Supply chain management (SCM) is a concept that increasing its importance and gaining popularity day by day in the organization. Organizational success is largely depends upon the level of customer’s satisfaction. If the customers of an organization satisfy by their product or services that means an organization can survive the long run in the market without any hindrance and achieve its objective and goals. Carter et al., (1995) defines the supply chain management as a coordinated approach for managing the flows of goods from supplier to the ultimate consumer, and that the goal is to meet customer service objectives while minimizing inventory and related costs. Supply chain management focused on the customer needs, values, services, etc. Productivity and profitability of an organization increases with the increases in the satisfaction level of customers due to increase in sales volume of the product.

SCM has gradually been embraced as a proven management to achieve sustainable profits and growth. This can be accomplished primarily by focusing on the whole SCM process to deliver the right products or services, in the right quantity, to the right place, at the right time and with the maximum benefits. In an organization, supply chain management acts as a blood vessel like blood corpuscles flow in our body and regulate the whole body mechanism, in the same way supply chain management acts as a blood of an organization which flows of goods and service to the ultimate consumer and satisfied the demand of the consumer. The demand generated by the customer’s side which is only being satisfied by organization, when the blood vessel of organization means supply chain management works effectively.

According to Chopra and Meindl (2007) believes that “a supply chain consists of all parties involved directly or indirectly, in satisfying a customer’s request.

According to Christopher (1994), a supply chain is “a network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate customer.” An example of a basic supply chain is shown in Figure

Sources: The Basic Supply Chain ( Chopra and Meindl, 2001)

The Supply chain is an integrated part (department) of the organization which is an extended form of marketing management. Marketing management is concentrating on customer orientation, but the supply chain management not only focuses on the customer, but also on suppliers which is directly or indirectly related to organization and integral parts of the organization such as procurement management, transportation system, inventory management, order placement, information system, demand forecasting. The main objective of supply chain management is to supply right quantity and quality of product to the valued customer at the right time and at the right place. This is possible only when supply chain management works effectively and continuous flow of relevant information regarding goods and service to the customer through the supply chain.

LITERATURE REVIEW:

Felea and Albastroiu, (2002) explored the extended approach of supply chain management, which described some of the most prevalent supply chain management definitions, frameworks and terminology, based on Romanian literature as references, present the term supply chain management and analyzed the concept of the supply chain. Studied conceptual framework of SCM based on secondary data and concluded that it has included the activities such as material sourcing, production scheduling, physical distribution system, information flows, developing new products, satisfying customers, building trust, etc. Treville, Shapiro and Hameri, (2004) conceptualized the primary goal of supply chain management which shows the supply of goods from supplier to end users of goods. This paper proposed a framework to improve the demand chain performance at lead time reduction. Used a typology (demand information transfer, different level of market mediation, relative supply lead time) of demand chain to identify and recommended trajectories to achieve desirable levels of demand chain performance.

Chen and Paulraj, (2004) studied the theory of supply chain management towards the constructs and measurement of supply chain. The objective was too identified and consolidated various supply chain initiatives and factor to develop key supply chain management constructs conducive to advancing the field. Analyzed more than 400 articles and synthesized the large body of work across many disciplines. A discipline was used as followed supply uncertainty, demand uncertainty, technology uncertainty, customer focus, purchasing, information technology, relationship, communication, supplier involvement, supply network, and logistic integration etc. Questionnaires were made to cross sectional mail survey in the United State for data collection. Respondent involved president, director, manager and others respect to purchasing, material, procurement, operation department. The result of the study, successive stage of measurement, analysis and refinement was a set of reliable, valid and one-dimensional measurement than can be conceptualization measurement or to test various theoretical models of SCM.

Stadler, (2005) studied the literature on supply chain management, which covered the several disciplines. The objectives of studied, firstly to extracting the essence of SCM and advance planning in the form of two conceptual framework that was SCM and supply chain planning matrix and second objective was focused on software for advance planning. SCM and supply chain planning matrix variable found on the basis of a literature review that was competitive and customer service, choice of partners, leadership, information and communication technology, process orientation, advance planning , demand planning, distribution, transport, purchasing, material requirement planning, demand satisfaction and available to promise etc.

