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1Supply Chain Management (SCM):Theory and EvolutionMamun HabibAmerican International University - Bangladesh (AIUB)Bangladesh1. IntroductionDuring last decade, researchers usually focused on Supply Chain Management (SCM) issuesin profit organizations. Research objectives may include adding value, reducing cost, orslashing response time in various parties involved in the manufacturing supply chain.However, very few studies were attempted in non-profit organizations. An extremely scarcenumber of research papers focused on SCM in the academia (Habib, 2011, 2010e, 2010d,2010f, 2010g).Hay (1990) states that a profit organization attempts to maximize profits, whereas anon-profit organization considers monetary returns of less importance. Their majorobjectives may include improved literacy rate, better quality of life, equal opportunities forall genders or races, etc. The revenues gained by a non-profit organization would be usedprimarily to balance the expenditure of the organization. Due to conflicting objectives,managing a successful profit organization may be drastically different from a non-profitorganization (Firstenberg, 1996; Drucker, 1992). Recently, an increasingly large number ofresearch studies highlight the criticalness of SCM as a means to assuring organizationalsuccess.SCM assists the business organization to compete in the dynamic international market. Theobjective of SCM is to incorporate activities across and within organizations for providingthe customer value. This should also be applicable to the academia, which represents a typeof non-profit organizations. The goal is to provide the society value by producing highquality graduates and research outcomes. An integrated educational supply chain involvescoordination and information sharing up and down the process among all stakeholders.With technology facilitating information flow, a coordinated supply chain can be designedto meet the strategic, planning, and operating objectives of the educational institutions. Italso means establishing effective and feasible relationships both inside and outside theorganization (Sandelands, 1994).SCM is needed for various reasons: improving operations, better outsourcing, increasingprofits, enhancing customer satisfaction, generating quality outcomes, tackling competitivepressures, increasing globalization, increasing importance of E-commerce, and growingcomplexity of supply chains (Stevenson, 2002). Supply chains are relatively easy to definefor manufacturing industries, where each participant in the chain receives inputs from a setof suppliers, processes those inputs, and delivers them to a different set of customers. Withwww.intechopen.com

4Supply Chain Management - Applications and Simulationseducational institutions, one of the primary suppliers of process inputs is customersthemselves, who provide their bodies, minds, belongings, or knowledge as inputs to theservice processes (Habib and Jungthirapanich, 2009b, 2009c, 2010a, 2010c, 2010h, 2010i).This chapter reveals the following objectives: Analysis the overview of SCM through different citations. Review extensive literature reviews regarding SCM based on secondary data. Define the SCM and the evolution of SCM. Analysis the trends of SCM and its future perspectives.2. Literature reviewThe term, “supply chain management,” has risen to eminence over the last ten years. About13.55% of the concurrent session titles contained the words “supply chain” at the 1995Annual Conference of the Council of Logistics Management. The number of sessionscontaining the term rose to 22.4% at the 1997 conference, just two years later. The term iscommonly used to illustrate executive responsibilities in corporations (La Londe 1997). SCMhas become such a “hot topic” that it is difficult to pick up a periodical on manufacturing,distribution, marketing, customer management, or transportation without seeing any articleabout SCM or SCM-related topics (Ross, 1998).Some authors defined SCM in operational terms involving the flow of materials andproducts, some viewed it as a management philosophy, and some viewed it in terms of amanagement process (Tyndall et al., 1998), some viewed it as integrated system. Authorshave even conceptualized SCM differently within the same article: as a managementphilosophy on the one hand, and as a form of integrated system between vertical integrationand separate identities on the other hand (Cooper and Ellram, 1993).According to Christopher (1994), a supply chain is “a network of organizations that areinvolved, through upstream and downstream linkages, in the different processes andactivities that produce value in the form of products and services in the hands of theultimate customer.” An example of a basic supply chain is shown in Figure low of goodsFlow of information and fundsFig. 1. The basic supply chain (Chopra and Meindl, 2001)The supply chain includes suppliers, manufacturers, distributors, retailers, and customers.The customers are the main focus of the chain, since the primary purpose of the existence ofany supply chain is to satisfy customer needs, in the process generating profit for itself(Chopra and Meindl, 2001). SCM was initially related to the inventory management within asupply chain. This concept was later broadened to include management of all functionswww.intechopen.com

