The Future of Supply Chain Management: Shifting from Logistics Driven to a Customer Driven Model

Origins

As per one definition, SCM is the coordination of the demand and supply of products and services between a supplier’s supplier and a customer’s customer. It involves the flow of products, information, and money between the trading partners of a company’s supply chain. The proactive improvement in the efficiency and effectiveness of the flow of goods, services, and knowledge across all stakeholders achieves the goal of reducing total costs and obtaining a competitive advantage for all parties.

Supply chain is the network of facilities (warehouses, factories, terminals, ports, stores, and homes), vehicles (trucks, trains, planes, and ocean vessels), and logistics information systems connected by an enterprise’s suppliers’ suppliers and its customers’ customers. Supply chain flow is optimized when material, information, and money flow simultaneously in real time and without paper.⁵

SCM revolves around efficient integration of suppliers, manufacturers, warehouses, and stores. Other definitions are more comprehensive and detailed:

As it can be seen from our discussion thus far and from the voluminous literature on supply chain, the focus is constantly on the network of facilities, logistics, supplies, and suppliers. This is due to two main reasons: (1) the origins of the concept of supply chain lie in logistics and in inventory. and (2) the supply chain is related mostly to manufacturing or tangible goods, and thereby, the developments in the services sector and in the knowledge economy are overlooked.

Some thoughts are emanating gradually on the use of supply chains for customer satisfaction. For instance, “efficient integration of suppliers, manufacturers, … so that enterprise can increase service level” (Simchi-Levi et al., 2003) and “maximize customer service and minimize cost of the same” (Frazelle, 2002). The closest one gets to customer focus is in the following statement: