Supply Chain Management (SCM). Supply chain management systems scm supply chain management system

Supply chain management systems (SCM) are designed to automate and manage all stages of an enterprise’s supply and to control the entire flow of goods within an enterprise. The SCM system allows you to significantly better satisfy the demand for the company's products and significantly reduce logistics and purchasing costs. SCM covers the entire cycle of procurement of raw materials, production and distribution of goods. Researchers generally identify six main areas on which supply chain management focuses: production, supply, location, inventory, transportation, and information.

Supply Chain Management (SCM) is the process of planning, executing and controlling from the point of view of reducing the costs of the flow of raw materials, materials, work in progress, finished goods, services and related information from the point of origin of the application to the point of consumption (including import, export , internal and external movements), i.e. until customer requirements are fully satisfied. The essence of the concept of “supply chain management” is the consideration of logistics operations throughout the entire life cycle of products, i.e. the process of development, production, sale of finished products and their after-sales service.

Supply chain management is a business strategy that effectively manages material, financial and information flows to ensure their synchronization across distributed organizational structures.

Information systems used for supply chain management can be divided into two groups:

• - systems for strategic and tactical planning (Supply Chain Planning - SCP);
• - systems for managing execution in real time (Supply Chain Execution - SCE).

According to analysts, the differences between SCP and SCE systems are gradually disappearing, as the developers of the former are constantly adding functions for processing information in real time. SCP/SCE systems are supplied both as stand-alone solutions and as part of complex ERP systems.

The basis of SCP systems are systems for advanced planning and scheduling (Advanced Planning and Scheduling - APS or Advanced Planning and Optimization - APO). APS systems are designed to develop a calendar schedule for replenishing stocks at all nodes of the supply chain and generating requirements for the production and transportation of the necessary products. The basis for this is current information about demand forecasts, inventory levels, delivery times, relative positions of trading partners, etc. When this information changes, the APS system allows

quickly analyze changes and make the necessary adjustments to the supply and production schedule. For example, when new orders appear, you can literally study the possibility of fulfilling them within a few minutes and prepare appropriate requests for production and transportation.

The first group also includes systems for joint development of forecasts. They are focused on supplier-buyer trading pairs and allow you to compare information on demand forecasts received from customers with forecasts of the availability of necessary products received from suppliers. The result is a balanced forecast that is agreed upon by both stakeholders. The operation of these systems is based on the Collaborative Planning, Forecasting and Replenishment (CPFR) standard developed by the VICS (Voluntary Interindustry Commerce Standards) association.

In addition to solving operational management problems, SCP systems allow for strategic planning of the supply chain structure: developing supply network plans, simulating various situations, assessing the level of operations, comparing planned and current indicators.

The subgroup of SCE systems is represented by three types of software products:

• 1) warehouse management systems (Warehousing Management Systems - WMS) make it possible to control the occupancy of warehouse space, set rules for sorting, packaging and warehousing of goods, and assess the status of inventories in real time. WMS systems can be integrated with barcode processing equipment and automatic warehouse systems;
• 2) transportation management systems (Transportation Management Systems - TMS) allow you to create an optimal plan for transporting goods and materials (taking into account the required delivery times, possible modes of transport, work schedules, etc.), prepare an optimal vehicle loading scheme, and track cargo , on the way;
• 3) order management systems (OMS) help the buyer create an order taking into account his individual requirements, allow him to assess the possibility of fulfilling the order and can offer alternative options (using data on product availability and planned receipts). In case of production need, the OMS system transmits information about the order to the APS system to assess the possibility of its fulfillment. Once an order is placed, the OMS system allows you to track it at all stages using information received from WMS, TMS and MES systems.

MES systems (Manufacturing Execution System), although not directly related to SCE systems, have recently been increasingly integrated with supply chain management software, thanks to which

You can control the status of the order not only in the warehouse or during transportation, but also in production.

The domestic market offers SCM solutions of various levels within the framework of comprehensive ERP systems Baan, OneWorld (J. D. Edwards), Oracle Applications, iRenaissance, AXAPTA, SyteLine, Vantage (Epicor Software), as well as domestic "Galaktika" and "1C: Enterprise" (look 1s reporting). SAP is promoting the mySAP.com Web solution, and IBM is promoting its own development, independent of ERP systems. There are also local SCM products.

There are many examples of successful application of the SCM concept for doing business today. In this case, there are two most common types of combining enterprises into supply chains:

• - strategic cooperation in the field of procurement;
• - strategic cooperation in the field of production.

The operating principles of the American supermarket chain Wal-Mart are already becoming classic SCM in the field of procurement. The introduction of this concept at Wal-Mart began with cooperation with Procter & Gamble. Before these two giants began implementing SCM in the late 1980s, manufacturers and retailers were closed to each other's communication at the planning level. That changed when software was developed to connect Wal-Mart's distribution centers with P&G's manufacturing facilities. The system allowed P&G to monitor on-line at the store level. Immediately after the goods passed the checkout, it became known about changes in stocks in Wal-Mart warehouses, which made it possible to optimize the production and delivery process. The system for issuing and paying invoices was automated. By reducing delivery times, warehousing costs, and losses from product shortages, P&G was able to offer Wal-Mart record low prices for its products.

At the end of the 90s of the last century, the Levi's company was experiencing a rather serious crisis, and the situation did not improve until Levi's launched a joint project with the same Wal-Mart and established an efficient supply system. Until 2000, Levi's produced jeans when they considered it necessary, and the rate of on-time delivery of goods to points of sale was 65%. Products delivered at the wrong time often remained unpurchased. Wal-Mart's requirements for suppliers forced Levi's to develop an adequate electronic system accounting for goods, which allowed the relevant departments of the company to observe in real time the dynamics of sales at any retail outlet and receive information about what still needs to be produced. This opened up the possibility of ensuring on-time delivery to retail chains with a level of 95%, i.e. 30% higher than before SCM implementation.

The work of the largest German department store chain Galeria Kaufhof is based on the principles of SCM, a feature of which is the use of RFID (Radio Frequency Identification) technology. This technology

allows you to ensure a high level of information efficiency through the use of special technical devices for contactless data transmission at all parts of the chain - from department store shelves to clothing design and design departments. At the moment, full information integration has been implemented with the largest German company - the manufacturer of outerwear Gerry Weber.

Strategic cooperation in the field of production on the principles of SCM is widespread in international practice in the form of subcontracting - a type of production cooperation based on the principles of outsourcing of work or processes. Its greatest distribution is observed in mechanical engineering, electronics, electrical engineering, light industry, as well as in the metalworking, plastics processing and electronics industries, where supply chains account for 88.26% of total production.

Supply chains are of greatest importance for the automotive industry. Of the approximately 10,000 parts that make up a car, 9,980 (up to 80% of the value created) are produced by subcontractors. According to the results of a study conducted in Japan, the transition to a production and logistics organization based on SCM principles made it possible to achieve lower prices (36%), improved quality (28%), access to the latest technologies (22%), and increased timeliness of deliveries (14%) .

Here are some examples of how to organize an SCM system. Market giants such as Cisco and Toyota have significantly reduced production time thanks to SCM. Iohnson Controls, a Ford subcontractor, can accept vehicle seat orders and fulfill them within four hours. As a result of focusing on cycle time, a number of firms, including Wal-Mart, P&G, Flextronics, and others, have significantly improved their corporate efficiency.

In Russia, cooperation on the principles of SCM is formed mainly in trade and at shipbuilding, aircraft and mechanical engineering enterprises, where the ideology of CALS technologies (continuity of product supply and support of its life cycle), based on developments in the field of creating information support systems, is most widespread. processes occurring during the entire life cycle of products and their components. For example, the active promotion of the Perekrestok retail chain to the regions prompted its management to undertake a large-scale modernization of the established logistics system by building an effective supply chain management system based on SCM, using global experience, and in particular, the experience of the i2 company. After 6 months of operation of the SCM system (Exceed 4000 solution) in the Pyaterochka distribution center, the utilization rate of warehouse space increased by 40%, the accuracy of order picking increased by 7.5 times (before implementing the system, the error when picking orders was 5%, and after implementation - 0.65%), the efficiency of personnel and warehouse equipment increased by 25%. As a result, by the summer of 2004, Pyaterochka had the opportunity to reach a more global level of coordination of commodity and transport flows.

In connection with the numerous, constantly updated definitions of the concept of “supply chain management” (according to J. Stock and S. Boyer, there were 176 at the beginning of 2009), the essence of this concept should be clarified. To do this, you should refer to some typical points of view of foreign experts presented in Table. 1.1.

