that can quickly adapt to economic conditions, control costs, and protect margins,” Chris Leone, executive vice president, Applications Development, Oracle, said in a release. “The latest enhancements to Oracle Cloud SCM help customers create a smarter, more responsive supply chain by enabling them to optimize planning and execution and improve the speed and accuracy of processes.”
According to Oracle, specific upgrades feature changes to its:
Production Supervisor Workbench, which helps organizations improve manufacturing performance by providing real-time insight into work orders and generative AI-powered shift reporting.
Maintenance Supervisor Workbench, which helps organizations increase productivity and reduce asset downtime by resolving maintenance issues faster.
Order Management Enhancements, which help organizations increase operational performance by enabling users to quickly create and find orders, take actions, and engage customers.
Product Lifecycle Management (PLM) Enhancements, which help organizations accelerate product development and go-to-market by enabling users to quickly find items and configure critical objects and navigation paths to meet business-critical priorities.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
Businesses were preparing to deal with the effects of the latest major storm of the 2024 hurricane season as Francine barreled toward the Gulf Coast Wednesday.
Louisiana was experiencing heavy rain and wind gusts at midday as the storm moved northeast through the Gulf and was expected to pick up speed. The state will bear the brunt of Francine’s wind, rain, and storm damage, according to forecasters at weather service provider AccuWeather.
“AccuWeather meteorologists are projecting a storm surge of 6-10 feet along much of the Louisiana coast with a pocket of 10-15 feet on some of the inland bays in south-central Louisiana,” the company reported in an afternoon update Wednesday.
Businesses and supply chains were prepping for delays and disruptions from the storm earlier this week. Supply chain mapping and monitoring firm Resilinc said the storm will have a “significant impact” on a wide range of industries along the Gulf Coast, including aerospace, life sciences, manufacturing, oil and gas, and high-tech, among others. In a statement, Resilinc said energy companies had evacuated personnel and suspended operations on oil platforms as of Tuesday. In addition, the firm said its proprietary data showed the storm could affect nearly 11,000 manufacturing, warehousing, distribution, fabrication, and testing sites across the region, putting at risk more than 57,000 parts used in everyday items and the manufacture of more than 4,000 products.
Francine, which was expected to make landfall as a category 2 hurricane, according to AccuWeather, follows the devastating effects of two storms earlier this summer: Hurricane Beryl, which hit the Texas coast in July, and Hurricane Debby, which caused $28 billion in damage and economic loss after hitting the Southeast on August 5.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).