A systematic review of existing supply chain management definition, framework

International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –
6340(Print), ISSN 0976 – 6359(Online) Volume 4, Issue 2, March - April (2013) © IAEME
298
A SYSTEMATIC REVIEW OF EXISTING SUPPLY CHAIN
MANAGEMENT: DEFINITION, FRAMEWORK AND KEY FACTOR
Mr. Amit Raj Varshney*
*
Department of Mechanical Engineering, Sunder deep Engineering College of Technology,
Ghaziabad
Mr. Sanjay Paliwal**
**
Department of Mechanical Engineering, Sunder deep Engineering College of Technology,
Ghaziabad
Mr. Yogesh Atray***
*** Department of Commerce & management, GICTS group of institutions, Gwalior (M.P.)
ABSTRACT
Supply chain management (SCM) is not a static concept or solution, continuous
advances and innovative applications of SCM are proposed every day. SCM is not a concept
without problems. These problems include the lack of a universally accepted definition of
SCM, the existence of several different and competing frameworks for SCM and Key factor.
Each organization has its unique supply chain structure so the critical factors that influence its
performance also vary from organization to organization. Hence, this study focused on
review of the existing SCM strategies adopted by different sectors.
The purpose for this paper is therefore to bring critical review of SCM by exploring
some of the more prevalent SCM definitions, frameworks and Key Factor.
INTRODUCTION
In recent years the topic of Sustainable Supply Chain Management (SCM) has
received growing attention and has become an increasingly popular research area. A basic
supply chain consist of a firm, an immediate supplier and an immediate customer directly
linked by one or more of the upstream and downstream flows of products, services and
information. SCM is all about delivering the right products/services at the right place at right
INTERNATIONAL JOURNAL OF MECHANICAL ENGINEERING
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ISSN 0976 – 6340 (Print)
ISSN 0976 – 6359 (Online)
Volume 4, Issue 2, March - April (2013), pp. 298-309
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time in right quantities. Conventionally, the sales/marketing and distribution teams do not
possess adequate information necessary for decision making regarding the stock demands
required to meet customer’s demands. To counter this problem, the concept of supply chain
orientation plays a vital role, where the firm is expected to understand and recognize the
systematic and strategic implications of the business activities and processes involved in
managing various flows regarding the information component of supply chain. In today's
competitive business environment, companies must tackle multiple new challenges and need
to interact constantly with the customers as well as manufacturers. This means that, in order
to produce goods tailored to customer's requirements and provide faster deliveries, industry
must be closely linked to suppliers and customers. In order to achieve this improved delivery
performance, reduced lead times within the industries and improved efficiency and
operational effectiveness, manufacturers need to have efficient planning & control systems
that enable very good synchronization and planning in all the activities of the organization. In
the backdrop of above information, an attempt has been made to unearth the various ways in
which SCM applications are utilized in different industrial sectors.
1. SCM DEFINITIONS
The first SCM definition in our review is provided by the Council of Supply Chain
Management Professionals (CSCMP). CSCMP refers to itself as the preeminent worldwide
professional association of supply chain management professionals with a vision to “lead the
evolving supply chain management profession by developing, advancing, and disseminating
supply chain knowledge and research”. CMCSP defines SCM as “encompasses the planning
and management of all activities involved in sourcing and procurement, conversion, and all
Logistics Management activities. Importantly, it also includes coordination and collaboration
with channel partners, which can be suppliers, intermediaries, third party service providers,
and customers. In essence, Supply Chain Management integrates supply and demand
management within and across companies” (www.cscmp.org). However, CSCMP also state
the supply chain management (SCM) profession has continued to change and evolve to fit the
needs of the growing global supply chain. With the supply chain covering a broad range of
disciplines, the definition of what is a supply chain can be unclear. Often times SCM can be
confused with the term logistics management. The second definition is provided by the
Global Supply Chain Forum (GSCF). GSCF defines SCM as: “Supply Chain Management is
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 et al, 1998, p.1). On the forum website, they also write: “Supply
Chain Management is not a business function; rather it is a new business model necessary for
an organization's success and everyone in the organization needs to be involved” (www.scm-
institute.org). However, implementation of this definition into the practice represents a
difficult and challenging task as there is a significant degree of complexity related to
management of all tiers of suppliers back to the point of origin and all tiers of customers out
to the point of consumption (Lambert et al, 1998).