Some typical points of view of foreign experts on the content of the concept of “supply chain management” 2

Table 1.1

Source	Points of view
	Integration of business processes from upstream suppliers to the end user that transform products, services and information to add value to customers
Ganeshan and Harrison (1995)	Supply chain - a network of services and options that performs the functions of acquiring materials, converting those materials into intermediate and finished products, and distributing finished products to customers
Monczka, Trent and Handheld (1998)	A concept to integrate and manage supply sources and flows, and control materials, using the capabilities of different systems performing different functions and containing multiple rows of suppliers
Mentzer et al (2001)	Systematic strategic coordination of traditional business functions of an individual company and across various activities within supply chains in order to improve the quality of long-term performance of these functions by individual companies and the supply chain as a whole

• 1 Stock J.R. and Boyer S.L. Developing a Consensus Definition of Supply Chain Management: A Qualitative Study // International Journal of Physical Distribution & Logistics Management. 2009. Vol. 39. Issue 8. P. 690-711.
• 2 Tyapukhin L.P. Logistics and supply chain management: the author’s view // Bulletin of Moscow University. Episode 24. Management. 2011. No. 2, pp. 128-145.

Source	Points of view
Arunachalam et al (2003)	Concerns planning and coordinating the actions of organizations through the supply chain from the acquisition of raw materials to the delivery of finished products
Simchi-Levi et al (2003)	A set of approaches used to efficiently bring together suppliers, manufacturers, warehouses and stores so that goods are produced and distributed in the right quantities, to the right places and at the right time to minimize costs while meeting customer service requirements
CSX World Terminals (2004)	Management and control of all materials and information in logistics processes from the acquisition of raw materials to delivery to the end user
Harrison and van Hoek (2005)	Planning and managing all processes that link supply chain partners together to meet needs
European Logistics Association (ELA) (2005)	Organizing, planning, controlling and executing the flow of goods from design and procurement through production and distribution to the final consumer in accordance with market requirements for cost efficiency*
Council of Supply Chain Management Professionals (CSCMP) (2005)	Planning and management of all activities in the supply chain, including sourcing and procurement management, product conversion (processing) and management of all types of logistics activities. Significantly, supply chain management also involves coordination and collaboration with supply chain partners, which may be suppliers, intermediaries, third party service providers, as well as consumers*
	A combination of art and science that involves improving the development of a company that supplies products to consumers
Borade and Bansod (2007)	Manage materials, money, people and information within and across the supply chain to maximize customer satisfaction and gain competitive advantage
Stock and Boyer (2009)	Managing a network of relationships within a firm and among interdependent organizations and business units consisting of materials suppliers, purchasing, manufacturing equipment, logistics, marketing, and related systems that facilitate the forward and reverse flow of materials, services, finance, and information from the original supplier to the final supplier customer with the benefits of increasing value, maximizing revenue through beneficial activities, and achieving customer satisfaction

* Definitions are given in translation by V. Sergeev.

Analysis of the definitions presented in table. 1.1 allows us to draw the following conclusions:

• 1) supply chain management is understood as a set of various components (primarily functions) of management activities, such as “integration”, “concept”, “coordination”, “planning and coordination”, “set of approaches”, “management and control”, “planning and management”, “organization, planning, control and execution”, “combination of art and science”, “management”. It is obvious that supply chain management is a type of management (management) in the first place and a set of its functions in the second place. The use of combinations such as “management and control” is terminologically inconsistent, since the conjunction “and” should be used exclusively between concepts of the same order (level), for example, between principles, methods or the same management functions;
• 2) despite the fact that the object of supply chain management is supply chains, foreign experts also consider such objects as: “business processes” (“processes”), “network of services and options”, “business functions”, “commodity flow” , “network of relationships”, which is not entirely correct;
• 3) the types of activities (business processes) carried out by the management object (supply chains) include “processing”, “acquisition, transformation, distribution”, “supply”, “production”, “design”, “transformation”, “ sourcing";
• 4) the main functions of supply chain management are “integration”, “planning”, “coordination”, “control”, “organization”, “cooperation”;
• 5) the scope of supply chain management includes the sequence of resource transfer according to the following scheme: initial supplier (supplier of the supplier) - suppliers or intermediaries - organization (enterprise) - consumers or intermediaries - final consumer (consumer's consumer);
• 6) the key words that best characterize supply chain management are:
  • a) words reflecting performance indicators of the management object, such as “quality of function performance,” “costs,” “company development,” “customer satisfaction,” “income maximization”;
  • b) words reflecting the source of stream absorption, such as “end user”, “client”, “consumer”, “end consumer”;
  • c) words reflecting the preferences of the client (consumer), such as “value”, “need”, “satisfaction”, “requirement”.

Clarifying the essence of the concept of “supply chain management” cannot be correct without clarifying the essence of the concepts of “logistics” and “logistics management”. Typical definitions of these concepts in the version of foreign experts are presented in table. 1.2.

Table 1.2

Some typical points of view of foreign experts on the content of the concept of “logistics” (“logistics management”) 1

Source	Points of view
Bowersox and Closs (1996)	An integrated process designed to help create customer value at the lowest overall cost.
Logistics Management Council (1998)	The process of planning, executing and managing the efficient, (cost-effective) flow and inventory of goods and services and associated information from point of origin to point of consumption to meet customer requirements
Johnson, Wood, Wardlow and Murphy (1999)	The flow of materials and services, as well as the connections necessary to manage this flow
Crompton and Jessop (2001)	The process of managing the movement and storage of goods and materials from their source to the point of final consumption, as well as the associated information flow
Coyle et al (2003)	The process of meeting customer needs and wants, acquiring the capital, materials, labor, technology and information needed to satisfy those needs and wants, optimizing the production and/or service network to meet customer requests, and leveraging that network to deliver timely fulfilling customer requests
	The function responsible for the flow of materials from suppliers to the organization, passing through operations within the organization, then going to consumers
Christopher (2004)	The process of strategically managing the procurement, movement and storage of materials, components and finished products (and related information flows) of an organization and its marketing channels to maximize current and future profitability by fulfilling orders and orders at the lowest possible cost

Tyapukhin A.P. Logistics and supply chain management: the author’s view // Bulletin of Moscow University. Episode 24: Management. 2011. No. 2. pp. 128-145.

Source	Points of view
Harrison and van Hoek (2005)	The challenge of coordinating material flows and information flows through supply chains
European Logistics Association (ELA) (2005)	Planning, executing and controlling the movement and placement of people and/or goods, as well as supporting activities associated with such movement and placement, within an economic system created to achieve its specific goals*
Council of professionals in the field Supply Chain Management (CSCMP) (2005)	(Logistics management is...) a part of supply chain management that refers to the planning, execution and control of the efficiency and productivity of the forward and backward flow of goods, services and related information from the point of origin to the point of consumption to meet customer requirements*
Definition of Logistics, sometimes called the layman's definition of logistics, (the seven "R's")	Ensuring the right product is available, in the right quantity and in the right condition, in the right place, at the right time, for the right customer, at the right cost.

* Definitions are given in translation by V. Sergeev 1.

Analysis of the definitions presented in table. 1.2 allows us to draw the following conclusions:

• 1) the concept of “logistics” (“logistics management”) can mean: “process”, “function” (“management functions”), “flow”, “task”, and “provision”. This fact indicates that there is no generally accepted definition of the concept of “logistics” (“logistics management”) today either;
• 2) in the definitions of the concepts of “logistics” (“logistics management”), the process is understood as:
  • a) or the process of managing the economic, including logistics system;
  • b) or other types of process, such as:
    • - some auxiliary (accompanying the main) process,
    • - an end-to-end process aimed at meeting the needs and desires of the client.

