Challenges faced in supply chain management

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The concept of supply chain management has been studied by many researchers and there exists different definitions of this. Supply chain management is referred to the process which relates both process management and project management to fulfill the needs of customer (Fawcett et al. 2006). The supply chain management is "a system of producing and delivering products and services, ranging from raw material to end user, by a well structured flow of information, materials and capital" (APICS 2002).

There are many definitions of supply chain management (SCM), but the most widely used definition of the SCMis:

"SCM is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses and stores so that goods are produced and distributed in the right quantities, to the right people and location and at the right time in order to minimize system-wide costs while satisfying service level requirements of the customers in the entire supply chain."

The supply chain management concept is from the western world but more clear understanding of the topic has been developed by the American companies and consultant firms, especially those who implemented information in business operations. The basics of supply chain management can be found in Japanese organizations, which are following these processes for three decades. This supply chain is an extension of total quality management (TQM) concept and Toyota Production Systems, also known Lean Manufacturing System in western part of world. This is done to create a balance between quality and cost of production (Mehta 2004).

Impact of variability in demand

The extensive variation in demand for product or service has adverse effects on supply chain plan and its process. This results in an increase in multiple factors affecting business operations. There occurs an increase in cycle times, inventories, costs, and decreases the quality, supply of products and services, and eventually decline in sales and profits (Mehta 2004).

Maximizing Reliability of Supply Chain

(Mehta 2004) In order to optimize the reliability of supply chain process, some necessary actions required are described below.

Reduced cycle time for getting demand related information

Indentify the product demand patterns and comprehend them for whole supply chain process.

Make flow of information quick and free from delays.

Eradicate those customer incentives that accumulates the demand and imbalances the supply chain process.

Set pricing strategy of products consistent enough that temporary promotions have least effect on demand.

Avoid promotions that delay the order pattern and disrupt whole supply chain process.

Objectives of SCM Process:

(Mehta 2004) The objectives of supply chain management process include:

Rapid customer satisfaction by meeting their demands.

Reduction in requirements of physical workforce.

Inventory management.

Maximizing service to customers.

Rapidly transmit latest inventory and anticipate information throughout the supply network, keeping replacement pipelines filled with products needed.

Achieve competitive advantage.

Supply Chain Quality Management:

The supply chain quality management (SCQM) has been evolved from the supply chain management. The SCQM is:

"A systems-based approach to performance improvement that leverages opportunities created by upstream and downstream linkages with suppliers and customers" (Foster 2008).

Supply chain management has developed as a concept that demands integration of both operations and marketing activities (Flynn and Flynn 2005). Now days the operations and logistics are focused on quality and as a result managers have started paying attention to the customer satisfaction (Foster and Ogden 2008). To achieve this it is necessary to investigate that how supply chain process assimilates with operations such as quality, lean management, and product development Miller (2002). Thus this integration of supply chain and quality management will result in the organizational success (Gustin 2001, Narasimhan and Das 2001, Hutchins 2002, Page ll 2004). The effects of supply chain management are reduced manufacturing time, decreased costs, rapid product development, and enhanced quality products (Davis 1993, Billington 1994). It has been found out that supply chain managers are more focused towards quality techniques, than traditional operational managers (Foster and Ogden 2008).

In order to maintain successful supply chain process, operational managers employ methods such as ISO 9000 to evaluate the supplier. These managers also implement processes like supplier development, rewards, feedback system to resolve customer issues (Foster. T, Wallina. C, Ogdenb. J, 2010).

The supply chain management is implemented through incorporation of processes in the company, to achieve satisfaction of stakeholders. In context of education, supply chain management is the process of producing qualified and excellent graduates and research publications, thus elevating the values of whole society. These graduates offer their skills, knowledge, resources as contribution to the processes [Christopher, M., 1994]. The supply chain management is required for multiple grounds, such as enhancing operations, profit maximization, achieving customer satisfaction, handling stress situations and elevating quality standards to achieve competitive edge. The globalization and emphasis on e-businesses are also from supply chain management [Habib, Mamun, December, 2009]. The main target of the supply chain education is customer satisfaction and well being of the society. For attaining this, universities are required to establish courses and degree programs regarding the components of supply chain i.e. suppliers, manufacturers, and end user. There must be coordination between educational institutions and industry sectors to get enhanced performance of supply chain management [Habib, Mamun and Jungthirapanich, Chamnong, 2009].

Studies on the interrelationships among components of educational supply chain are probed and established by Structural Equation Modeling (SEM) technique [Md. Mamun Habib, and Chamnong Jungthirapanich, January 2010]. This explains the educational supply chain management in a way that students researchers are vital for educational institutes, as they have been treated as raw materials by universities, while graduates and research works or findings are outcomes of education supply chain and beneficial to end users and culture of society. This elaborates that for betterment of the society and customers, it is essential to have competent and outstanding university graduates by implementing well structured educational supply chain management processes [Md. Mamun Habib, and Chamnong Jungthirapanich, January 2010].

Supply Chain Architecture:

The architecture of supply chain network is designed by applying predefined principles. The five main principles of supply chain network are mentioned here.

The velocity principle: build a competitive infrastructure

The activities competitive supply chain networks work are related to each other. The supply chain management covers raw material to final customer, through a series of actions at different levels in an organization. The suppliers are involved in purchasing raw material and transforming it into constituent units. Then midstream level comes, buy components, manufacture them into products, which will be bought by distributors who sell them to end user. The well structured supply chain network is characterized by paying each level for its sales prior to their payment against purchases (Walker 2005).

The variability principle: leverage worldwide logistics

This principle is focused on designing the network on variability in order to delivery to cash cycle throughout the network. This principle demands for the flexibility in a supply chain network by giving leverage in logistics. Lack of flexibility in logistics reduces the flexibility of overall network (Walker 2004).

The vocalize principle: synchronize supply with demand

It has been evolved from the drum-buffer rope concept in Eli Goldratt's the theory of Constraints (Goldratt 1990, Noreen 1995). The drum refers to the restraints which limits the working of network, while buffer represents the safety measures which limit the constraints. The rope is a communication between supply and demand to carry out operations in a well coordinated manner. This drum-buffer rope is implemented in the factory to enhance the operations of supply chain management system (Walker 2002).

The visualize principle: measure performance globally

The key performance indicators (KPI) are incorporated in the business for the purpose of decision making. In order to reap the maximum benefits out of it, these KPIs should be managed well. This principal emphasizes on optimizing operations by measuring overall performance to foresight the capacity and inventory of network (Walker 2002, 2005). The consistency in performance measures is raising trend in field of supply chain architecture. Different soft-wares like supply chain event management, global positioning system has made it possible to evaluate the capacity and inventory of supply chain network all around globe.

The value principle: a supply chain creates net value

(W. T. WALKER 2005) the supply chain management system involves four main types of stakeholders i.e. suppliers, owners, employees and end customers. In order to maximize the value or worth of network for all stake holders, each trading partner has to recognize and comprehend the relationship that exists between network design and its operations. The value principle has been utilized in three ways by supply chain network to provide benefits to its stakeholders.

Improving top line revenue by getting hold of new end customers

Improving bottom line profits by operating at lower costs.

Cash and inventory assets are improved by achieving highest customer service level and utilizing less inventory and cash on balance sheet.


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