Supply Chain Management: The Basics

Supply Chain Management has been a popular phrase for the past twenty to twenty-five years. It can be heard in classrooms, large corporations, and tiny operations, supply chain management has become a management phenomenon that has swept across the United States and throughout the world. What is it? Who developed it? How long has it been around? What companies use it? In this paper, I will be delving into the basics of supply chain management, providing the reader with a basic knowledge of the subject as well as examples of companies that practice supply chain management and some up-to-date technological advances in the area.

There are several definitions for supply chain management. Some view it as a new name for a combination of purchasing, operations and logistics. Others consider it to be identical with logistics, inclusive of consumers and suppliers. Business people acknowledge supply chain management as a new way to manage business and relationships with other members of the supply chain such as suppliers, manufacturers, and consumers. The Global Supply Chain Forum defines supply chain management as the integration of key business processes from end user through original suppliers that provides products, services, and information that add value for customers and other stakeholders (Lambert 2004).

A research team at the University of Tennessee has defined Supply Chain Management as "the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain for the purpose of improving the long-term performance of the individual companies and the supply chain as a whole (Logistics Management & Distribution Report 2001)." Doug Smock defines supply chain management as the process of how products are designed, sourced through an often complex network, manufactured, and distributed from raw material to the end customer with the purpose of creating as much cross-functional teaming and coordination as possible to reduce costs, standardize, simplify, reduce inventories and maximize profits from assets (Smock 2003).

The concept of supply chain management has been evolving since the early 1960s (Quinn 1997) but has actually been traced back to the late 1800s (Dik, Kambil). However, the credit for the further development of this concept goes to Thomas Stallkamp, a top buyer at Chrysler Corporation in the 1980s (Smock 2003). The conceptualization of supply chain management can be divided into three phases. The first phase began in the late 1800s with Richard Sears and Alvah Roebuck separating the concepts of supply and demand. This separation was due to the utilization of railroads, mail, telephones, and telegraphs. They created a mail order system and fashioned new practices in warehousing and distribution. Sears and Roebuck made many innovations in continuous process manufacturing that gave the company an opportunity to offer customers greater values. It was one of the fastest growing, most successful companies of the twentieth century (Dik, Kambil).

The second phase of the Supply Chain Management era is called the "push" phase. This period ran from 1960-1975 and focused on the physical distribution of finished goods. The goal was to balance production output with consumer requirements by pushing production output to finished goods locations (Quinn 1997). During the 1970s, foreign competitors were marginalizing the market share of American companies in industries such as automobiles and electronics. As these foreign entities struggled for the American market share, they adopted innovative manufacturing practices that influenced how American industries manufactured goods. New practices were improved by new computing capabilities such as scientific and data-driven practices. These capabilities provided functions such as Materials Requirement Planning and Manufacturing Requirements Planning, which improved supply chain performance and efficiency. Other techniques, such as Just-in-Time manufacturing, were developed to lessen the amount of inventory on hand resulting in lower inventory costs and a more resourceful supply chain (|Dik, Kambil).

The third phase has taken place from 1975-Present. During Phase II, business leaders recognized the importance of operations within the enterprise. There was shift in Management Information Systems from financial matters to materials-management techniques. Companies began to credit a consumer pull channel as the power of the Supply Chain moved downward to consumers (Quinn 1997). Computer technologies such as Electronic Data Interchange (EDI), Vendor-Managed Inventory (VMI), and Collaborative Planning, Forecasting, and Replenishment (CPFR) enabled supply chain management to really flourish during this era. The development and sophistication of the Internet has given businesses the ability to create private platforms of exchange, allowing companies to manage ordering and filling processes, payment and settlement processes, joint design, and forecasting processes with preferred buyers or sellers. This era also has seen a change of manager mind-set when it comes to supply chain. Managers shifted from optimizing processes in the firm to using supply chains in order to redefine the concept of "value" for the customer (Dik, Kambil).