In other words, these definitions assume the use of a subject and an object of management, each of which is characterized by the performance of specific functions;

• 3) in the definitions of the concepts “logistics” and “logistics management”, perceived as a management process:
  • a) there are two main management functions, such as planning and control,
  • b) probably, according to the authors of the definitions, the remaining functions of management:
    • - basic: organization and motivation,
    • - specific: accounting, analysis, coordination, regulation, standardization, delegation of powers, etc. are absorbed by such activities as “implementation” and “execution” without indicating the differences between them;
• 4) the types of activities carried out by the management object include:
  • a) “movement” and “storage”,
  • b) “movement”, “placement” and “supportive actions”;
• 5) the sphere of competence of logistics (logistics management) includes the sequence of resource transfer according to the scheme: supplier - organization (enterprise) - consumer, i.e. this sequence is shorter than the sequence characteristic of supply chain management;
• 6) the key words that best characterize logistics (logistics management) are:
  • a) a word reflecting its control object - “flow”. In addition, in two definitions, the word “flow” is an accompanying word for words such as:
    • - “goods” and “materials”. From this we can conclude that there are two forms of movement - “product movement”, so popular among domestic specialists, and “movement of materials (resources)”, used in foreign sources,
    • - “materials”, “components” and “finished products”. Flow objects can be “goods and services” and “materials

and services." Basically, researchers distinguish two types of flows - material and informational,

• b) words reflecting the management object or “economic system”, which can include (in ascending order) “organization”, “supply chain” and “production or service network”,
• c) words reflecting performance indicators of a supply chain management object, such as “costs” and “connections”,
• d) words reflecting the source of flow absorption, such as “client” and “consumer”, e) words reflecting the preferences of the client and consumer, such as “value”, “need”, “desire”, “demand”. The results of a joint terminological analysis of the concepts of “logistics” (“logistics management”) and “supply chain management” are presented in Table. 1.3.

1) today the problem of distinguishing the concepts of “logistics” (“logistics management”) and “supply chain management” has not been resolved. However, many researchers suggest that logistics (or logistics management) is part of supply chain management (for example, Simchi-Levi et al. (2003) 1 , Chen and Paulraj (2004), Gibson, Mentzer, and Cook (2005), CSCMP (2005), Gourdin (2006), Ballou (2006), Bowersox et al. (2007));

Table 1.3

Results of terminological analysis of the concepts of “logistics” (“logistics management”) and “supply chain management”

	Logistics (logistics management)	Supply Chain Management
4. Control object	Organization, supply chain and production or service network	Supply chains (systems)
5. Area of ​​competence	Supplier - consumer organization	Initial supplier - (suppliers) - organization - (consumers) - final consumer
6. Performance indicators of the management object	Costs, communications	Quality of function performance, costs, company development, customer satisfaction, income maximization
7. Control functions	Planning, control, implementation* and execution*	Integration, planning, coordination, control, organization, cooperation*
8. Types of activities of the management object	Moving, storage	Processing, acquisition, conversion, distribution, supply, production, design, sourcing

• * These concepts (functions) are usually not classified as management functions
• 2) when defining these concepts, researchers use virtually the same words (in columns 2 and 3 they are highlighted in bold);
• 3) definitions of the concept “supply chain management” contain a wider range of features compared to the definitions of the concept “logistics” (“logistics management”). Consequently, the concept of “supply chain management”, according to foreign experts, is broader in meaning than the concepts of “logistics” and “logistics management”;
• 4) existing definitions of these concepts are not without shortcomings. As an example, consider Stock and Boyer's (2009) definition of supply chain management (last row of Table 1.1). The disadvantages of this definition are:
  • - incorrect interpretation of the management object: “supply chains” are replaced by “networks of relationships”, which will be further corrected by the author of the textbook,
  • - it is not specified how the concepts of “organization” and “business unit” differ; Apparently, we are talking about organizations and their divisions,
  • - it is not clear on what classification basis the components of the above organizations and business units, which differ significantly from each other, are distinguished, such as “material suppliers, purchasing, production equipment, logistics, marketing and related systems”,
  • - the content of the purpose of supply chains is questionable - “revenue maximization” in a highly competitive market environment,
  • - It is unclear how the two goals of supply chain management, such as “increasing value” and “achieving customer satisfaction,” are related to each other.

The above shortcomings in the terminology of logistics (logistics management) and supply chain management require the development of an original approach to their elimination.

In addition to the information presented in table. 1.1, other definitions of the concept “supply chain management” have been developed, which, due to their large number, should be classified according to priority criteria. There are some studies on this topic. For example: ? Delfmann and Alberts (2000) 1 compiled a table. 1.4, which provides a brief overview of different perspectives on supply chain management;

Table 1.4

Review of different perspectives on supply chain management according to Delfmann and Alberts (2000)

• ? Mentzer et al. (2001) argue that definitions of the concept of “supply chain management” can be divided into three main groups, such as: 1) management philosophy; 2) implementation of management philosophy and 3) set of management processes;
• ? Mentzer et al. (2004) 1 suggest that supply chain management includes: 1) another (duplicate) name for integrated logistics (Tyndall et al., 1998) ; 2) management process (La Londe, 1997); 3) the form of vertical integration of the firms (Cooper and Ellram, 1993) and 4) the management philosophy (Ellram and Cooper, 1990);
• ? Mentzer et al. (2008) note that modern concepts of supply chain management have the following aspects: 1) coordination/collaboration with suppliers and customers; 2) the requirement and the corresponding supply side and 3) orientation to flows;
• ? Stock and Boyer (2009) identified three main aspects of supply chain management as: 1) actions; 2) benefits (benefits) and 3) components.

Thus, using the later definitions of supply chain management and the Delfmann and Alberts (2000) version of their grouping, it is possible not only to clarify, but also to supplement the information contained in Table. 1.4. The results obtained are reflected in table. 1.5. Analysis of the table 1.5 allows us to draw the following conclusions:

1) the number of classification criteria included in the concept of “supply chain management” continues to increase. On the one hand, this trend contributes to a better understanding of the essence of this type of management, and on the other hand, it seriously complicates the problem of distinguishing the concepts of “logistics” (“logistics management”) and “supply chain management”;

Review of perspectives on supply chain management

Table 1.5

A perspective on supply chain management
	Johannsson (1994), Groosse (2000), Simchi-Levi et al. (2003), Gunasekaran and McGaughey (2003), Koh and Tan (2006), Koch (2007), Wong and Wong (2007)
Concept	Jones (1989), Bechtel and Jayaram (1997), Schary and Sktt-Larsen (1995)
Perspective
Philosophy	Cooper, Lambert and Pagh (1997), Lambert, Cooper and Pagh (1998), Ellram and Cooper (1990), Svensson (2002)
Methods, systems and leadership	Stevens (1989), Poirier and Bauer (2000)
	Turner (1993), Cox (1997)
Integrated logistics	Tyndall et al (1998)
Form of vertical integration of firms	Cooper and Ellram (1993), Coyle, Bardi and Langley (2003), Tommelein, Walsh and Hershauer (2003), Piplani and Fu (2005), Stonebraker and Liao (2006), Global Supply Chain Forum (GSCF) (2007)
Actions	Handfield and Nichols (1999), Lummus et al (2001), Towers and Ashford (2001)
Processes and activities	Christopher (1992)
Streaming Perspective	Zsidisin et al. (2000), Towill et al. (2000), Pedroso (2002), Bloomberg, LeMay and Hanna (2002), European Logistics Association (ELA) (2005), Seuring (2004), Ballou (2006), Borade and Bansod (2007)
Control processes	LaLonde (1997), Mejza and Wisner (2001), Stock and Lambert (2001), Chopra and Meindl (2001), Paulson (2001), Elmuti (2002), CSCMP (2005), Harrison and van Hoek (2005), Lambert (2006), Meredith and Shafer (2007), Webster (2008), Monczka et al. (2009)
Relationship	Morgan and Hunt (1994), Walters and Lancaster (2000), Dainty et al. (2001), Stock and Boyer (2009)
Coordination/ cooperation	Larson and Rogers (1998), Chandra and Kumar (2000). Schonsleben (2000), Mentzer et al. (2001), Stank, Keller and Daugherty (2001), Horvath (2001), Bowersox, Closs and Cooper (2002), Simatupang et al. (2002), Arunachalam (2003), Jonsson and Zineldin (2003), Cachon and Lariviere (2005), Hervani, Helms and Sarki (2005), Griffith, Harvey and Lusch (2006)
Ability Network	Frazelle (2002)
Innovation	Saad, Jones and James (2002)

2) to solve this problem, it is necessary to establish horizontal and vertical connections between those presented in table. 1.5

classification criteria. This aspect of research

shown in Fig. 1.1, from which it follows that:

• a) it is advisable to consider supply chain management, on the one hand, as a concept of enterprise management, and on the other hand, as a type of management activity;
• b) supply chain management as an enterprise management concept can be presented as a sequence of the following interconnected components:
  • - “philosophy”, the basis of which in a highly competitive market economy is “innovation”,
  • - “perspective”, which is formed on the idea of ​​managing resource flows or on “integrated logistics” as opposed to resource management based on the principle of creating reserves - “working in batches and queues”,
  • - an “approach” based on “coordination/collaboration” and “relationships” of supply chain participants, and also on the use of “methods, systems and leadership” for their effective interaction in the long term,
  • - a “network of capabilities”, which can be formed from a set of components such as “process management”, “actions”, “form of vertical integration” and “technique”;
• c) supply chain management as a type of management activity involves the design, formation and use of a process and management system, both for supply chains and individual enterprises;
• d) the enterprise and supply chain management process includes the components: “innovation”, “integrated logistics”, “coordination/collaboration”, “process management” and “action”;
• e) the enterprise and supply chain management system includes the components: “relationships”, “methods, systems and leadership”, “form of vertical integration” and “technique”.

