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Market Analysis: Supply Chain Management


The Four Links in the Chain

Why does SCM give so many companies fits? Because the process is complex across four key areas--demand, logistics, manufacturing and supply. To make sense of it all, remember one tenet: All the processes that make up SCM have one end game--optimization. The goal is to deliver goods and services to the customer in the most time- and cost-efficient manner (see "The Four Key Components of Supply Chain Management," left). Note that SCM is concerned with planning and management, not execution, which is the purview of SCE (supply chain execution) and ERP (enterprise resource planning) systems.

It's tempting for IT to toss all these issues to the business side because, after all, it's really their problem. But don't. Technology--whether packaged applications, like a BI (business intelligence) suite, or a set of tools on which IT can build custom software--is critical to SCM. Technology automates processes such as purchasing and kicking manufacturing into high gear. Technology can streamline order and fulfillment, reducing staff hours and costs.

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