Four types of supply chains

Throughout the 1990s, Supply Chain Management continued to evolve, as outsourcing became a more popular practice. Since supply chain management is consumer-driven, it is imperative that requirements are met quickly and accurately with as little waste and as few defects as possible. Maximum efficiencies, logistics, and product distribution are key in supply chain management (Smock 2003). Anderson Consulting has developed seven principles of supply chain, which, if followed correctly, give the company applying the principals an abundance of competitive advantages. The principles, as defined by Anderson Consulting, are:

1. Segment customers based on services needs. Companies traditionally have grouped customers by industry, product, or trade channel and then provided the same level of service to everyone within a segment. Effective supply-chain management, by contrast, groups customers by distinct service needs, regardless of industry, and then tailors services to those particular systems.

2. Customize the logistics network. In designing their logistics network, companies need to focus intensely on the service requirements and profitability of the customer segments identified. The conventional approach of creating a "monolithic" logistics network runs counter to successful supply chain management.

3. Listen to signals of market demand and plan accordingly. Sales and operations planning must span the entire chain to detect early warning signals of changing demand in ordering patterns, customer promotions, and so forth. This demand-intensive approach leads to more consistent forecasts and optimal resource allocation.

4. Differentiate product closer to the customer. Companies today no longer can afford to stockpile inventory to compensate for possible forecasting errors. Instead, they need to postpone product differentiation in the manufacturing process closer to actual consumer demand.

5. Strategically manage the sources of supply. By working closely with the key suppliers to reduce the overall costs of owning materials and services, supply-chain management leaders enhance margins both for themselves and their suppliers. Beating multiple suppliers over the head for the lowest price is out, Andersen advises. "Gain sharing" is in.

6. Develop a supply-chain-wide technology strategy. As a cornerstone of successful supply-chain management, information technology must support multiple levels of decision-making. It also should afford a clear view of the flow of products, services, and information.

7. Adopt channel-spanning performance measures. Excellent supply-chain measurement systems do more than just monitor internal functions. They adopt measures that apply to every link in the supply chain. Importantly, these measurement systems embrace both service and financial metrics, such as each account's true profitability. (Quinn 1997)

According to Bill Helming, the number one driver for the supply chain is the delivery channel you work through. Peter T. Funke, the director of marketing for Chemical Lehman Tank lines has identified the following as supply-chain transportation drivers:

1) Reducing total costs. Eliminating redundant and inefficient processes from the supply chain.

2) Improve services. Developing tighter schedules and more accurate forecasts between shippers, carriers, and cosignees.

3) Increasing asset utilization. Eliminating assets that aren't essential to the company's core functions, such as private fleets, and devise more efficient method of using the remaining assets.

4) Increase scope. Use information technology to expand the amount and type of information shared with suppliers, customers, and internal groups. Increase speed and accuracy of decisions and processes.

These transportation drivers create a smooth operating network and can save a company between 15% and 40% rather than a traditional purchasing function that can save a company, at most, 5%. A study by consultants at A.T. Kearney shows that the functions in the supply chain represent somewhere between 60%-80% of a typical manufacturer's cost structure. Each of these drivers should be focused on equally because targeting any single process could actually be less cost effective for a company in the long run (Minahan 1996).

Two examples of supply chain management can be seen through Abington Memorial Hospital and Dell Computers. Founded in 1914, Abington hospital is located in three counties in Pennsylvania: Bucks, Montgomery, and Philadelphia. Today it provides services for cancer care, maternal child health, and cardiac care. The hospital is also the only accredited trauma center located in Montgomery County. The hospital needed to improve the quality of medical care while creating operating efficiencies. The solution that was developed involved a physician-engaged materials management program. This program helped the hospital identify cost savings opportunities by conducting a benchmark study, educating hospital administrators and physicians about contract negotiations, evaluating and renegotiating vendor agreements, as well as recommending operational changes.

