To those who are unfamiliar, they normally relate Supply Chain Management as merely logistic or warehousing challenges.

However, the key issues in Supply Chain Management are very much more than that.

In this article, we shall discuss one of the following key issues of SCM which is the
STRUCTURAL DIMENSION:-

• Configuration which is the geographical or physical placement of the supply chain processes for example suppliers, facilities (plants, warehouses),distribution centres and others. Which process or function should be located where is a very critical long term decision challenge which will determine the effectiveness of the supply chain in the long run. Factors managers need to consider are current production cost structure plus its long term trend at different locations, taxes, tariffs, duties, duty drawback,existence of skilled labor forces and other location-specific costs.

• Connection which is matching between supply chain functions. Here, the manager need to decide how to link or connect scattered functions namely the processes in the supply chain for example which supplier should supply to which plant, which plant produces and ships goods to which distribution center and which distribution center should serve which customer market. Here, the manager needs to think about the role and location of inventory existing between consecutive processes. If not properly thought of, the connection will cause impact on a medium to long term impact.

• Inventory – buffering against uncertainty where manufacturer processes faster that its suppliers or when the suppliers can supply raw materials faster than the manufacturers. This imbalance whether from the manufacturers or suppliers will cause the existence of unnecessary inventory. A point to note is that inventory will play a key performance measure in supply chain management. With this in mind, one important objective of SCM is to optimize the inventory level across the supply chain system. By reducing such inventory, it not only solves some of the critical operational problems but save costs associated with the carrying and managing the inventory.

• Logistic– the shipping / transportation options. In this case, generally the more expensive the inventory, it’s more economical to use a fast ( generally more expensive) logistical option to ship the product from one process to another as we want to keep these expensive inventory at a low level. Logistic therefore has a very close relationship with inventory decision.

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