Thus, it is possible to explore supply chain management and logistics as concepts in enterprise management and as types of their management activities.

This conclusion eliminates the need to study a number of minor components of supply chain management presented in Table. 1.5 and in Fig. 1.1, since it is easy to carry out their detailed study, if necessary.

As mentioned earlier, foreign scientists and specialists still cannot find fundamental differences between the concepts of “supply chain management” and “logistics” and give their definitions in accordance with their ideas and experience.

Rice. 1.1.

For example, Ballou (2006) 1 , Bowersox et al. (2002) , Chen and Paulraj (2004) , CSCMP (2009) , Gibson, Mentzer and Cook (2005) , Gourdin (2006) ,

Simchi-Levi et al (2003) 1 suggest that logistics (or logistics management) is a part of supply chain management. In particular, Ballou (2006, p. 382), notes that: “...the field of logistics is limited to the boundaries of functions within the company and, above all, concerns the management of activities that have been its traditional type. At the same time, managing multiple organizations related to different areas of activity belongs to the field of supply chain management, not logistics.”

There are two ways to solve the above problem:

• ? on the one hand, logistics is directly related to the management of resource flows (for example, Cooper et al. (1997), CSCMP (2009), Crompton and Jessop (2001), Johnson et al. (2003), Harrison and van Hoek (2005), Waters (2003) ;
• ? on the other hand, supply chain management involves managing resource flows, which become an additional object of its research, which radically changes the object of logistics research. For example, Vohuegeohidr. (2002) view logistics as the management of materials and physical distribution, including credit assessment, insurance, and delivery communication. And at the same time, Bloomberg, LeMay and Hanna (2002, P. I) believe that: “...supply chain management is the process of planning, organizing, and managing streams(note by the author) materials and services from suppliers to end users/customers."

Analyzing these definitions, we can draw the following conclusions:

• 1) the object of study of logistics is the flow of products and services, while the object of study of supply chain management is, naturally, supply chains. In particular, Beamon (1998, p. 282) believes that supply chains are: “...an integrated process involving the collaboration of various enterprises (i.e. suppliers, manufacturers, distributors and retailers) that: 1) purchase raw materials, 2) process raw materials into final products, and 3) supply those final products to retailers";
• 2) the main flows from the point of view of logistics are the flows of products and services that are needed by end consumers, and differ in terms of quantity and quality (or condition), as well as in terms of the time and costs required to obtain them. In the process of moving to the final consumer, flows are either combined or separated in accordance with the preferences of both the consumers themselves and supply chain participants. These flows move along certain trajectories with the participation of suppliers and intermediaries (links of supply chains) and are absorbed by final consumers located in certain territories. The components listed above are important components for justifying the author's content of the concepts of “logistics” and “supply chain management”;
• 3) managing the flow of products and services is impossible without the involvement of participants (links) in supply chains. Obviously, this relationship emphasizes the inconsistency of the statement that the object of study of logistics - the flow of products and services - is absorbed by supply chain management, which has its own object of study - supply chains (systems). Since each scientific discipline must have its own object of study, there is an urgent need to distinguish between the concepts of “logistics” and “supply chain management”.

The above problem can be solved based on the following premises:

According to the author, the most valuable and least in demand definition of logistics at present for further analysis and use is a definition sometimes called “the layman’s definition of logistics (seven “Rs”)” (see Table 1.2), which is mentioned, for example, by Shapiro and Heskett (1985, p. 4) 1 , Russell (2007, p. 59), etc.

It is easy to see that this definition includes the well-known elements of the marketing mix (“product (good)”, “place”, and “consumer”), and, as will be shown below, the elements of the logistics complex (“quantity”, “quality” or “ condition", "time" and "costs");

• ? Marketing and logistics are business management concepts that form a logical sequence and are therefore closely related to each other;
• ? It should be recognized that supply chain management is an intermediate concept of enterprise management, since it does not absorb the main object of logistics research - the flow of products and services, which in any case is a priority for end consumers. It is obvious that for these consumers, supply chains, as an object of management, are of secondary importance;
• ? each enterprise management concept involves the use of a set of business processes, including, among others, logistics management;
• ? Logistics should be considered as a concept for enterprise management, and logistics management as a type of management activity (or a separate business process) characteristic of both logistics and supply chain management. Let us consider the points of view of foreign authors on the evolution of enterprise management concepts.
• 1. Ansoff (1965) identified four main stages of development of the modern economy:
• 1) 1820-1900 - stage of the industrial revolution;
• 2) 1900-1930 - mass production stage;
• 3) 1930-1950 - marketing stage;
• 4) from 1950 to the present - post-industrial stage. These stages should be classified as stages of development of macroeconomic systems.
• 2. Gutierrez and Prida (1998) presented three aspects of the development of supply chain management: 1) materials management, 2) industrial logistics and 3) quality management.
• 3. Coyle, Bardi and Langley (2003) 1 divided the development of logistics into three stages: 1) physical distribution or consumer-oriented logistics system (1960-1970); 2) integrated logistics management (1970-1980); 3) supply chain management (1980 to 1990).
• 4. Larson, Poist and Halldorsson (2007, p. 2) noted the following aspect: “Metz (1998. - Years.) suggests that supply chain management is a logical progression of events in logistics management. He describes the development of supply chain management in terms of four stages of expansion of its functions. The first stage - physical distribution led to the unification of the functions of warehousing and transportation. Logistics - the second stage added the following functions: acquisition, production and order management. The third stage - integrated supply chain management, is based on the rational use of suppliers and customers in supply chains. The fourth and final stage is “superior quality” supply chain management, which includes a number of additional functions such as marketing, new product development and customer service. Thus...supply chain management has evolved from a narrow subset of logistics functions to a broad and diverse set of functions.”
• 5. Mejza and Wisner (2001) defined the area of ​​processes that are integrated “across organizational boundaries” and pointed out that a large number of enterprises are trying to integrate logistics, marketing and other activities within supply chains.
• 6. Ross (2003) suggests that the formation of supply chain management involved five main stages. The first stage can be described as a period of “structured” logistics within an individual enterprise. At the second stage, a transition was made from the performance of separate logistics functions to their integration, which stimulated new relationships related to the optimization of customer service costs. The author calls the third stage integrated logistics management. The fourth stage is the stage of supply chain management with a strategic vision. The year 2000, according to the author, can be called the period of “electronic supply chain management.”
• 7. Ballou (2006) 1 proposed a hierarchical structure for the development of supply chain management since the 1960s. to date, in the following sequence: 1) management of materials procurement and physical distribution; 2) logistics; 3) supply chain management.
• 8. Mentzer et al. (2008) created a “supply chain management map” that includes the processes of production (operations), marketing and logistics, the content of which will be discussed below.

The above points of view undoubtedly contribute to a more accurate understanding of trends in the development of enterprise management concepts. However, unfortunately, their authors do not indicate the reasons and factors for such development and classification criteria that take into account the patterns of formation of logistics and supply chain management.

• ? type of market needs;
• ? supply chain structure to better meet market needs.

These features make it possible to substantiate the evolution of enterprise management concepts, which is presented in Table. 1.6.

In accordance with the results of the analysis of literary sources, three stages of enterprise management can be distinguished:

• ? management (mass production stage);
• ? marketing (marketing stage);
• ? logistics, which includes two “waves” (post-industrial stage, according to I. Ansoff).

These stages should be classified as micro- and mesoeconomics or business management concepts.

Management, marketing and logistics can be studied simultaneously as:

• ? concepts of enterprise management;
• ? types of management activities of enterprises (in this case it is advisable to use the following terms “production management” (instead of “management”), “marketing management” (instead of “marketing”), “logistics management” (instead of “logistics”).