So, how did they do it? A consultant from VHA worked at the hospital two days per week and helped create two physician led groups. The Value Assessment Team was assigned the task of looking at how materials were used and identify opportunities for standardization and utilization management. The Medical Team was to examine how materials were used and enhance physician integration by identifying cost saving opportunities that would not impair the quality of medical care. Additional teams were created to conduct line item analyses, price tier optimization, standard analysis, and contract enhancement review. The creation of these teams resulted in a higher level of involvement among those involved towards the solution.

The consultant from VHA was able to work with Abington's operating room materials manager, Jane Cartwright to identify underlying cost saving opportunities. The following cost savings opportunities were identified:

Savings of more than $712,000 in one year by working with the operating room materials manager to negotiate a better price for automatic implantable cardioverter defibrillators and pacemakers.

Savings of $340,000 in one year by outsourcing the sterilization, refurbishing and repairing of laparoscopic equipment and switching from disposable to cloth gowns.

Savings of $350,000 over a two-year period by negotiating a better price for the stents used in the cardiac catheterization lab (that's $600 to $800 in savings per stent!).

Savings of $82,000 in 2004 by outsourcing the sterilization and packaging of cystourethroscopy instruments.

Savings of $561,000 over a three-year period by renegotiating its radiopharmaceutical contract.

Savings of $255,000 in one year by negotiating a 50-50 market share agreement with two of the leading stent manufactures for disposable cardiac interventional products (for example, stents and balloons)

Savings of $51,000 by having one Boston Scientific stent moved to a Novation contract.

The result of all of this hard work and research was a savings for Abington Memorial Hospital in excess of $2.4 Million (Palmer 2005).

The next example involves a leader in today's technology industry. Dell Computers has made mass customization a common phrase since Michael Dell began his company in the 1980s with the vision that customers could directly communicate with the company. Today, Dell is one of the most successful companies in the United States, if not the world, and the company has its innovative supply chain strategy to thank. Many have tried to duplicate Dell's supply chain strategy, however many have failed to grasp the concepts behind the success of the technology giant. There is a certain culture at Dell that is the backbone of the company's success. Appropriate pairing of people and process elements in addition to a set of disciplined business processes guide the supply chain operations as well as the entire organization. The executives at Dell realize that they have a winning strategy and also realize the difficulty in duplicating their success. As one Wall Street analyst says, "It's like watching Michael Jordan stuff the basketball. I see it. I understand it. But I can't do it."

By communicating directly with customers, Dell can accurately sense changes in consumer demand. Recently, this ability has enabled Dell to move from a slowing PC and server sector to more innovative areas such as printers, handhelds, projectors, and most recently, flat screen televisions. So how does Dell generate such global success? The company is focused on increasing business velocity and the elimination of waste. Also, the culture that has been established at Dell has been carefully woven together with a set of disciplined business processes. The processes that are practiced by employees at all times include: constantly focusing on driving down backlogs, promoting best practices, and creating synergies among adjacent processes as seen in cross-functional initiatives for example, the design-for-manufacturability effort between manufacturing and research and development.

When broken down, Dell's DNA consists of four main areas: demand management, internal collaboration, leveraging partners, and financial fundamentals. The direct management model gives the company the unique ability to respond quickly to the changing of consumer demands in the marketplace, as well as generate very accurate forecasts. However, forecasts are relatively short-lived and are outdated very quickly so Dell is constantly balancing and managing supply and demand. Dell also utilizes their Web portal by updating it often with product promotions that are directly related to the customers' demand and the company's supply. They have mastered the art of quickly adapting to changes, which is essential to good demand management. The culture at Dell is also focused on the ability to be flexible. One Dell executive states that, "It's better to be fast and good than slow and perfect."

Internal collaboration is driven by Dell's culture, which highly values the sharing of information and the empowerment of all employees. If a problem arises and grabs the attention of Michael Dell or Chief Executive Kevin Rollins, they directly e-mail employees who may be many organizational levels below them to inquire about the issues. Quick and direct responses are expected in the Dell culture to reassure that the issue is being addressed. This is a unique practice when most companies have an organizational hierarchy where it could take days or even weeks to get in touch with the company executives. To reduce the delay in information transfer, lower level employees are given the opportunity and power to make decisions. Direct communication and involvement at all levels are an integral part of the Dell culture.

