page_title: Supply chain
section_title: Management
hierarchical_section_title: Supply chain / Management
caption_attribution_description: For documentary purposes the German Federal Archive often retained the original image captions, which may be erroneous, biased, obsolete or politically extreme. ADN-ZB-Häßler-14.4.80-la-Bez. Dresden: Täglich 75 Tonnen Altpapier werden im VEB Vereinigte Papierfabriken Heidenau aufbereitet und zu Toilettenpapier sowie zu hochwertigem Duplex-Tapetenrohpapier verarbeitet. In der ersten Verarbeitungsstufe wird der wertvolle Sekundärrohstoff zu einer Art Zellstoffbrei aufbereitet. Meister Günter Riedel (l) und Anlagenfahrer Rolf Unganz sind für die richtige Mischung der entsprechenden "Zutaten" verantwortlich.
context_page_description: In commerce, a supply chain is a system of organizations, people, activities, information, and resources involved in
  supplying a product or service to a consumer. Supply chain activities involve the transformation of natural resources, raw materials, and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value chains.
context_section_description: In the 1980s, the term supply-chain management (SCM) was developed to express the need to integrate the key business processes, from end user through original suppliers. Original suppliers are those that provide products, services, and information that add value for customers and other stakeholders. The basic idea behind SCM is that companies and corporations involve themselves in a supply chain by exchanging information about market fluctuations and production capabilities. Keith Oliver, a consultant at Booz Allen Hamilton, is credited with the term's invention after using it in an interview for the Financial Times in 1982. The term was used earlier by Alizamir et al. in 1981 .
  If all relevant information is accessible to any relevant company, every company in the supply chain has the ability to help optimize the entire supply chain rather than to sub-optimize based on local optimization. This will lead to better-planned overall production and distribution, which can cut costs and give a more attractive final product, leading to better sales and better overall results for the companies involved.  This is one form of vertical integration. Yet, it has been shown that the motives for and performance efficacy of vertical integration differ by global region.
  Incorporating SCM successfully leads to a new kind of competition on the global market, where competition is no longer of the company-versus-company form but rather takes on a supply-chain-versus-supply-chain form.
  The primary objective of SCM is to fulfill customer demands through the most efficient use of resources, including distribution capacity, inventory, and labor. In theory, a supply chain seeks to match demand with supply and do so with minimal inventory. Various aspects of optimizing the supply chain include liaising with suppliers to eliminate bottlenecks; sourcing strategically to strike a balance between lowest material cost and transportation, implementing just-in-time techniques to optimize manufacturing flow; maintaining the right mix and location of factories and warehouses to serve customer markets; and using location allocation, vehicle routing analysis, dynamic programming, and traditional logistics optimization to maximize the efficiency of distribution.
  The term "logistics" applies to activities within one company or organization involving product distribution, whereas "supply chain" additionally encompasses manufacturing and procurement, and therefore has a much broader focus as it involves multiple enterprises (including suppliers, manufacturers, and retailers) working together to meet a customer need for a product or service.
  Starting in the 1990s, several companies chose to outsource the logistics aspect of supply-chain management by partnering with a third-party logistics provider (3PL). Companies also outsource production to contract manufacturers. Technology companies have risen to meet the demand to help manage these complex systems.
caption: A German paper factory receives its daily supply of 75 tons of recyclable paper as its raw material.
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