SCM has grown out of the logistics concept but is distinct from this concept in several ways. Logistics is typically based on the individual business with the objective of making this enterprise’s logistics system more efficient through internal and external planning and control. SCM is based on the external relationships between the players in the entire supply chain and focuses on how to improve trading in general.
The SCM concept thus provides a broader perspective across the supply chain that has been the traditional approach within logistics. A range of activities comprised by the SCM concept concern expansion of the Business Process Reengineering (BPR) concept to cover the entire supply chain, as it is presupposed that the internal logistics has already become more efficient through BPR projects.
Processes across the supply chain and the development of supply chain relationships are characteristics of SCM. Focus is on strengthening the overall supply chain rather than on sub-optimization in the individual enterprise.
In practice, businesses in a supply chain do not have integrated cooperation with all other players in the supply chain. It is left to the suppliers and customers to handle these relationships. Within the automobile industry there is often hierarchic vendor cooperation, where the automobile manufacturer cooperates with a number of system suppliers, each of which is responsible for cooperating with a number of component suppliers, which in turn are responsible for cooperating with vendors of sub-components and raw materials. This is show in above figure.
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