Business partners are subject to stringent guidelines and lofty performance goals. Open and honest communication is expected of suppliers with the Dell Corporation. Dell provides direct signals of customer demands to suppliers and shares current and projected market shifts and sourcing strategies in return for information about capacity outlooks and new technology drivers. Each quarter, suppliers meet with Dell executives to receive feedback regarding recent performance and future expectations. Suppliers receive scorecards that give them an opportunity to view their status in comparison to the status of their corporate peers. These cards compare cost, quality, reliability, and continuity of supply. In return for good performance, the supplier gains access to large volumes of business, as well as, training in process development and improvement. Personal relationships with coworkers throughout the supply chain are encouraged and, in his book, Michael Dell explains his philosophy, "Dell sells computers directly to our customers, deals directly with our suppliers, and communicates directly with our people, all without the unnecessary and inefficient presence of intermediaries."

Focusing on the business fundamentals is the basis of Dell's entire supply chain. The most important number is operating margin to ensure long-term profitability. Each manager at Dell is expected to know and have the capability to present current, detailed performance figures on a moment's notice. Each employee knows the four metric categories needed to make each week successful. These categories are quality, productivity, safety, and delivery. Employees are rewarded for good performance such as improving financial performance and decreasing costs.

Overall, Dell is a supply chain icon. The company exercises supply chain management by incorporating their four core processes and by including individual employees, as well as teams, to create a directly communicative environment. The culture supports honesty and straightforwardness, which ultimately creates good relationships between executives and employees, the company and the suppliers, and the company and the consumer (Fugate, Metzer 2004).

Successful supply chain management requires various processes in order to maintain optimal product flows. Although there is not an industry standard of processes as of yet, it is key to have similar processes in place. This way, managers in various organizations throughout the supply chain can use a "common language" to connect their processes with the processes of other supply chain members. The Global Supply Chain Forum has identified the following as eight key supply chain processes: Customer Relationship Management, Customer Service Management, Demand Management, Order Fulfillment, Manufacturing Flow Management, Supplier Relationship Management, Product Development and Commercialization, and Returns Management. These processes, when implemented properly, involve all key customers and suppliers, thus creating a higher likelihood for success. (Lambert 2004)

A blue print is created by the customer relationship management process, which helps to develop and maintain customer relationships. Key customers and customer groups are identified and targeted with a goal of segmenting these customers based on their value over time. Product and service agreements are created by cross-functional customer teams and specify different levels of performance for a firm. Then the product and service agreements are provided to these key customers based on their value offer in order to create customer loyalty. Advancement of processes and elimination of demand variability and non-value-added activities are achieved as a Customer Relationship Management team works with these key customers.

A product and service agreement defines and documents how the two firms will engage in business. Agreements can be created in a variety of ways, from formally written to informally spoken. Written documents tend to be the most popular and functional for achieving the desired results of profitability and business-to-business congruence. Douglas Lambert gives the example of 3M for proper and effective use of product and service agreements. Each product and service agreement written for 3M is a formal documentation of how 3M will interact with the other business. Included in the product and service agreements written by 3M are: contact information including name, title, telephone number, and e-mail address for 3M and the customer representatives; all of the details related to transportation including deliveries, order minimums, driver instructions, will-calls, and appointments; bill-of-lading instructions; pallets to be used; purchase-order confirmations; order-status information; details related to pricing inquires; availability of market-development funds: marketing promotional allowances; acceptability of back orders and how they will be handled; and contract terms.