Our final definition is provided by Stock and Boyer (2009). Their definition is based
on a synthesis of a wide range of suggestions provided by a variety of practitioner, academic
and hybrid sources. They deconstructed the commonalities in all the reviewed suggestions in
order to develop their definition of SCM as: “The management of a network of relationships
within a firm and between interdependent organizations and business units consisting of

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material suppliers, purchasing, production facilities, logistics, marketing, and related systems
that facilitate the forward and reverse flow of materials, services, finances and information
from the original producer to final customer with the benefits of adding value, maximizing
profitability through efficiencies, and achieving customer satisfaction” (Stock and Boyer
2009, p.706).Scott and Westbrook (1991) and New and Payne (1995) describe supply chain
management as the chain linking each element of the manufacturing and supply process from
raw materials through to the end user, encompassing several organizational boundaries.
According to this broad definition, supply chain management encompasses the entire value
chain and addresses materials and supply management from the extraction of raw materials to
its end of useful life. Baatz (1995) further expands supply chain management to include
recycling or re-use. Fig. 1 shows the activities and firms involve in such a value chain as
portrayed by New and Payne (1995). It begins with the extraction of raw materials or
minerals from the earth, through the manufacturers, wholesalers, retailers, and the final users.
Where appropriate, supply chain management also encompasses recycling or re-use of the
products or materials. Supply chain management appears to treat all organizations within the
value chain as a un filed ‘virtual business' entity. It includes activities such as planning,
product design and development, sourcing, manufacturing, fabrication, assembly,
transportation, warehousing, distribution, and post delivery customer support. In a truly
&integrated' supply chain, the final consumers pull the inventory through the value chain
instead of the manufacturer pushing the items to the end users.
2. SCM FRAMEWORKS
SCM frameworks should serve as a point of reference for researchers and managers.
There are four frameworks: the Supply Chain Operations Reference (SCOR) model, the
Global Supply Chain Forum (GSCF) framework, the Collaborative Planning, Forecasting,
and Replenishment (CPFR) tool and a framework developed by Mentzer et al. (2001).In our
review, we include only one framework : the Supply Chain Operations Reference (SCOR)
model. We exclude three frameworks due to lack of significant detailed level description. In
the following sections we describe only one framework among four of them.
Supply Chain Operations Reference (SCOR)
The Supply Chain Operations Reference (SCOR) model, developed by the Supply
Chain Council (SCC) and AMR Research in 1996 is the most commonly cited SCM
framework (Lochamy and McCormack 2004). SCC describes itself as “an independent, not-
for-profit, global corporation with membership open to all companies and organizations

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interested in applying and advancing the state-of the-art in supply chain management systems
and practices. The SCOR-model captures the Council’s consensus view of supply chain
management.” (www.supply-chain.org). The SCOR model “provides a unique framework
that links business processes, metrics, best practices and technology features into a unified
structure to support communication among supply chain partners and to improve the
effectiveness of supply chain management and related supply chain improvement activities”
(Supply Chain Council, 2009). According to the SCC, SCOR is used to identify measure,
reorganize and improve supply chain processes through a cyclical process that includes:
1. Capturing the configuration of a supply chain
2. Measuring the performance of the supply chain and comparing against internal and
external industry goals
3. Re-aligning supply chain processes and best practices to fulfill unachieved or changing
business objectives
Through the completion of the steps outlined above, the SCOR model aims to integrate
well-known concepts such as business process reengineering, benchmarking, and process
measurement into a cross functional framework (Huan et al. 2004). When originally
developed in 1996, four core business processes – plan, source, make, and deliver – served as
the foundation of the SCOR model. Later, in 2001, a fifth process – return – was added to
enhance the validity of the model. Each of these processes is implemented through four
individual levels. The first level defines the scope and content of the model itself, as well as
specifying basis for competition performance targets. At level two, companies implement
their operations strategies dependent upon the configurations they choose for their supply
chains. Level three defines inputs, outputs, and flows of each transactional element, and
finally, level four defines the implementation of specific supply chain management practices
(Lockamy and McCormack 2004). The source, make, and deliver processes of the SCOR
model create a continuous chain of activity throughout a company’s internal operations and,
potentially, across the whole inter-organizational supply chain. One also could argue that the
framework includes a high level planning process, which balances aggregate demand and
supply to develop a course of action that best meets the requirements of the source, make, and
deliver processes (Lambert et al. 2005).

