Supply Chain Management and its Applications

Purchasing is a subset of supply chain management. Purchasing deals primarily with managing all aspects related to the inputs to an organization (i.e., purchased goods, materials, and services), while supply chain management deals with inputs, conversion, and outputs. A supply chain consists of three types of entities: customers, a producer, and the producer's suppliers. The extended supply chain includes customers and suppliers. Supply chain management oversees and optimizes the processes of acquiring inputs from suppliers (purchasing), converting those inputs into a finished product (production), and delivering those products or outputs - to customers (fulfillment). Under this definition, supply chain managers decide where to locate manufacturing and distribution facilities, how to route goods and materials among those facilities, and from which parts of the world to source the inputs. Supply chain management unites disparate functions that historically reported to different executive positions with different, and sometimes conflicting, priorities.