Demand management ensures that the right processes are in place so that managers are able to match supply and demand. When supply and demand are matched correctly, the managers can ensure that the plan can be implemented with minimal disruptions. The demand management process includes coordinating supply and demand, forecasting, increasing flexibility, coordinating marketing requirements and production plans, reducing variability, and all practices that increase demand variability. Uncertainty is reduced in this process by utilizing point-of-sale and key customer data.

One may believe that the order fulfillment process is entirely focused on fulfilling orders. However, this is not the case. There are many activities associated with defining consumer requirements, designing a network, and making it possible for a firm to meet customer requests. All of these activities must be completed while minimizing the total delivered cost. Key suppliers and customers are essential to the process even though much of the actual order fulfillment work is done by the logistics function. The goal of this process is to create a flawless system from the firm to the supplier to the customers.

Activities necessary in order to obtain, implement, and manage manufacturing in the supply chain and to move products through plants make up manufacturing flow management. The goal of this process is to produce a wide array of products at the lowest possible cost and in a timely fashion. Supply chain partners are a large and important aspect of realizing the desired manufacturing flexibility level.

Supplier Relationship Management is very similar to Customer Relationship Management. The goal of this process is to develop and maintain supplier relationships by way of product and service agreements. Just as in customer relationship management, there are a small number of suppliers that are sought after to have a maintained relationship. These suppliers are categorized by the value that they bring to the firm over a certain period of time. A product and service agreement is negotiated for each supplier that defines the relationship between that particular supplier and the firm. Suppliers that are categorized as less critical, the firm provides a non-negotiable product and service agreement.

CRM and SRM are critical to the ultimate success of supply chain management implementation. Customer relationship management and supply relationship management actually coordinate each of the other six processes. Improvements are showcased in customer and supplier profitability reports. Management teams are made up of representatives from marketing, sales, finance, production, purchasing, logistics, and research and development in order to develop, maintain, and implement the strategic elements of the processes. The operational elements within each functional area are supervised and executed by managers. The customer relationship management and supply relationship management teams maintain overall managerial control of their respective processes. These teams will work together to develop relationships in order to create joint profitability. They also strive to make a positive impact on a customer's profitability. Each year, these two teams must work together to improve the profitability of all members.

Customer relationship management and supplier relationship management are so critical that they themselves have seven sub processes that differentiate customers/suppliers. These sub processes are: preparing the account/segment management team; internally reviewing details related to the business conducted; identifying opportunities for sales growth, cost reduction, and service improvements; developing product and service agreements; implementing the product and service agreements; and measuring performance and generating profitability reports and total cost reports as appropriate. The teams must also place a quantitative value, in financial terms, on the benefits of any process improvements. Douglas Lambert uses the example of Cargill, a provider of food and agricultural products. In order to share supply chain benefits, the customer relationship management and supplier relationship management teams worked with key customers to develop the following elements that would be incorporated into their strategies:

An agreement in principle on a fair allocation of benefits

A timeframe for benefit sharing

A decision on what benefits/costs to include

A fair approach to handling capital expenditure costs

An accurate baseline to use as a starting point for measuring savings

A common process to measure value captured

A benefit review and approval procedures

A mechanism to accrue and transfer value

A methodology reviewIt is important to clearly identify these elements so each team can realistically plot reachable and mutually agreeable goals and objectives in areas such as process efficiency, growth/profit stability, cost savings, improved customer service, organizational alignment, and metrics. Another key element for the customer relationship management and supplier relationship management teams is identifying and categorizing customer and supplier segments. The teams also must develop a framework for metrics and offer guidelines for sharing process improvement benefits while managers must focus on writing and implementing product and service agreements. Cargill's experience yielded lessons learned including, as summarized by Douglas Lambert:

o Gain sharing agreements need to be determined at the outset so that it doesn't undermine the accomplishment of the joint objectives.

o Working between internal business units is challenging enough. When you add external trading partners into the mix, the issues of trust, culture, process, and systems capabilities make the challenges more intense.

o Skeptics about success require focused leadership and management support.

o Partnerships work even though they may take a while to develop, but they work. Once trust is established, both parties can find many opportunities to learn from one another.

o Everyone involved in the initiative enhanced their knowledge and capabilities, which proves advantageous in future initiatives.