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3. SUPPLY CHAIN MANAGEMENT – KEY FACTORS
3.1 Inbound and outbound logistics
All components/parts and products within the supply chain have to be delivered to
factories, distributors, and customers. However, the choice of the transport mode (air, sea, or
land) affects all other areas of SCM, such as warehousing, production, packaging, planning,
location (of suppliers, manufacturing, and customers), inventory control, and information
management [1]. Therefore, factors, such as transit time, reliability, accessibility, security,
impact on inventory, product degradation or obsolescence, trace-ability, and so on are
important.
Once the carrier is selected, computer models are used to optimize routing. The
previous studies have shown that the overall effectiveness of the shipping function is a major
way to reduce costs [2]. More recently, managing the reverse flow of products has become an
important ability. Reverse Logistics is the management of the reverse flow of products. This
includes customer dissatisfaction with the product or at the end of the product life cycle,
when the product is returned for recycling. This concept of reverse logistics has become an
important strategic advantage for companies, and is driven by losses from customer
dissatisfaction returns, or the cost and challenges of recycling. Both activities, if managed
well, have great potential to augment customer satisfaction.
3.2 Planning: Sales and production planning (collaborative planning and generating
demand)
All manufacturing or supply of services starts with a forecast of demand. However,
the major problem with forecasting is the errors associated with it, which can significantly
increase the business losses (if forecast is low) or high inventories (if forecast is too high).
Forecast errors lead to the “bullwhip” effect and can cause excessive inventories, poor
customer service, lost revenues, misguided capacity plans, and missed production schedules
[3]. Furthermore, suppliers often push products to market, but more recently the retailers are
interested in stocking only what the consumer will buy. The probable solution to the
“bullwhip” effect is supply chain collaboration – an activity requiring two or more companies
to share the responsibility of exchanging common planning, management, execution, and
performance measurement information [4]. Typically, the process is to get data from POS
(point of sales) systems, which is sent back to the warehouse or manufacturer, who arranges
for quick replenishment [3], [5]. Consequently, production volumes and subsequent sales to
retailers are based on sell-through information, planned promotions, and seasonal forecasts
using statistical models. The sell-through data are used to replenish products at a retailer
through a process called continuous replenishment. Hence, if a company has the ability to
understand real-time market demand and respond quickly, it is possible to manufacture only
what sells in the market [3]. This continuous replenishment process, or the synchronized
supply chain as it is often called, has spread from the Supermarket sector to the automobile
industry, but barriers remain including lack of scalability and critical mass, managing
exceptions, and managing promotions [6]. Apart from the above mentioned hurdles in the
implementation of continuous replenishment approach, the human resource and technology
related aspects would also contribute in its lesser utilization.

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3.3 Purchasing, strategic sourcing, vendor management, collaboration and bidding via
the supply chain
With accurate dynamic forecasts made from customer demand and promotions, the
correct raw material inventory can be stocked. Furthermore, purchasing becomes a strategic
function – hence strategic sourcing needs to be initiated to reorganize the company’s supply
base for materials and services, in order to reduce external expenditures and internal
processing costs [7]. Aggressive companies have partnered with suppliers to reduce the
number of suppliers by 40% to 85% [5],[7]. This supplier reduction approach also reduces
internal processing costs as larger orders go to fewer suppliers. In addition, aggressive
companies review their supplier’s cost structure and technical capabilities in order to select
the best supplier. They also set up internal supply management teams to manage the supply
process [8]. These initiatives result in higher volumes with better prices and quality from the
short-listed suppliers [8].
