Loosely speaking, a supply chain
management is a management tool that
involves three main factors such as
procurement, production, and distribution. In
the past, the enterprise experienced a stage
marked by the producer-oriented
manufacturing environment. In that stage, a
single individual generally limits the
enterprise decisions. Since the
responsibilities of the three factors are all
independent, the enterprise must adopt an
appropriate inventory control to pursue its
normal operations. According to a statistical
data from U.S. manufacturers, the average
inventory cost shares about thirty to
thirty-five percent of their annual incomes.
The inventory is regarded as a very important
asset at that time. However, the inventory is
no longer to be a good management strategy
due to the rapid product development. Since
the new innovative technology has made the
product life cycle become shorter and shorter,
the excess inventory will block the cash flow
and indeed gives an adversely effect on the
enterprise. It is a common belief that an
optimum inventory policy is the only way to
lower the impact to a lowest level. Therefore,
the supply chain management has become a
focus issue in the enterprise. There are many
scholars and owners of enterprises have
devoted their time and money to improve the
supply chain management techniques.