Product development and commercialization is responsible for the development of products with consumers and suppliers. This team is also responsible for getting the product to market efficiently by helping other members of the supply chain with manufacturing, logistics, marketing, and other activities that are imperative to support product commercialization. The product development and commercialization teams work the customer relationship management teams to identify customer needs. They work with the supplier relationship management teams in order to identify the materials and suppliers that should be used. The product development and commercialization teams and the manufacturing flow management process teams develop production technology that is a suitable fit for the product/market combinations.

The firm manages activities that are associated with returns, reverse logistics, "gate keeping", and return avoidance through returns management. Theses activities are also managed across key members of the supply chain. The minimization of return requests is called avoidance and is a key aspect of the returns management process. The following shows the different functional inputs and processes and what each function does for each different process.

(Lambert 2004).

Michigan State University, through ten years of research, has identified four supply chain flows that appear in all supply chains. These flows are the product-service flow, the market accommodation flow, the information flow, and the cash flow. The product-service flow represents the value-added movement of goods and services from the raw material provider to the end customer. The market accommodation flow provides supply chain participants with visibility regarding timing and location of product consumption. The information flow is the bi-directional exchange of transaction data and inventory status among supply chain partners. The cash flow tends to move in the opposite direction of the value-added activities, although it may flow in the same direction when promotions and rebates are involved (Frankel et al.).

CONTINUE SUPPLY CHAIN FLOW

The concept of supply chain management is very complex. Though it has been popular and very beneficial to various companies and organizations, its complexity is resulting in a lack of the concept being readily applied. It has been labeled as poorly understood, badly explained, and improperly implemented. Robert Monczka and Jim Morgan have identified seven factors that need to be examined in order to create a friendlier version of the concept. These seven factors are:

o Fragmentation in the way that supply chain management is understood and applied.

o Failure of companies to develop true integration of the processes used to achieve supply chain management.

o Organizational resistance to the concept.

o Lack of buy-in by many top corporate managers.

o Lack of and/or slow development of needed measurement systems.

o Lack of good and sufficient information, including integrated information, systems and electronic commerce linking firms in the supply chain.

o Failure of supply chain management thinking beyond the bounds of individual companies.

Fragmentation is a cause that is directly related to the complexity of the supply chain development. The poor definition of supply chain has resulted in a mass confusion about what it actually is. As a result, people in the same organizations are speaking different languages when it comes to supply chain management. To remedy this issue, a common definition needs to be established and people implementing supply chain management must have a more comprehensive understanding of the principles of the concept.

The fragmentation of the concept also leads to a poor integration of supply chain management into a company. In order to integrate the process correctly and successfully, the company attempting to integrate supply chain management must better educate the members of the company about the concept. Since supply chain management involves the entire company, every employee must know and understand where the company is at the moment, where it is trying to go in the future, and how it is planning on getting there with supply chain management. Firms have to let go of tightly defined functions and practices if they do not coincide with the supply chain management concept, which can be a particularly trying task with some hard-nosed employees who do not see a reason or motivation for change. A high level of cooperation and willingness to focus differently is imperative from external customers through suppliers at all tiers.

Companies wishing to implement the supply chain management concept must develop and analyze a better understanding of the needs of their customers and future customers. In addition to developing long-term relationships and alliances to strengthen, supplement, and enhance core competencies, implementing companies need to understand and meet the needs of these competencies through technology, production capabilities, marketing agility, and organizational competence. Relationships with suppliers, internal and external, as well as internal customers should be developed and can be used as a competitive advantage (Monczka, Morgan 1997).