Sukati, Hamid, Tat and Baharun, (2008) studied the supply chain management practices on consumer goods industry in Malaysia. The purpose of the study was to present the relationship between supply chain management (SCM) and supply chain responsiveness (SCR) and investigated their relationship with competitive advantage (CA). Questionnaire survey method was used to collect the data of 200 samples of managers. Variable included in supply chain management practices was strategic supply partnership, customer relationship, information sharing. Supply chain responsiveness consisted of the operation system, logistic process and supplier network and established the relationship with competitive focus in the terms of price, quality delivery; lead-time, product innovation etc. was analyzed by statistical methods such as reliability, validity and multiple regressions. Multiple regression analysis showed that supply chain management practices was related to supply chain responsiveness and helped to advantage in competition.

Cai, Liu, Xiao and Liu, (2009) proposed a framework using a systematic approach to improve the key performance indicators (KPIs) accomplishment in a supply chain context. A questionnaire was made on the basis of employees and manager interviewed to define different KPIs with their coupled relationship. Identified 20 measures as KPIs based on the characteristics of the retail industry. All identified measures in supply chain competitive was classified into four categories (resources, output, flexibility, inventiveness) and found cause-effect diagram measures matrix was SC management cost, distribution cost , inventory cost, return on investment, information management cost, sales, customer satisfaction, on time delivery, order fulfillment, customer complaints , procurement, delivery flexibility, NP flexibility, logistic flexibility, NP flexibility, IS flexibility, NP sales, SC stability process improvement. Result found that proposed framework provides an effective approach to managing supply chain performance in a dynamic environment.

Bozarth, Warsing and Flynn, (2009) studied the impact of supply chain complexity on manufacturing plant. Supply chain complexity was divided into three components upstream complexity, internal manufacturing complexity and downward complexity. Downward complexity contented various variables like number of customers, heterogeneity in customer needs, shorter products life cycle and demand variability. Upward complexity contented number of suppliers, supplier lead-time and globalization of the supply base and internal manufacturing complexity had a capacity of product, number of parts, manufacturing schedule and volume batch production. Studied was made in 209 manufacturing plants in seven different countries and result found that high level of upstream and internal manufacturing complexity will negatively impact on plant schedule attainment and manufacturing cost and higher level of downward complexity decrease the unit manufacturing cost performance.

Flynn, Huo and Zhao, (2010) studied the relationship between three dimensions of supply chain integration, operations and business performance from both contingency and configuration perspective in order to achieve effective and efficient flows of product and services, information, money and decides to provide maximum value to customers. The contingency approach suggested that the organization should match their structures and process to their environment in order to maximize performance (Donaldson, 2001).A configuration approach focused on alignment of strategy and system was reflected in the pattern observed in practice (Miller,1986). Hierarchical regression was used to determine the impact of supply chain integration dimension (customer, supplier and internal integration) and their interaction on performance. Customer integration included sharing of information, communication, ordering system, customer feedback, demand forecast, availability of inventory associated with a customer. Supplier integration included procurement, information, ordering, available inventory, demand, inventory associated with supplier. Internal integration included process, new product development, internal function, inventory management. A questionnaire was submitted to academicians and supply chain executive for their review and data were collected from manufacturing companies in china. Result found that direct effect of SC integration of operational and business performance and also found there was an interrelationship with operational and business performance.

Almost all the studies showed that supply chain management system having a set of activities to perform its job like goods flows, cash flow and information flow this is called supply chain practices. An SCM practice is defined as a set of activities undertaken in an organization to promote effective management of its supply chain (Donlon, 1996). Supply chain management is a process of planning, implementing and controlling the operation of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Effective supply chain management equilibrates the supply of the product by an organization to fulfill the demand of the ultimate consumer.

Supply chain of an organization effective only when all the parties involved in the supply chain work properly. Supply chain management system is primarily concerned with the efficient integration of supplier of organization, transportation system, warehousing, order management, information management, procurement management, relationship, strategic sourcing, inventory management and demand forecasting. On the basis of a conceptual study of supply chain management of an organization, SCM is divided into three streams which work collectively and enhance the efficiency of product supply which leads to fulfill the demand of the ultimate consumer. The three streams are as follows-

1. Upward stream

2. Downward stream

3. Internal stream

Upward stream –

Upstream supply chain of an organization involves searching and extracting of raw materials from various sources. According to the production capacity demand, manufacturing organization placed in order to purchase raw materials from various suppliers/ vendors. These are the various types of suppliers such as single suppliers, multiple suppliers, third party logistics, fourth party logistics etc. as per organizational requirement. Suppliers concerned not only provide good quality of raw materials and services to the manufacturer, but also provide precious information about the quality of raw materials. These are actively undertaken in an organization to promote effective management of the upstream supply chain.

