Supply Chain Management

The term Supply Chain Management denotes all efforts of a company to plan and control the flow of goods from "the suppliers of the suppliers" to the end customers ("the customers of the customers") across the complete value adding network. Supply Chain Management is a management approach, which includes strategic and organisational aspects. In this context, software systems provide only limited assistance.

Closely related to Supply Chain Management is the term Supply Chain Optimisation. This is the application of mathematical decision models and algorithms to support the design and operation of the value-adding processes all across a supply network, including suppliers, the focused company with its factories and inventory locations, as well as wholesalers, retailers and end customers.

Examples of decision problems

Plant location	How many factories and inventory locations are required and where should they be located?
Master Planning	How to react on seasonal (dynamic) developments of the demand? Which temporale distribution of the production? How to distribute the production among different factories? How much should be purchased from external suppliers?
Safety Inventory	As the demand is uncertain demand and random events will occur during the value-adding processes: How much safety stock do we need and where is safety stock to be located?
Lotsizing	How to react on the occurence of setup losses (time and money) during production?
Scheduling	Which production sequence should be chosen for the orders waiting for processing?

Advanced Planning Systems (APS) are software systems designed to support the planner with the help of mathematical model-based solution approaches, using Operations Research methods, in the solution of planning problems in supply chain management, production and logistics.

APS differ from traditional transaction-oriented MRP or ERP systems in that they try to generate feasible plans with respect to all constraints based on mathematical planning approaches.