However popular a new concept, or an old one for that matter, is, it is highly probably that there are common mistakes being made with regards to it. According to Sumantra Sengupta, there are ten commonly made mistakes when working with or viewing supply chain management. The Top Ten Mistakes are as follows:

1) Always viewing the supply chain as a "chain"

2) Continuing to do business as usual

3) Having the wrong idea about "control"

4) Failing to synchronize demand and supply signals

5) Believing that technology is the real enabler

6) Failing to gain real visibility

7) Adopting a "one-channel-fits-all" approach

8) Misreading the people factor

9) Not leveraging global elements of supply chain operation

10) Underestimating the size of the transformation disk

First of all, with the invention of technologies such as the Internet, the supply chain has become much more complex than it was ten or fifteen years ago. People too commonly associate supply chain management as the management of a chain, being connected by a single process flow rather than a process spanning many functions and organizations. External business-to-business processes and interactions, as well as business-to-consumer processes and interactions need to be focused on by supply chain practitioners. The vision that the supply chain is simply that is flawed and needs to be corrected in the minds of people working for companies involved with the concept.

The second mistake is made when business leaders want to avoid leaving the confines of their comfort zones. For whatever reason, these business leaders will adopt the concept of supply chain management and fail to rearrange their marketing strategies or any other strategies for that matter. This can bring a company to a screeching halt. When a company is falling into the same routine, they are not implementing the strategy correctly or maybe even at all.

Many people have the wrong image of control, what it means to have control or to be in control. Companies that outsource non-core activities are viewed as having given up control of those activities. However, these companies are not actually giving up actual control of the activities, they are just giving up the internal costs of engaging in the activities themselves. The companies who are receiving the outsourced work are considered to be a part of the newly evolving "extended" value chain. As it is, control is not being given or taken away, a new element of the supply chain is being added and the future of businesses involved with such activities will be determined by the relationships formed between the businesses making up this new value chain.

To overcome mistake four, failing to synchronize demand and supply signals, a company suffering from this needs only to turn to Wal-Mart and view the retail giant's strategy for managing supply and demand. Wal-Mart uses a highly sophisticated tracking system, which automatically reorders a particular item when it is purchased. They track the point-of-consumption data in addition to the last point of consumption. It is critical for a company to match financial forecasts with sales and marketing forecasts and operations forecasts. With the help of today's technology, companies like Wal-Mart are able to separate their marketing, sales, and production teams allowing them to focus on their particular jobs without worrying about the successes and failures of any other team.

Relying entirely on technology, however, is not the way to be successful. Being fanatical about technology platforms is very ineffective for a business transformation. Business processes are still key to success and when a strong technology platform is enforced with the right people at its helm to support the corporate strategy, this forms the most effective situation for a company.

Many teams integrate the saying, " a chain is only as strong as its weakest link" into the fundamentals of their organization. This is quite true when it comes to supply chain; it can only operate as fast as its slowest process. Part of gaining real visibility is realizing the difference between real time and perceived time or, as the Scotts Company calls it, "near real time." They actually minimize total cost by collecting data on a less frequent basis, even though that is more desirable. This gives their supply chain function the ability to be innately stable with each various schedules. This mistake is often caused by companies failing to realize the importance of identifying where certain data can be of business value within their extended supply chain.

The seventh top mistake that companies make with regards to supply chain management, is the misconception that "one-channel-fits-all". Since there is not one specific design of supply chain that is good for every product or company, it is important for businesses to realize that there are multiple designs. Applying the same supply chain techniques to every product and channel is a common, yet destructive behavior. When companies practice this approach, they limit themselves to one "right" way of engaging in supply chain management rather than exposing themselves to the "portfolio mix" trend. This new trend calls for multiple supply chains and examining commonalities between them is the most practical way to manage them. Another key to using multiple supply chains is to develop the best cost structure for each one. (Sengupta 2004)

Supply chain management is a multifaceted and profound subject. If understood and implemented correctly, much good can come from the use of supply chain management. Companies like Dell Computers have already found that supply chain management is the way to grow and be successful. However, it takes an energetic and intelligent individual to understand the concept of supply chain management and stick with the idea through implementation.

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