Inventory Management
Historically, there is a strong emphasis on asset management via lower inventories
and warehouse space. Companies recognize that product inventories are expensive to hold.
Therefore many companies have implemented just-in-time (JIT) deliveries of parts, a
methodology initially implemented by Toyota Motor Company [9]. Some companies have
been more aggressive and have implemented vendor-managed inventory (VMI). For example
Apple Computer Inc. has set up a partnering deal with suppliers. A supplier keeps inventory
in the warehouse on consignment and moves it to the factory on demand – only then is it
considered sold [10].
Moreover, inventory occupies warehouse space, which is costly – therefore there is a drive to
reduce multiple warehouses. Hence, regional distribution centers (RDCs), instead of a
warehouse in every big city, have become popular [1]. For example, Philips has reduced its
warehouses for consumer products from 22 to 4 in Europe [11]. However, the location of
RDCs is very critical and decides whether the company can minimize the costs. Furthermore,
the RDCs are often responsible for longer delivery cycles, but this effect can be compensated
with supply chain programs like continuous replenishment. The next step in inventory
management is development of a centralized information system, to facilitate distribution of
goods across and within regions. The information systems are critical in providing the vital
availability information and create a virtual inventory that is accessible to all involved parties
[12].
Manufacturing techniques, mass customization of products, and outsourcing
Japanese companies led by the automobile industry have implemented lean
manufacturing techniques, for example kanban manufacturing and just in time (JIT) delivery
of parts. These manufacturing techniques are responsible for lower inventories, better
deliveries, and lower costs compared to other competitors [13]. Another approach to lower
costs is outsourcing of manufacturing and manufacturing closer to the customers and large
markets. The primary reason for this is that in every industry customers expect greater
customization of products and services to meet their individual needs [14,15]. To meet these
needs, companies are pursuing a supply chain compression strategy [14]. Some of the
strategies pursued by companies are [14, 16]

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• Intra-company postponement:
Moving final product configuration from factory to distribution centers in selected markets.
This solution requires a modular product design, which allows last minute customization, to
meet customer, at a distribution center near the customer.
• Inter-company postponement: i.e. moving final product configuration downstream to a
channel partner, intermediary, or retailer.
• Sales agent model: moving all inventory to the assembler, and allowing the channel and
reseller to focus on sales.
• Direct model: the assembler is responsible for order processing and delivery, thereby
eliminating the distributor and reseller, and sales channel.
• Outsourcing: companies are realizing that manufacturing (especially of low-value added
activity) is not a core competency. Outsourcing of such activity can reduce costs and increase
productivity per employee.
Any one of the above mentioned strategies is able to save significant costs and improve
return on investment. Depending on which strategy is used, some companies have shown an
increase in EVA (Economic Value Added) of 70 to 470 million dollars [14].
Order and information management of products and services
Since 1995, with the advent of information and computing technology, many
companies have started to share as well as transmit information, transmit orders, and
purchase parts and products via Electronic Data Interchange (EDI) or the Internet [1999].
EDI has been available for many years, however, its use is limited to big companies and is
too costly for smaller companies or retailers. However with the introduction of the Internet,
almost any firm is able to become an electronic commerce player. Activities provided via the
Internet include inventory information, catalogs and prices, order management, shipping
information, and product returns management [17]. The benefits of electronic commerce to a
firm include quicker and more accurate capture of orders, quicker verification and
transmission of orders, better communications, and quicker payments.
The Internet enabled supply chain and integration of the entire supply chain
The different factors of the supply chain (such as planning, purchasing,
manufacturing, order and management, warehouse management, and logistics) have posed
formidable challenge because often many activities in company are adopted and introduced
ad-hoc. However, the rapid development pace of powerful information technology systems
has potential to provide solutions towards better integration.
Integration of entire supply chain via a computer network
The different factors of the SCM evolved over the years with different pace. These
factors are needed to be linked together to ensure optimization of resources and costs. As a
result, new age software vendors have come up with innovative solutions to provide this
synergy, synchronization, and optimization of the supply chain. In 1999, there were at least
14 enterprise-wide (supply chain) software solutions available [18]. The linkages span the
supply chain from the consumer to the supplier. Good integration involves coordination of the
following: demand information, inventory status, capacity plans, production schedules,
promotion plans, demand forecasts, shipment schedules and replenishment processes [19].