Basic concepts of enterprise management

Table 1.6

Enterprise management concept		Type of logistics system	Object of design, formation and optimization	Logistics system diagram	Supply and demand ratio
Management	End of the 19th century	Microsystem	tion/sharing of resources		Demand exceeds supply (homogeneous market needs)
Marketing		1st level	Product and service sales system		Supply exceeds demand (different market needs)
Logistics of the “first wave”		Meso-system 2nd level	Local system for providing resources/sales of products and services		Supply exceeds demand (market needs close to elite)
Logistics of the “second wave”	80s XX century - beginning of the XXI century.	Level 3 meso system	Global system for supplying resources/sales of products and services		Supply exceeds demand (elite market needs)

This prerequisite allows us to create the matrix shown in Fig. 1.2.

Rice. 1.2. Combinations of management, marketing and logistics as concepts of enterprise management and types of management

activities

Figure 1.2 allows us to draw the following conclusions:

• ? In accordance with the above characteristics, six possible combinations of management, marketing and logistics can be obtained. It is advisable to call these combinations conceptual (strategic) types of enterprise activities;
• ? each concept of enterprise management involves the implementation of several types of enterprise activities;
• ? each conceptual (strategic) type of activity of enterprises should be located in only one sector of the matrix;
• ? it can be assumed that two of the six possible combinations are supply chain management (logistics management in management as a concept) and, as will be shown later, value management (logistics management in marketing as a concept).

Material table 1.6 allows us to draw the following conclusions:

• 1) the concept of management began to take shape at the end of the 19th century. This concept had the following features:
  • - homogeneous needs prevailed in the market,
  • - demand for products and services exceeds their supply,
  • - enterprises produced products and provided services at a minimum cost, producing them in large quantities and of a limited range (“working in batches and queues”),
  • - management objects (enterprises) were microeconomic systems and, in conditions of increased demand, there was practically no fear of reducing the consumption of their products and services,
  • - from the point of view of logistics management, enterprise managers received specific experience and knowledge of how to create and move resource flows within enterprises (microeconomic systems);
• 2) the concept of marketing appeared in response to the saturation of the market with homogeneous types of products and services. Consumers began to reject mass-produced products and insist on meeting their own, differing needs. The features of this concept are reflected below:
  • - heterogeneous needs become the main type of needs in the market, which allows marketers to identify and serve the so-called “market segments”,
  • - in a competitive environment, the demand for products and services becomes less than their supply. Some enterprises, for example, those of Henry Ford, were unable to sell their own products and fell into bankruptcy.
  • - enterprises produce products and provide services in limited quantities and develop a more diverse range of products according to customer needs, which leads to the formation of market segments and niches,
  • - enterprises form mesosystems (or systems for selling products and services) and try to prevent the possible lack of demand for products and services by promoting them to the market,
  • - from the point of view of logistics management, managers create resource flows both within enterprises, using processes of consolidation/disaggregation of these resources, and in the field of sales of products and services, which in turn belongs to meso-economic level systems;
• 3) the concept of “first wave” logistics appeared in response to the inability of an individual enterprise to satisfy the emerging and quantitatively growing elite needs of customers. Enterprises are faced with an alternative:
  • - or create additional divisions not related to the main activities of the enterprise to solve new problems in the field of sales,
  • - or transfer some business processes to suppliers, taking advantage of outsourcing.

The latter option turned out to be more promising. As a result, the concept of “first wave” logistics began to develop not only within the enterprise, but also between enterprises that form separate sections of the supply chain. Its features are presented below:

• - heterogeneous customer needs begin to transform into elite needs with a focus on the values ​​of these consumers,
• - demand for the company’s products and services decreases in relative terms. Competition in the market is getting tougher,
• - enterprises create products and provide services to consumers, segments of which may not be economically profitable for them or may be completely absent. However, these consumers agree to compensate the costs of enterprises associated with meeting their needs (non-price methods of competition predominate),
• - enterprises create products and provide services in small batches and a more diverse range (transition to work on the principle of “managing the flow of single products”),
• - from the point of view of logistics management, managers form resource flows and ensure their consolidation and disaggregation not only within the enterprise, but also outside it, starting with the acquisition of ownership of resources from the supplier and ending with the transfer of ownership of finished products to its consumer;
• 4) the concept of “second wave” logistics, according to the author, includes two components - supply chain management and value management. This concept appeared as a natural continuation of the development of the “first wave” logistics concept associated with managing resource flows at the enterprise level, and has the following features:
  • - customer needs are elite, i.e. practically non-repeating,
  • - competition in the market requires the introduction and use of innovative management methods, including through the formation of relationships with suppliers, intermediaries and consumers on a long-term basis, including on a virtual basis,
  • - enterprises create products and provide services to consumers who do not represent traditional market segments for classical marketing,
  • - in order to survive in the market, enterprises begin to form supply chains (systems) that ensure the design, creation, information and delivery of value to end consumers in accordance with M. Porter’s version 1,
  • - from the point of view of logistics management, managing the flow of resources and finished products becomes more complex, since these flows flow through several enterprises - from the initial supplier (supplier of the supplier) to the final consumer (consumer of the consumer). It can be argued that supply chain management in this case turns into supply network management.

As noted earlier, each concept of enterprise management has its own components that reflect its specifics. The components of various concepts of enterprise management are interconnected with each other (Fig. 1.3).

Rice. 1.3. Components of management, marketing and logistics as concepts of enterprise management and their relationships 2

Data in Fig. 1.3 allow us to draw the following conclusions:

1) the management concept is based on internal variables of the organization (enterprise), which can be called a complex

management. These include “goals”, “objectives”, “technology”, “structure” and “personnel” (Mescon, Albert and Khedouri (1998) 1). According to table. 1.6, when implementing the management concept, homogeneous needs dominate the market, and the goal of enterprises is to make a profit;

2) the marketing concept involves the use of components of the 4P marketing mix, such as “product”, “price”, “place” and “promotion” (as will be shown below, “communications”. - Years.)"(Kotler (1967)). This concept is characterized by the presence of heterogeneous market needs.

According to the author, the “4P” marketing complex must be supplemented with such a component as “consumer”. This word in English begins with the letter “C” (“consumer”), and not with “P”, which is not fundamentally important for science, but significantly influences the justification of the author’s version of the concepts “supply chain management” and “logistics”;

• 3) the concept of “first wave” logistics is formed from a combination of components of “the layman’s definition of logistics (seven “Rs”)” in a situation where, on the one hand, elite needs begin to dominate the market, and, on the other hand, end consumers strive to receive significant value for them. When implementing the concept of “first wave” logistics, the tasks of enterprise marketers become more complex due to the need to manage the differing needs (values) of customers. In this situation, it is advisable to transfer some traditional functions of marketers to insourcing, i.e. it seems rational to leave to marketers the management of primarily two components of the marketing mix - “consumer” and “promotion (communications)”, and the remaining three components - “product” “price” and “place” are partially transferred for management to logistics management specialists and act together. With the help of these three components, logistics management specialists form their own complex - “value management”. In fact, this is the first half of the logistics complex, and this half is formed as follows (see Fig. 1.3):
  • a) the “product” component of the marketing mix is ​​“divided” into two components - “quantity” and “quality” or “condition”, which depend on the specific requirements (values) of consumers, b) the “price” component of the marketing mix includes two components - “ costs" and "time". The first component helps reduce the price of the product. The second component ensures a reduction in the need of enterprises - links in supply chains (systems) for working capital, which has a positive effect on the behavior of investors,
  • c) the “place” component of the marketing mix consists of two components - “territory” and “trajectory”. Businesses must control specific territories (or, in marketers' terms, geographic market segments) and deliver specific products along specific trajectories to those segments.

Thus, it is possible to transform the “man's definition of logistics - the seven “Rs”” into the “man's definition of logistics - the eight “Rs”: “...ensuring the availability of the right product, in the right quantity and of the right quality (in the right condition), at the right time, for the right customer, located in the right territory, using the right trajectory, at the right cost";

4) changes in consumer preferences create prerequisites for the development of internal variables of the enterprise (or management complex). Consumers are demanding new tools to design, create, communicate and deliver the value they need. The formation of the concept of value management provokes the further development of traditional methods of enterprise management.