Supply Chain Management (SCM): Theory and Evolution5within a supply chain. According to Chopra and Meindl (2001), “SCM engages themanagement of flows between and among stages in a supply chain to minimize total cost”.This definition implies that SCM involves management of flows of products, information,and finance upstream and downstream in the supply chain.In the course of time, the most considerable benefits to businesses with advanced SCMcapabilities will be radically improved customer responsiveness, developed customerservice and satisfaction, increased flexibility for changing market conditions, improvedcustomer retention and more effective marketing (Horvath, 2001).SCM is a concept, “whose primary objective is to integrate and manage the sourcing, flow,and control of materials using a total systems perspective across multiple functions andmultiple tiers of suppliers” (Monczka, Trent and Handfield, 1994). Stevens (1989) stated theobjective of SCM was to synchronize the customers’ requirements with materials flow tostrike a balance among conflicting goals of maximum customer service, minimum inventorymanagement, and low unit costs.The supply chain is viewed as a single process. Responsibility for the different divisions inthe chain is not fragmented and transferred to functional areas such as manufacturing,purchasing, distribution, and sales. SCM calls for, and in the end depends on, strategicdecision-making. “Supply” is a shared objective of practically every function in the chainand is of particular strategic importance because of its impact on overall costs, profits andmarket share. SCM calls for a different point of view on inventories that are utilized as abalancing mechanism of last, not first, resort. A latest approach to systems is required integration rather than interfacing (Houlihan, 1988).SCM is delivering major economic benefits to businesses as diverse as manufacturing, retail,and service organizations, etc. (Horvath, 2001). The scope of SCM was further expanded toinclude re-cycling (Baatz, 1995). SCM deals with the total flow of materials from suppliersthrough end users (Jones and Riley, 1985). It highlights “total” integration of all stakeholderswithin the supply chain, a realistic approach is to consider only strategic suppliers andcustomers since most supply chains are too complex to attain full integration of all thesupply chain entities (Tan et al., 1998).Supply chain strategy includes “two or more firms in a supply chain entering into a longterm agreement; the development of mutual trust and commitment to the relationship; theintegration of logistics events involving the sharing of demand and supply data; thepotential for a change in the locus of control of the logistics process” (La Londe and Masters,1994). Manufacturers are able to develop alternative conceptual solutions, select the bestcomponents and technologies, and assist in design assessment by involving suppliers earlyin the design stage, (Burt and Soukup, 1985).SCM incorporates logistics into the strategic decisions of the business (Carter and Ferrin,1995). Eventually, the philosophy developed and combined into a common body ofknowledge that encompassed all the value-adding activities of the manufacturers andlogistics providers (Tan, 2001). Many SCM strategic models have been investigated to linkits vital role in overall strategic corporate planning (Frohlich et al., 1997; Watts et al., 1992).Experts agree that a formal supply chain strategy will be critical to both manufacturing andservice industries (Kathawala, 2003).Such ambiguity suggests a need to examine the phenomena of SCM more closely to defineclearly the term and concept, to identify those factors that contribute to effective SCM, andwww.intechopen.com

6Supply Chain Management - Applications and Simulationsto suggest how the adoption of an SCM approach can affect corporate strategies, plans,operations and performance.Proper performance measures and metrics including activity-based costing andmanagement may be helpful in identifying non-value-adding activities across a supplychain. Total Quality Management (TQM) methods can be utilized to eradicate theseinefficiencies, thereby improving the overall effectiveness of a supply chain. Customerdemands and supply chain relationships are the key in selecting the most appropriatemethod of target costing for supply chains. Activity-based, process-based, value-based andcost management approaches may be fit for TQM in SCM (Lockamy and Smith, 2000).2.1 Definitions of SCMAmerican Production and Inventory Control Society (APICS, 1990) define the supply chainas the processes from the initial raw materials to final consumption of the finished productslinking across supplier-user industries. The supply chain constitutes all functions withinand outside an industry, which enable the value chain to make products and provideservices to customers (Inman, 1992). Some researchers suggested a clearer SCM definition byadding the information system necessary to monitor all of the activities (Lee, 2002; Morgan,1995; Talluri, 2002).Recently, the Council of SCM Professionals (CSCMP), which is the premier organization ofsupply chain practitioners, researchers, and academicians, has defined SCM as: “SCMencompasses the planning and management of all activities involved in sourcing andprocurement, conversion, and all Logistics Management activities. Importantly, it alsoincludes coordination and collaboration with channel partners, which can be suppliers,intermediaries, third-party service providers, and customers. In essence, SCM integratessupply and demand management within and across companies” (Ballou, 2007).Scott and Westbrook (1991) described SCM as the chain linking each element of themanufacturing and supply process from raw materials to the end user. This managementphilosophy focused on how firms utilized their suppliers’ processes, technology,information, and capability to enhance competitive advantage (Farley, 1997), and thecoordination of the manufacturing, materials, logistics, distribution and transportationfunctions within an organization (Lee and Billington, 1992). SCM is an integrativephilosophy to manage the total flow of a distribution channel from supplier to the ultimateuser (Cooper et al., 1997).Supply chain is defined as all the activities involved in delivering a product from rawmaterials to the customer including sourcing raw materials and parts, manufacturing andassembly, warehousing and inventory tracking, order entry and order management,distribution across all channels, delivery to the customer, and the information systemsnecessary to monitor all of these activities. SCM coordinates and integrates all of theseactivities into a seamless process. It links all of the stakeholders in the chain includingparties within an organization and the external partners including suppliers, carriers, thirdparty companies, and information systems providers (Lummus, 1999).SCM is defined as the systemic, strategic coordination of the traditional business functionsand the tactics across these business functions within a particular organization and acrossbusinesses within the supply chain, for improving the long-term performance of theindividual organization and the supply chain as a whole (Mentzer and et al., 2001).www.intechopen.com

Supply Chain Management (SCM): Theory and Evolution7Most of the recent SCM literature focused on the purchasing function, stating that it was abasic strategic business process, rather than a specialized supporting function (Wisner andTan, 2000). It was a management philosophy that extended traditional internal activities byadopting an inter-enterprise scope, allowing trading partners together with the commongoal of optimization and efficiency (Harwick, 1997).The customized definition for the service industry is as follows: The SCM for the serviceindustry is the ability of the company/firm to get closer to the customer by improving itssupply chain channels. The services supply chain will include responsiveness, effectiveness,efficiency, and controlling (Kathawala, 2003). One of the primary suppliers of process inputsis customers themselves in service organizations. This concept of customers being suppliersis recognized as ‘customer-supplier duality.’ The duality implies that service supply chainsare bi-directional (Sampson, 2000). The concept may be applicable to the academia as well.(Habib, 2010e, 2010g).Integrated SCM is about going from the external customer and then managing all theprocesses that are needed to provide th