The benefit of integration is the creation of supply chain that reads customer demand and
responds quickly to customer and market needs. Such a lean and responsive system is, in

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theory, able to shorten time to do anything and have a shorter cash to cash cycle [20, 21].
With SCM integration it is possible to improve inter-organizational level coordination and
hence move towards optimization of the supply chain [22].
Successful integration via Efficient Consumer Response (ECR) process
One of the most effective integration solutions is ECR - it focuses on the integration
of factory or vendor supply and customer demand. Specifically, it focuses on demand
management, supply management, and enabling technologies that link these activities [11,
12]. ECR can coordinate new product introductions, consumer promotions, product
range/variety, and replenishment. The benefit of ECR is lower cost, less inventory, and
improved product availability. ECR can result in extensive collaboration between suppliers,
logistics service providers, and retailers. Hence, supply chains can become demand chains,
resulting in the optimum quantity of products in the market, with little or no stock-outs in the
retail outlets.
Rebuilding the supply chain
The convergence of supply chain principles with internet has resulted in its evolution
and rebuilding. The Internet makes it possible to dispense with many activities in the supply
chain [23]. This dis-intermediation has reduced the role of many wholesalers and retailers as
consumers have started to buy direct from manufacturers or wholesalers. However, an early
prediction that this dis-intermediation will eliminate wholesalers and retailers has not
happened - instead what has emerged is a change in the function of intermediaries, for
example the need to add value and decrease high price mark-ups [24]. Hence, the continuous
evolution and reorientation of the supply chains demands that constant efforts are necessary
to rebuild the supply chains that are in line with the current business perspective.
Internet-enabled supply chain
A high degree of coordination and integration of the various factors of supply chain is
possible with the advent of the Internet. The Internet provides the basic platform to initiate,
propagate, support e-commerce, and synchronize the entire supply chain. Drucker [25] has
said that in future, with e-commerce and the Internet, companies will sell only what they can
deliver, which will put a high dependency on SCM. Some of the activities that are possible
via the Internet are [11, 21, 23, 24 and 26]:
• Information about product, service, catalogues, and pricing data
• Customer communication, order management, acknowledgement, and service.
• Supplier communication, data sharing, and purchase orders
• Financial transactions between the firm and its suppliers and customers
• Electronic delivery of products and services
• Rebuilding of the supply chain
However, the Internet is only a tool to better synchronize and facilitate supply chain
management and cannot replace it – however, the outcome will be lower costs, higher speed,
and increased customer satisfaction [14].
The E-supply chain
The Internet enabled supply chain becomes an E (or Electronic) supply chain. The E-
supply chain can connect the entire organization from raw material vendors, purchasing,
planning, manufacturing, logistics, marketing, customer care and service, and human

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resources. Such a system is able to meet the customer’s changing demand quickly and meet
very aggressive goals in economic added value [20]. The E-supply chain can form a network,
which will allow for collaboration with all the partners of a firm and links all the important
information in a firm, including but not limited to cash flow and order management, to those
members of the supply chain that most need it. However, the greatest challenge is data quality
and good information exchange and better integration to create a truly virtual E-supply chain
and the cost benefits can be envisaged only if these objectives are achieved [27].
Nevertheless, the E-supply chain dimension of E-business is largely neglected and under-
practiced, and hence it is difficult to make E-business into a reality. In fact one researcher
argues that the E-supply chain is virtually non-existing [27], which may be due to the quality
and quantity of technically competent human resource as well as the availability of latest
computing infrastructures.
Electronic delivery of products and services
The convergence of the Supply Chain with the Internet allows immediate delivery of
certain products and services, which can be transmitted electronically. These include music,
documents and books (via data files), software, event and travel tickets, stock transactions,
on-line diagnosis of computers and their peripherals, and banking services, e.g. loans and
payments [23].