By analogy with the process of forming value management components, internal variables of an enterprise or management complex are formed as follows:

• a) two components are added to the “personnel” component - “suppliers” and “intermediaries”, which are selected by the enterprise in accordance with customer requirements. Thus, it is possible to form a basic supply chain, which includes the following links: “suppliers (development of the “personnel” component) - intermediaries (development of the “personnel” component) - personnel (internal variable of the enterprise) - intermediaries (development of the “personnel” component) - consumers (component of the marketing mix), which corresponds to the real movement of resource flows “downstream”;
• b) from the point of view of transferring some functions of the enterprise to outsourcing, the “technology” component receives an additional increase due to the implementation of logistics operations -

“consolidation” and “disaggregation” of resources. Consolidation is associated with an increase in the quantitative parameters of resource flows. Disaggregation is associated with the reduction of these parameters. Thus, logistics (or rather, logistics management) does not replace or absorb production and service technologies, but it adds new properties to this component. It is obvious that logistics (logistics management) and technology are the basis for the implementation of production and commercial processes with new goals and more complex parameters;

• c) the “structure” component is further developed as follows:
  • - this component takes into account both the dynamics (“process”) and statics (“system”) of managing a new object - associations, including enterprise chains;
  • - if the “process” component within the framework of management, as a concept of enterprise management, is carried out according to the principle of “working in batches and queues”, then within the framework of the “second wave” logistics concept the process is organized according to the principle of “managing the flow of single products”. Therefore, the new component of “second wave” logistics is the “flow” component, which is a “moving mass (of products)”;
  • - if in the management concept the system is understood as the enterprise itself, then in the “second wave” logistics concept such a component is the “chain” or “supply chain”; hereinafter referred to as “supply network”.

Thus, the clear conclusion follows that enterprise managers must be responsible for achieving “goals” and completing “tasks”, logistics management specialists should help managers manage the components “personnel”, “technology” and “structure”, including in the external environment of enterprises. These three components not only provide six additional components, but also create the basis for the formation of the concept of supply chain management through the second half of the logistics complex (see Figure 1.3).

It is easy to see that logistics management specialists do not replace the functions of managers and marketers in supply chains, but only help to significantly improve their implementation.

As can be seen in Fig. 1.3, to a first approximation, supply chain management is logistics management in management, and value management is logistics management in marketing

• (see Fig. 1.2). The following aspects of this classification should be noted:
• ? Logistics does not replace management as a business management concept. This concept allows you to achieve the goals and objectives of enterprises. Logistics helps managers carry out the processes associated with designing, creating, communicating and delivering value to end consumers within and outside the enterprise. Logistics involves the joint participation of suppliers, intermediaries and enterprise personnel. It is associated with the creation and movement of resource flows and the implementation of processes for managing these flows with the involvement of supply chain links;
• ? Logistics does not replace marketing as a business management concept. This concept ensures that customer needs are met and these needs are controlled through a communication policy (using the “promotion (or rather, communications)” component). Logistics helps marketers carry out the processes involved in meeting the individual requirements of end consumers, since these requirements involve the management of various components such as “quantity”, “quality” or “condition”, “cost” and “time”. Supply chains must meet these requirements by serving consumers in specific territories along specific trajectories. Logistics helps marketing execution if consumers demand that their unique orders be fulfilled, creating the value they need;
• ? Logistics as an enterprise management concept eliminates cross-functional barriers between supply chain participants inside and outside enterprises at all parts of resource flow trajectories. Previous enterprise management concepts do not take this feature into account to the extent necessary for the end user.

A sufficient number of arguments have been obtained to justify the author’s definitions of the concepts “logistics”, “supply chain management” and “value management”. Features of these definitions are indicated by words highlighted in italics.

Value management is a concept of enterprise management that is associated with the impacts of the subject of management on resources and trajectories movement of their flows in order to create value for end consumers located at a certain territories, who ordered a certain quantity products and services of a certain quality (state) at a certain time, and agreeing to compensate expenses businesses (supplier or intermediary) involved in the design, creation, communication and delivery of products and services.

Supply chain management is a concept of enterprise management that is associated with the influence of the subject of management on the chain - linearly ordered links of the logistics systems(,suppliers And intermediaries), performing consolidation/unbundling objects flow resources in accordance with the goals of their end users.

Logistics is a concept of enterprise management, which is associated with the impacts of the subject of management on streams resources moving along certain trajectories with the help of logistics links systems (suppliers And intermediaries), performing consolidation/unbundling flow data objects for the purpose of providing end consumers located on a certain territories, maximum value within their stated parameters quantities And quality (state) products and services and agreed parameters time And costs for their production and sale.

So, supply chain management and value management, as components of logistics, are intermediate concepts of enterprise management or conceptual (strategic) activities.

Table data 1.6 and fig. 1.3 are the basis for identifying basic options for management decisions in supply chains and determining their relationships (Fig. 1.4).

Analysis of the information presented in Fig. 1.4 allows us to draw the following conclusions:

• 1) to justify basic management decisions in supply chains, marketing components (value management) are used - price (costs, time) and product (quantity, quality or condition);
• 2) management decision A - Reducing costs and eliminating possible product shortages by creating inventories (option 3 - Cl) is due to:
  • - the possibility of using trade discounts when purchasing large quantities of raw materials, materials, semi-finished products and components,
  • - spreading semi-fixed costs over a larger volume of production (economies of scale),
  • - rational use of technological equipment without replacing it (excluding losses in production volume due to equipment readjustment),
  • - reducing the costs of “lost profits” due to a possible shortage of raw materials, materials, semi-finished products and components;
  • - relatively low effective demand for finished products and services, which makes it possible to effectively satisfy homogeneous market needs.

Rice. 1.4.

This version of the management decision is typical for such a concept of enterprise management as production management (see Table 1.6);

• 3) management decision B - Ensuring the quality of goods for consumers by increasing costs (option 3 - Kch) is effective for the following reasons:
  • - reorientation of clients to non-price methods of choosing products and services, when the focus is not on the low price of the product, but on its consumer properties (quality),
  • - increased costs for ensuring the quality of products and services due to the appearance of their modifications, which leads to additional equipment readjustments and loss of product output,
  • - increased costs for additional technological operations and quality control operations for products and services,
  • - increased costs for marketing research and development of a marketing mix in a market of heterogeneous needs.

This version of the management decision is typical for such a concept of enterprise management as marketing (see Table 1.6);

• 4) management decision C - Saving working capital of the enterprise by reducing inventories (option B - Cl) is effective for the following reasons:
  • - the transition of enterprises to the production of a diversified range of products and services, in connection with which the possibilities of synchronizing the operations of technological processes and reducing the cost of products and services are practically exhausted,
  • - the need to improve management at enterprises and in supply chains in the face of increased competition in markets of various types,
  • - the possibility of reducing the need for working capital and increasing on this basis the profitability of assets (and products) of the enterprise,
  • - wide involvement of personnel in the process of improving the activities of the enterprise, including through “quality circles”,
  • - the increasing role of logistics methods for managing production and commercial processes, aimed at eliminating cross-functional barriers within enterprises and in supply chains.

This version of the management decision is typical for such a concept of enterprise management as logistics at the enterprise level (“first wave” logistics) (see Table 1.6);

5) management decision D - Improving the quality of goods due to

shortening the innovation cycle (option B - Kch) is

effective for the following reasons:

• - the organization of the flow of single products makes it possible to ensure minimum dimensional tolerances during their manufacture (for mechanical engineering products), which improves the quality of the product consisting of these products,
• - eliminating cross-functional barriers at the supply chain level makes it possible to significantly reduce the preparation time for the production of innovative types of products and at the same time master a wide range of products and services in accordance with the requirements of end consumers,
• - reducing the duration of the innovation cycle makes it possible to identify areas for improving enterprise management, since in this case the risk of losses of “lost profits” significantly increases, which is eliminated by improving the quality of management in supply chains,
• - reducing the duration of the innovation cycle leads to the allocation of part of the work or all of the work to outsourcing, i.e. to those enterprises that can perform the work assigned to them more efficiently.

This version of the management decision is typical for such a concept of enterprise management as logistics at the supply chain level (“second wave” logistics) (see Table 1.6);

• 6) for each shown in Fig. 1.4 management decisions, we can propose the corresponding management principles:
  • - management decision A - Reducing costs and eliminating possible product shortages by creating inventories (option 3 - Cl) - principles of A. Fayol 1,
  • - management decision B - Ensuring the quality of goods for consumers by increasing costs (option 3 - Kch) - principles of E. Deming,
  • - management decision C - Saving working capital of the enterprise by reducing inventories (option B - Cl) - principles of J. Liker,
  • - management decision D - Improving the quality of goods by reducing the innovation cycle (option B - Kch) - “mega trends that are changing logistics supply chains” by D. Bowersox, D. Kloss and T.P. Stanka.

