Seven Principles of SCM

Seven Principles of SCM

More than ten years ago, a research study of 100+ manufacturers, distributors, and retailers uncovered some widely used supply chain strategies and initiatives. These ideas and practices were distilled down to seven principles and presented in an article in Supply Chain Management Review, a magazine widely read by SCM professionals.

Though they are more than a decade old, these timeless principles highlight the need for supply chain leaders to focus on the customer. They also stress the importance of coordinating activities (demand planning, sourcing, assembly, delivery, and information sharing) within and across organizations.

Here's an excerpt from the article:

“Managers increasingly find themselves assigned the role of the rope in a very real tug of war—pulled one way by customers' mounting demands and the opposite way by the company's need for growth and profitability. Many have discovered that they can keep the rope from snapping and, in fact, achieve profitable growth by treating supply chain management as a strategic variable.

These savvy managers recognize two important things:

• They think about the supply chain as a whole—all the links involved in managing the flow of products, services, and information from their suppliers' suppliers to their customers' customers (that is, channel customers, such as distributors and retailers).
• They pursue tangible outcomes—focused on revenue growth, asset utilization, and cost.”

Source: David L. Anderson, Frank F. Britt, and Donavon J. Favre, “The Seven Principles of Supply Chain Management, Supply Chain Management Review, (1997).