What is Supply Chain Management?

The Supply Chain, which is also referred to as the logistics network consists of the management of the flow of the information and the goods among suppliers, manufacturing centers, warehouses, distribution centers, and retail outlets, as well as raw materials, work-in-process inventory, and finished products that flow between the facilities.

The objective of Supply Chain management is:

To meet and exceed the required customer service level (95%, 98%, or 99.9%)

To be as efficient and Cost-effective as possible across the entire system’s costs, from transportation and distribution to inventories of raw materials, work in process, and finished goods.

Thus, to meet the customer service level at the lowest cost puts the emphasis not only on minimizing transportation cost or reducing inventories, but also, on tackling all the system.

General knowledge tells us that to increase service level, the firm must increase inventory and therefore cost.  Surprisingly, recent developments in information and communication technologies, together with a better understanding of Supply Chain strategies, has lead to innovative approaches that allow the firm to improve both objectives simultaneously without added cost.

Why Do We Need Supply Chain Management?

High competition in today’s global markets, the introduction of products with short life cycles, and the heightened expectations of customers has forced business enterprises to invest in and focus attention on their Supply Chains. 

Additionally, continuing advances in communications and transportation technologies (e.g., mobile communication and overnight delivery) have motivated the continuous evolution of the Supply Chain and of the techniques used to manage it. As a result, many opportunities exist to cut costs in the Supply Chain. 

Not surprisingly, a number of companies have been able to substantially increase revenue or decrease costs through effective Supply Chain management.

ARABIAN HALA COMPANY Ltd.
Head Office:
Abdullah Bin Hoazafa Al-Sahami St. Diplomatic Quarter
P.O.Box 6164 Riyadh 11442 - KSA
Tel: +966.1.4884887 - Fax: +966.1.4884389