He also believed that companies should own and control virtually every aspect of its business. Late 1970's and early 1980's witnessed the development of the manufacturing strategy paradigm. The thinkers of the time argued that a company should devise a focused strategy, creating a focused factory that performs a core activity that the company is best at. Late 1980's saw the development of quality management for setting international quality standards. The International Organization for Standardization created the ISO 9000 certification standards with this purpose in view.
Innovations in the process of operations led to the development of Business Process Reengineering in the 1990's. Companies saw the need to become lean in their manufacturing process to remain competitive and BPR aided by helping them eliminate the non-value added steps in their manufacturing process and computerizing the remaining ones to achieve low-cost and higher quality. Then came the Supply chain Management; applying a total system approach to managing the flow from suppliers through factories and warehouses to the end customers. Internet aided the progression during the late 1990's bringing supply chain management to its current level as an essential element of business activity (Chase, Jacobs and Acquilano, 2004).
Supply-chain management (SCM) is a method for integrating a manufacturer's operations with those of all of its suppliers and customers and their intermediaries. SCM seeks to integrate the relationships and operations of several-tier suppliers in meeting necessities such as quantity, delivery and the timely exchange of information (Gunasekaran and Ngai, 2004).
Supply Chain Management
Supply chain management is the discipline of managing the movement of raw materials into an organization and the finished products out of the organization. SCM is an approach that encompasses every process concerned in manufacturing a product, from source to consumption. There has to be a linkage between the suppliers that provide inputs, manufacturing and service support operations that transform the inputs into products and services, and the distribution and local service providers that localize the product (Chase, Jacobs and Acquilano, 2004). This involves building a network that allows a flow of materials, without a break or hitch, throughout the process of production. This flow is fuelled by co-operation, and co-ordination among the diverse channel partners.
Supply chain management thrives on improving efficiency and reducing cost of production by focusing on the core competencies of a company. Functions such as procurement of raw materials and distribution of products are outsourced to companies that are better equipped and more cost-efficient to perform them.
Strategic planning is necessary to develop a network to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers. Information technology has helped integrate the various components of SCM by building a network that aids in sharing necessary data between all supply chain partners within a system.