Based on those highlighted in Fig. 1.4 management decisions of the first level, it is possible to justify the accompanying decisions of the second level through the use of the following classification criteria:

• ? components of supply chain management: system and process;
• ? type of activity: fulfilling orders of end consumers and managing the implementation of these orders (supply chain management).

The above classification criteria make it possible to solve the problem posed using the matrices shown in Fig. 1.5-1.8. Let's consider their content in more detail.

• 1. Figure 1.5 shows four main management decisions of the second level (A 1.1-A 2.2):
  • ? solution A 1.1 is aimed at the rational placement of batches of resources at workplaces and (or) storage areas, which has a negative impact on the layout of the areas of the enterprise departments; the result of this decision is the creation of the necessary conditions for uninterrupted work in batches and queues, especially on discontinuous production lines;
  • ? solution A 1.2 is related to ensuring the synchronization of the production process or organizing the sequential movement of objects of labor; the result of this decision is the rational loading of jobs due to the equality of cycles of operations of the production process;
  • ? Solution A 2.1 is a logical continuation of task A 1.1 and involves the selection and implementation of concepts (models) for inventory management in an enterprise, such as economical and production models based on the order size of resources, models with a fixed order size and frequency, etc.;
  • ? solution A 2.2 assumes the organization of the enterprise’s work in “batches and queues”, traditional for mass and large-scale production; the result of this decision is a reduction in the cost of products and services due to the effect of scale of production.

Rice. 1.5.

Rice. 1.6.

Rice. 1.7.

Rice. 1.8.

• 2. Figure 1.6 shows four main management decisions of the second level (B 1.1 - B 2.2):
  • ? solution B 1.1 is aimed at improving the consumer properties of products and services; the result of solving this problem is not only the retention of traditional market segments, but also the attraction of new consumers, which leads to an increase in the range and, accordingly, to more frequent equipment changeovers;
  • ? solution B 1.2 is related to the improvement of technological processes; the result of this decision is a reduction in the number of defective products and stability of production;
  • ? solution B 2.1 involves the introduction of concepts for quality management of products and services; the result of this decision is the introduction of an integrated approach to the production of products and the provision of services at each stage of the production and commercial processes;
  • ? solution B 2.2 leads to “building” quality into the product (into the process); The result of this decision is a significant reduction in costs for control operations of the production process and the abandonment of specialized quality units such as technical control departments.
• 3. Figure 1.7 shows four main management decisions of the second level (C 1.1 - C 2.2):
  • ? solution C 1.1 is aimed at using a parallel or series-parallel type of movement of objects of labor; the result of this decision is a reduction in the need for working capital of the enterprise and a partial reduction in the cost of products and services by reducing packaging and handling equipment and freeing up production space;
  • ? solution C 1.2 involves eliminating cross-functional barriers in supply chains; the result of this decision is a reduction in the duration of the production cycle for the production of various types of products and services due to the coordinated actions of supply chain participants;
  • ? solution C 2.1 requires the implementation of the lean manufacturing concept; the result of this decision is the implementation of an integrated approach to the organization of production and commercial processes that ensure the continuity of the flow of single products in supply chains;
  • ? solution C 2.2 is associated with rapid changeover of equipment (SMED system); The result of this solution is a reduction in time spent on replacing technological equipment, an increase in labor productivity and, at the same time, a reduction in the cost of products and services.
• 4. Figure 1.8 shows four main management decisions of the second level (D 1.1 - D 2.2):
  • ? solution D 1.1 involves the development of human capital of the resource supply system; the result of this decision is the creation of the necessary prerequisites for the development and implementation of innovations that ensure the achievement of the required level of competitiveness of enterprises in markets of any type;
  • ? solution D 1.2 is aimed at reducing the wait (downtime) of supply chain participants in conditions of constant readiness for misalignment of their activities when creating value for end consumers; the result of this decision is the reduction of “lost profits” losses even in the absence of cross-functional barriers in supply chains due to the unique requirements of a particular consumer;
  • ? solution D 2.1 requires the implementation of pull concepts for managing enterprises and resource supply systems; the result of this solution is a significant reduction in the costs of supply chain management due to its decentralization and the achievement of efficient functioning of supply chain participants;
  • ? solution D 2.2 concerns the organization of the flow of single items as part of the implementation of the logistics concept, including supply chain management and value management; The result of this solution is a reduction in the duration of the production cycle - from the emergence of an innovative idea to the delivery of finished products based on it to end consumers while simultaneously ensuring the required quality.

The material presented above creates the necessary prerequisites for developing an algorithm for implementing management decisions in supply chains (Fig. 1.9).

• Sergeev V. Again about terminology and near-terminological fuss around logistics // RISK. 2008. No. 2. pp. 123-128.
• Simchi-Levi D., Kaminsky R. and Simchi-Levi E. Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies. New York: McGraw-Hill, 2003. Mentzer J. T., Min S. and Bobbit L. M. Toward a unified theory of logistics // International Journal of Physical Distribution & Logistics Management. 2004. Vol. 34.No. 8. P. 606-627. Chen I.Jand Paulraj A. Understanding supply chain management: critical research and theoretical framework // International Journal of Production Research. 2004. Vol. 42.No. 1. P. 131-163. Waters D. Logistics: An introduction to Supply Chain management. New York, PALGRAVEMACMILLANN, 2003. Ansoff I.H. Corporate Strategy: An Analytical Approach to Business Policy for Growth and Expansion. New York: McGraw-Hill, 1965. Ross D.F. Introduction to e-Supply Chain Management. St. Lucie Press. USA, 2003. Kotler P. Marketing Management: Analysis, Planning, and Control, Prentice-Hall, 1967.
• Fayol N. Administration industrielle et generate; prevoyance, organization, commandement, coordination, controle. Paris, H. Dunod et E. Pinat, 1916.
• Deming W.E. () Out of the crisis. Cambridge, MA: Massachusetts Institute for Technology Press, 1982.
• biker J.K. The Toyota way: 14 Management principles from the world's greatest manufacturer. New York: McGraw-Hill, 2004.
• Bowersox D.J., Closs D.J. and Stank T.P. (2000) Ten mega-trends that will revolutionize supply chain logistics // Journal of Business Logistics. Vol. 21.No. 2. P. 1-16.

Question:
Please tell me the difference between logistics and Supply Chain Management. What are the specifics in the pharmaceutical business?

Answer:

The question is very relevant in the modern development of the economy in general, and the pharmaceutical business in particular.

In principle, there is still no single definition for both the term logistics and the term Supply Chain Management. Especially in Russian sources. Although in the West there are different points of view on this matter, which are represented by several “schools”. Let's try to figure out what the difference is and how interesting these areas are for the pharmacy business as the final seller.

So, we talked about what logistics is a few issues ago. And yet we will repeat the general theses.

Logistics has two main tasks:

• Manage/control/minimize costs;
• Provide a certain level of service (maintenance) to internal and/or external consumers. For a pharmacy chain, this is the level of possible (acceptable) shortages and the speed (timing) of delivery.

One of the common definitions of logistics is as follows:

Logistics is the direction of the company’s activity, which consists in managing material and accompanying flows (cash, information).

The main activities for logistics are:

— procurement management,

— warehouse management (if any),

— transport management,

— management of foreign economic activity (if any),

— inventory distribution management.

The best results in logistics can be achieved if the participants are united in one department. Otherwise, optimization will be carried out locally in each department, which will inevitably lead to two results:

1. cost optimization within the company will not be achieved,
2. Interfunctional conflicts will arise due to the presence of local tasks.

And here Supply Chain Management (SCM)(Supply Chain Management, SCM) is a more complex category. Unlike logistics, digital marketing involves performing the same tasks, but within a chain. That is, optimization occurs not within the company, but when working with contractors.

Purpose of supply chain management

Achieve maximum competitiveness and profitability of the company, as well as the entire supply chain network structure, including the end consumer.

In this regard, integration and reengineering of supply chain processes should aim to improve the overall efficiency and productivity of supply chain participants.

Digital marketing is a fairly new direction in management. Its origins can be dated back to the second half of the 80s of the last century. The UDC received mass distribution as a strategic direction in the west much later. In Russia, so far there is a more local solution to problems. But as the experience of companies that have been involved in this area for a long time shows, they turn out to be the best in their class.

