This philosophy is supported by three fundamental features process orientation, customer orientation, and teamwork.

What is SCM?

A continuously evolving management philosophy that seeks to unify the business functions within the enterprise and allied business partners along the entire supply channel into a highly competitive and total supply system focused on synchronising the flow of value-added products, services, and information with customer demand and channel's total productive resources.

Where do we go from here?

SCM can be considered from two distinct points of view — operational or tactical and global or strategic.

As all operational paradigms, SCM enables supply channel partners to compete as a unified logistics entity.

It provides for the merging of individualised logistics activities occurring in each channel organisation to form a coherent inter-firm logistics system designed to meet customer needs for products and services on a continuing basis.

These logistics activities range from the establishment of channel alliances and supporting information technologies through forecasting, demand and supply planning, sourcing and procurement manufacturing, physical distribution, and receivables collection.

SCM views this boundary-spanning matrix of logistics activities as a single process composed of the dynamics of the marketplace, on one end of the channel, and the productive capacities and flexibilities capable of providing the desired mix of products and services, on the other.

This definition of the operational content of SCM is important for the following reasons:

Today, the logistics content of SCM plays a dual role.

It acts as a communicator of customer demand that extends from the point of sale all the way back to the supplier, and also as a physical flow process that engineers the timely and cost-effective movement of goods through the entire supply pipeline.

Although the management of logistics is at its very heart, the power of SCM is best understood as a strategic business philosophy that represents previous business paradigms. SCM is boundary-spanning, marketplace-responsive, dynamic and

growth-oriented. It is more than just better synchronising the flow of inventory through the supply pipeline or the activation of information systems to network channel members.

Also, it is not simply about cutting costs, improving efficiency, or coercing channel partners into unfair relationships.

Putting the theory to test

SCM is not a business formula or a computer system, but a continuous process of shaping and reshaping inter- and intra-company performance, information technology tools, product and services, and organisational and personalexcellence to exploit the ever-changing context of customer opportunities.

It provides channel executives with the opportunity to continually reposition the role of channel members, the mix of products and services, productive and distributive processes, human and technological resources and marketing strategies to respond to the marketplace with overwhelming competitive superiority.

By following the SCM concept, channel constituents have the ability to develop virtually endless permutations of channel structures, each possessed of superior core competencies targeted at realising a distinct marketplace opportunity.

In today's global environment competitive advantage belongs to those supply channels that can activate concurrent business processes and core competencies that merge infrastructure, share risk and costs, leverage the dwindling of product life cycles, and reduce time to market, and that gain and anticipate new opportunities for competitive advantage.

This value enhancing competitiveness is marked by agile marketing and operations organisations that tirelessly search the marketplace as well as the entire supply channel to uncover new sources of innovation and customer enrichment.

The goal is to enhance the capabilities found in each business system around the collective competencies of channel constituents to generate new sources of product and service value, new processes and technologies, and new forms of vertical integration and scale economies that will not only sustain survival, but also engineer continuous market system dominance.

Can you achieve this?

The ability to leverage the supply channel is centred around two critical dynamics.

This activity enables the creation of customer-enriching, individualised combinations of products and services.

Channel co-evolution where top management is to search and initiate centres of innovation, and then to orchestrate a network of supporting enterprises from which new forms of competition and new businesses can evolve.

The expansion in the scope of leadership necessary to realise the potential of SCM is summarised.

(The author is Course Manager, The School of Business Logistics. He can be contacted at info@theschoollog.com.)

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