Downward stream-

Downstream supply chain mainly focuses on demand, preferences, desire and needs of the customer. Marketing researcher of an organization studies the customer centric marketplace and other competitive market for acquiring the data about the customer taste, preferences, needs and the demands of the customer. This data information goes up to the top level of management. Organizational supply chain management provides goods and service to the customers continuously and fulfilled its desire on the basis of its preferences, needs and demands. This set of activities undertaken in an organization to promote effective management of the downstream supply chain which is called downstream supply chain practices.

Effective work of the upstream supply chain and downstream supply chain will be completely dependents on the internal supply chain management of an organization. Following are the integrated practice of the internal supply chain which increases the effectiveness of upstream and downstream supply chain:

· Demand forecasting

· Information technology

· Procurement management

· Order management

· Transportation management

· Warehouses management

· Inventory management

Internal Stream-

The internal supply chain is an internal activity of manufacturing organization which enhances the efficiency of both the upward and downward stream of supply chain. This helps to obtain raw materials by supplier and distributed finished product to the ultimate users in an adequate time period to obtain right quality, right quantity and right place. So many demand forecasting techniques is used to know the demand of market and customers. After knowing the demand of market and customers, order is placed by the organizations in the various out sources to fulfill the requirement of raw materials. These raw materials converted into finished product and then it’s stored in the warehouses before dispatching to the ultimate users. Warehouse management is a part of internal supply chain which provides a space for storage of finished goods or semi finished goods and raw materials and also protect from wastage, spoilage and damage.

Transportation management is a very crucial internal activity of the supply chain which takes part to intake of raw materials from the various sources or by outsources as well as dispatching of finished or semi finished product from an organization to the valued customer. So many techniques are used for inventory management to protect from overcrowding of the product and also maintained the minimum stock level of product like ABC analysis, VED matrix, Economic order quantity, etc. Procurement process is also a most important activity in internal supply chain of manufacturing organization. This process excess to procure the raw materials from various sources/outsources i.e. right quality and good quantity purchase of materials etc.

For appropriate working on all these activities, communication has played an important role to adequate supplies of information in both the direction of downstream and upstream supply chain which leads in enhancing the advancement of tool and techniques. All this set of activities undertaken in an organization to promote effective management of internal supply chain. Internal supply chain management increases the effectiveness of the supply side (upstream supply chain) and the demand side (downstream supply chain) of the supply chain.

All the stream of the supply chain together makes an effective supply chain management of an organization which equilibrates the supply and demand side of the supply chain. Demand of the goods or services changed according to taste, preferences, needs and desire of the customer. Supply chain management of an organization has a difficult task to overcome the fluctuated demand of the customer, no organization can survive if the demand of the customer is not satisfied, and it is cut out from the market. But those organizations having effective supply chain management, can overcome the fluctuated demand of the customer by effective supply side of the organization.

Strategic sourcing of an organization handle the upstream supply chain which increases effectiveness of supply to obtain high quality of raw material, raw material on lead time, decreased uncertainty and delivery time period, good service provided by suppliers, there is no communication gap between suppliers and manufacturer and shared reliable information, assessment of advance technology increased the source’s delivery speed, right documentation, just in time delivery. Strategic sourcing increased the affection of the supply side of supply chain management.

Capacity planning of an organization measures the ability to produce goods and services that the customer demanded. Close relationship with suppliers and manufacturer helped the organization to reduce the cost like (raw materials or finished product cost, transportation cost, storing cost), improving the quality, to enhance the product development and leads to deliver the high quality, well -priced parts and components.

CONCLUSION:

This study has contributed to; in particular, the SCM literature by proposing a research that relates to supply chain management. This paper studies all the aspects of supply chain management which takes place in the process of the effective supply chain management. Supply chain management works in the direction of the upstream supply chain (supply side) and the downstream supply chain (demand side) management. Effective upstream supply chain management increases the efficiency of the supply side of the supply chain management and the downstream supply chain increases the efficiency of the demand side of the supply chain. Effective supply chain satisfied the demand of the customer. Thus, on the basis of concepts and literature of supply chain management it is concluded that effective supply chain management equilibrates the demand and the supply management of an organization.

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Received on 01.09.2016 Modified on 10.09.2016

Asian J. Management. 2016; 7(3): 231-235.

DOI: 10.5958/2321-5763.2016.00035.4