Origin Of Supply Chain Management Essay
A business entity, in the earlier 1950s revolved more around its own self. Merger and acquisitions though prevalent ,a firm used to engage its resources for all the activities needed from buying raw materials to manufacturing and then distributing the products to stockiest, dealers and retailers. The aim was to produce more, reduce cost, sell more and increase profit, all by oneself. Creating partnerships with upstream or downstream players was not considered. As a result, keeping large inventories on the shop floor to sustain mass production was considered necessary. However, as the competition grew in 1970s the need for cost reduction got greatly emphasized and soon there were efforts to reduce inventory.
Increasingly the management of relationships across the supply chain is being referred to as Supply Chain Management (SCM). Strictly speaking, the supply chain is not a chain of businesses with one-to-one, business-to-business relationships, but a network of businesses and relationships. SCM offers the opportunity to capture the synergy of intra- and inter-company integration and management. In that sense, SCM deals with total business process excellence and represents a new way of managing the business and relationships with other members of the supply chain
Material requirement planning (MRP) and Manufacturing Resource planning (MRP II) systems were introduced to reduce inventory holding.
Need for effective Materials management…