3.4 SCM Information Systems
The linkages of supply chain factors via computer systems using enterprise resource
planning systems or the Internet also provide another benefit - access to information
throughout the supply chain. Some of the benefits and advances are:
Visibility across the entire supply chain: SCM information systems are able to provide
complete visibility across the entire supply chain. Available information includes [11, 22, 24
and 26]:
•Product and marketing information, catalogues, and pricing data
•Customer communication, order management, acknowledgement, and service.
• Supplier communication, data interchange, and purchase orders
• Provide complete visibility across entire chain
• Ability to track specific projects, production runs and cycle times
• Inventory buckets at suppliers, in transit, receiving docks, work-in-process, finished goods,
and at distributors
• Product or goods delivery information
• Ability to track local to worldwide information of above factors
• Provide real time information of all above factors
• A crucial area that improves with good SCM information systems is Inter-organizational
information flow – both within and between organizations.
Challenges in designing the SCM system for competitive advantage
Recent research looks at the impact of information usage on the supply chain system
[28]. The researchers argue that market place information must move quickly from customers
through the entire supply chain without delay. Information from the market place comes via
the Internet or electronic data exchange. Such an enriched supply chain can reduce
uncertainty and time delay and provide several benefits. The benefits include an increase in
the speed of response in processes and reduced inventory levels. The overall result can be a

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seamless and holistic supply chain, which allows a company to be more competitive.
However, this research focuses on forecasting and production and the conclusions drawn are
from a computer model.
3.5 Customer relationship management and SCM
Customer relationship management (CRM) has become important as customers start
to demand mass customization or personalized products and services [15]. CRM is the
management of technology, processes, information, and people in order to maximize each
customer contact by obtaining a 360- degree view of the customer [29]. To be effective, CRM
has to extend through multiple channels [30]. Effective CRM can result in high customer
satisfaction, which is achieved through customization, personal relationship, and after-sales
support [29]. In order to maintain competitive advantage, a company has to have an effective
CRM program and integrate it tightly. Hence, the CRM aspect has to be given adequate
importance while designing the SCM strategies.
CONCLUDING DISCUSSION
The field of SCM has gained in importance over the last decades and there are many
signs indicating that the field will continue to grow in importance – both in terms of research
and for practitioners. The current global competitive business environment demands an
increased interaction between the customer and manufacture. Hence in order produce
customized product and provide faster deliveries, the industry must be closely linked to
suppliers and customers. SCM benefits and the required conditions necessary to achieve these
benefits, such as process management and cross-functionality, breaking down silos, emphasis
on customer satisfaction, process orientation, and information sharing have been discussed
for decades. However, SCM also has many problems. Stock and Boyer discuss the problem
with the confusion that exists amongst researchers, and practitioners, due to the multitude of
suggested SCM definitions. They write “…a consensus definition of SCM is of significant
importance in the advancement of SCM theory and practice.”
Furthermore, while many scholars agree that SCM includes certain key concepts, such as
integration and collaboration/cooperation among chain members, these concepts are still
poorly defined – with multiple meanings to both researchers and practitioners. Since the
mentioned concepts obviously are important to the development of SCM, they need to be
further explored and defined.
For all these reasons, both the research and practitioner communities should be aware
of the hype and potentially unrealistic claims concerning SCM. As our review indicates, there
is a lack of empirical research to confirm the significant stated benefits of SCM. Although a
majority will agree to the importance and potential benefits of SCM, somehow SCM does not
seem to occur often enough in practice. Organizations appear to have significant difficulties
in evolving from theory to the successful implementation and practice of supply chain
management. This is a crucial yet challenging dilemma to solve. In many cases, we do not
have seamless chains, optimized flows, or networks of integrated organizations. In reality, the
frameworks and their corresponding terminologies, once more aptly illustrated, ultimately are
dealing with companies trying to make dyadic relationships better. Therefore, we need
methodical approaches to the implementation of SCM and we need sound empirically based
research to continue to develop the field – and to explore the concepts related to SCM.

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As a final thought, supply chain management is complex, it is often yet still poorly defined
and it includes innumerable concepts and ideas that need clarification. The supply chain does
not have clear roles or rules, nor does it have measurement or reward systems. How can such
a structure possibly be managed?
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