Supply Chain Management from a Systems Science Perspective

Supply chain management (SCM) is going to be the main management process for production systems in the xxi century. This management process will take care of the flow of materials, information, purchased parts, personnel and financial needs supplied from different vendors, sometimes geographically too far from the main production plant. The industry of domestic appliances is a good example of the supply chain management. Before SCM a production system designed their products itself and manufacture all the subassemblies and components and gave after sale service during and after warranty period. After SCM the new production systems “comakership” several aspects of the production process, for example hermetic compressors for fridges, plastic parts and motors for washing machines, electrical components, etc. SCM provides different management principles to help in the designed planning and controlling the network of suppliers in order to synchronize the variability of customer’s demand with the variability of capacity of suppliers. One management principle is called Asbhy’s law:” the variability of the manager system should be more than or equal to the variability of the managed system”. In order to speak correctly about SCM let see how is the official definition expressed by the Association for Operations Management in their APICS Dictionary (Blackstone, 2008): SCM is “The design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measurement performance globally”. The previous definition emphasizing the main functions of production systems management as follows: the design of the supply chain when it is going to be a new corporation, the planning of operational and strategic activities, the scheduling and execution of the production planning, the control and solution of conflicts and the monitoring and auditing of the production processes . The financial management to create net value to all stakeholders: owners , employers, employees, society and environment. In the following section of this chapter, it is going to be described in more detail each one of the manufacturing functions of Supply Chain (SC), considering a systems approach based on the five components of the Viable System Model (VSM) by Beer (1985). Supported by the popular business/industrial information system called Enterprise Resources Planning (ERP).