A supply chain is composed of all the companies involved in the design, production, and delivery of a product to market. Supply chain management is the coordination of production, inventory, location, and transportation among the participants in a supply chain to achieve the best mix of responsiveness and efficiency for the market being served.

Chapter Summary

A supply chain is composed of all the companies involved in the design, production,
and delivery of a product to market. Supply chain management is the coordination
of production, inventory, location, and transportation among the participants
in a supply chain to achieve the best mix of responsiveness and efficiency for
the market being served.

The goal of supply chain management is to increase sales of goods and services
to the final, end use customer while at the same time reducing both inventory
and operating expenses. The business model of vertical integration that came
out of the
industrial economy has given way to “virtual integration” of companies
in a supply chain. Each company now focuses on its core competencies and partners
with other companies that have complementary capabilities for the design and
delivery of products to market. Companies must focus on improvements in their
core competencies in order to keep up with the fast pace of market and technological
change in today’s economy.

To succeed in the competitive markets that make up today’s economy, companies
must learn to align their supply chains with the
demands of the markets they serve. Supply chain performance is now a distinct
competitive advantage for companies who excel in this area. One of the largest
companies in North America is a testament to the power of effective supply chain
management. Wal-Mart has grown steadily over the last 20 years and much, if
not most, of its success is directly related to its evolving capabilities to
continually improve its supply chain.

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