A Systems Science Perspective for Supply Chain Management

Abstract

The Supply Chain Management (SCM) is a socio-technical system designed and managed to deliver products and services from raw materials to end customers through a logistic network of physical, information, financial and human resources.

The physical components of a typical supply chain include several production facilities, inventory warehouses, modes of transportation and distribution channels.

In order to synchronize demand of end products or services with supply of raw materials cash flow and human resources, it is necessary to have an information system like the popular Enterprise Resources Planning System (ERP) improved with some additional specific modules to strategic planning and corporate management of the Supply Chain.

Of course the Supply Chain Management requires an especial organization different from the traditional hierarchy. The paper will describe a recursive special organization for the Supply Chains Management based on the Viable Systems Model (VSM). This model of organization takes in consideration several feedback cycles of the production systems the local future and vital interaction between the market and the supply chain.

Incidentally, the inventory system in a supply chain has a special attribute that needs too much attention. It is called bullwhip effect (quite similar to the butterfly effect) because small changes in the demand downstream the supply chain; generate extreme changes in the supply positions upstream. It means that the inventories can quickly move from being backordered to being in excess.