Supply chain management is the integration of eight key business processes:

1. Customer relationship management;
2. Customer service;
3. Demand management;
4. Order fulfillment management;
5. Support of production processes;
6. Supply management;
7. Managing product development and bringing it to commercial use;
8. Return material flow management

The difference between DRM and logistics and their capabilities can be described as follows:

Logistics is responsible for the physical implementation of materials management. The efficiency or inefficiency of logistics can determine about 10% of business success.

The DCM is responsible for balancing needs and supplies throughout the customer value chain. The effectiveness or ineffectiveness of DRM can determine about 30% of business success.

It is possible to achieve serious results in SCM only by using modern information technologies and advanced approaches within the framework of integration and coordination of actions of supply chain participants.

As an illustration of the differences between logistics and supply chain management, the following example can be given from the practice of one of the pharmaceutical distributors.
The supplier offers the distributor to purchase a batch of goods with the following conditions. If the distributor purchases a batch that covers three months of sales to its customers, then the distributor will receive, in addition to the discount, a bonus from the supplier.
If we consider this task from the point of view of logistics at the supplier and distributor, then the scheme should be like this.
The distributor reviews the supplier's proposals from the point of view of economic efficiency. Comparing the savings on the purchase price and the bonus with all logistics costs (transport, warehouse, cost of frozen money), warehouse capabilities, expiration dates, etc.
The supplier's logistics, in turn, must further ensure this supply. That is, there must be stocks at the required level, the accompanying documents must be in order, the warehouse must ship this delivery in a timely manner. That is, the supplier is obliged to provide logistics services at the appropriate level.

What would the same situation look like, only from the point of view of the DRM?

Such an offer from the supplier can (and most often does) lead to a significant increase in costs in the supply chain, which ultimately affects the price of the product. On the other hand, there may be a shortage of goods for some time. How will this happen?!
If the client is offered a batch for three months to cover demand, then the client will continue to place orders rarely, but in large quantities. Due to this, the supplier's demand for this product will increase in instability. And the more unstable the demand, the more difficult it is to predict/plan for the next period. The worse the forecast, the more difficult it is to adequately plan inventories of both finished products and raw materials. Accordingly, the supplier's logistics and/or production will suffer. Logistics will be forced to inflate inventories, and production will often break the production plan for newly emerging urgent orders.
As a result of this approach, the distributor will periodically have supply interruptions, and there will be an “intra-city” shortage in pharmacies.
And in general – increased costs and loss of sales. Of course, the result may look somewhat scary at first glance.

Therefore, they propose to consider these problems in more detail and with figures in a number of subsequent publications. And also consider how these problems are solved within the framework of DRM by market leaders and others.

The concept of supply chain management (stages of management, tasks, advantages, functions, strategies). The evolution of supply chains. SCM in the West, foreign market of solutions: ERP systems. SCM with Russian specifics and the domestic market for solutions (examples).

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Supply Chain Management (SCM) is a system for planning, execution, control and analysis of a company's logistics processes. This management covers both internal and external flows of goods and materials and services in the process of executing customer orders.

Supply Chain Management is a comprehensive solution for automating the management of the entire chain of business processes from the moment an order appears until the goods are received by the end customer. The use of a modern software platform, company web applications (, KPI MONITOR), as well as the diverse experience of ProfItProject specialists in the field of designing economic information systems, together determine the effectiveness of the entire system as a whole.

The Supply Chain Management solution is focused on reducing logistics costs (transportation, storage, distribution, planning) and solves the following problems:

• Reducing production costs
• Increased labor productivity
• Increasing inventory turnover
• Increased cash turnover

• Prompt satisfaction of demand
• Increased customer satisfaction
• Transparency of the flow of goods and materials throughout the supply chain
• Reduced order processing cycle
• Supply chain performance monitoring and analysis

Who is the solution suitable for?

Suppliers

Production

Distribution

Retail

Solution Possibilities

Solution Components

B2B portal

Ordering goods via the Internet will allow a regular customer of the company, regardless of location, to place an order at any time of the day, get acquainted with the characteristics and detailed description of the product, view images and videos, automatically receive an electronic copy of the invoice and order specifications without the participation of a manager, monitor the status of the order, print shipping documents, reconciliation statements, etc.

The Supply Chain Management (SCM) solution supports the automation of business processes when processing customer orders both “from the warehouse” and “to order”. The system implements software mechanisms that allow automatic division of business process chains according to these types of client orders, taking into account the taxation system of trading companies.

In order to increase the speed of placing a customer order, the Supply Chain Management (SCM) solution uses a data collection terminal (DCT), which provides the sales manager with full information support when working with a client in a showroom or warehouse.

The use of programs developed by ProfItProject for the data collection terminal can significantly reduce the time it takes to complete the customer order process, increase the number of processed customer orders and, as a result, reduce the time it takes to complete the entire supply chain.

Selection of suppliers and delivery of goods

The solution provides procedures for selecting suppliers by assessing their compliance with certain criteria (order execution speed, product quality, product cost, shipment schedule to a transport company, etc.). This opportunity is relevant for Companies with a large number of suppliers of the same type of goods and materials. Since the share of procurement costs in such companies reaches more than 50%.

• Selection of suppliers using various evaluation criteria, especially significant for the company, will provide support for management decisions based also on statistical data of the system, ensuring minimization of risks in the selection of suppliers and the optimal purchase price of goods.
• The supply manager is given the opportunity to automatically generate orders to various suppliers based on agreed/paid customer orders and send the order in the required form and format.

Road transport logistics

The Supply Chain Management solution provides automation and management of the following logistics business processes:

• Manage vehicle requests
• Selection of vehicles
• Vehicle equipment
• Transportation management
• Accounting for waybills
• Transportation accounting
• Accounting for fuel and lubricants and vehicle maintenance

Opportunities for companies with a geographically distributed structure

The data exchange (replication) tools provided in the solution determine the effectiveness of the use of the Supply Chain Management system by companies with a geographically distributed structure, ensuring coordination and consistency of the activities of all business units involved in the supply chain.

• When a sales manager from one city reserves an item, the manager from another city instantly displays information about the reduction in the available balance for this item.
• The platform used ensures the consolidation of data from all structural divisions and dependent companies, as well as obtaining a common vision of supply chain business processes and conducting multilateral analysis

Accounting, tax and management accounting

The comprehensive Supply Chain Management solution also includes an Accounting module that solves accounting and tax accounting problems. The system provides high performance when working with large volumes of data and ample opportunities for integration with information systems and databases.

• The holding accounting implemented in the program allows you to maintain accounting, tax and management records of various legal entities that are part of the holding in a single information base, and to generate consolidated financial statements for a group of companies.
• The capabilities of the Accounting module to expand each transaction with an unlimited number of analytical measurements in conjunction with the Supply Chain Management solution offer a tool for effective financial analysis of the activities of a trading company in any analytical context (product groups, warehouses, types of partners, points of sale, etc.).

Accounting for settlements with counterparties

The Supply Chain Management solution supports various trading options: full prepayment, partial prepayment and installments. At the same time, the program allows you to determine the time limits of payments for stage-by-stage payments with automatic notification of the approaching/arriving date of payment, and in the case of installment payment - to accrue interest according to the rates and terms of the agreement.

• When placing an order or shipping to a client, the program monitors the compliance of the state of mutual settlements with the counterparty with the terms of the contract. These functionalities allow you to evaluate partners in terms of compliance with payment terms and conditions, assess risks and create new conditions for working with a partner.
• Provides effective tools for analyzing current and overdue accounts receivable in the context of partial payments and installments, as well as qualitative data for the company.
• Wide possibilities for determining, monitoring and analyzing the state of mutual settlements with counterparties contribute to the prompt adoption of management decisions to increase cash turnover, one of the key performance indicators of a trading company.

Monitoring, control and analysis of supply chain key performance indicators

In achieving the goals of improving the efficiency of supply chain management, the ability to quickly monitor and control business processes plays an important role. In the Supply Chain Management system, the solution to these problems is implemented through the use of KPI (Key Performance Indicator) management technology; automation of this system based on the KPI MONITOR software product developed by ProfItProject provides:

• Formation, configuration and calculation of key performance indicators (KPI) of logistics operations
• Setting up KPI relationships and bringing them into the company’s system of indicators
• Interactive animated visualization of KPI performance
• Multidimensional analysis of logistics indicators with the ability to drill down values ​​and refine them according to any analytical parameters
• Automatic notification when an indicator enters the risk zone, etc.