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Supply Chain Management plays an important role in the local and international market. Supply chain management is about managing or coordinating the supply chain from the product or service manufacture to the consumption (Hugos, 2003, p. 4). There are several benefits to the market by managing the supply chain network. Since supply chain contains several networks of people like producers, distributors, retailers, consumers and services like transportation it is very important that we manage it properly. An effective supply chain management requires the firm to have strong capabilities such as controlling ability, flexibility on change and being able to integrate to a new environment. (Kim, 2005, p. 16).
Supply chain management enables the visibility into the supply chain and adaptive supply chain network. It also increases the sense of change, allows reacting quickly to the changes and learns profit from on new opportunities. Since supply chain management has the control of supply chain it is easy to track and monitor compliance in areas as environment, health and safety.
An effective supply chain management led to information transparency and real-time business intelligence. SCM can lower operational expenses with early planning for specifications development, manufacturing and transportation and also improve margins through better coordination with business partners. SCM enables strong connection with trading partners keep the supply chain aligned with current business strategies and priorities, improving your organization's overall performance and achievement of goals.
Since supply chain plays a major role in the day to day life there are some major dependencies and risk involved on it. Supply chain risks can be categorized into several risks such as process risks, control risks, supply risks, demand risks and environmental risks (Husdal, 2008). There can be risks involved in process where it can be a hazard to the supply chain. If the process is not well defined and the responsibilities of the process have not been dedicated to some else it will become a big risk in supply chain.
Controlling risks involved in controlling the supply chain on in and out. For example if a company has well defined process and unmanaged controlling system will make a big impact on supply chain. Controlling involve capability on changing to the market and environment changes.
Supply can also be a risk on supply chain where that can be introduced by suppliers. For example Early/late shipments or delivery to wrong location, Non-conforming/wrong product or quantity, faulty supplier processes, sole source supplier, weakening performance, credit/financial problems, poor labor practices, long-term investment in capacity, innovation, performance, etc can be some supply chain risks.
A demand risk is one of the major a risk in supply chain. A supply chain should have the capability on handling for a higher demand as well as a lower demand level.
External environment factors can also be a risk in supply chain. Local political situations, Weather conditions, traffic and transport can also affect the supply chain.
â€˜Managing quality in an increasingly global supply chain brings many challenges alongside the numerous benefits.â€™ (Veritas, 2007) Managing the quality throughout the supply chain improve the supply chain risks. ISO 9001 is a world recognized standard for quality management. It ensures quality management from suppliers to retailers. (ISO, 2008) Quality management forced the supply chain participants to manage the quality of work in process, control and execution. If the quality has been assured during the process start to end there is a minimum risk in supply chain.
The Marketing concept has strong influence in supply chain. (Soonhong Min, 2000). Marketing plays a big role in supply chain management. Marketing helps to find the best and flexible supply chain partners. Marketing involves in recognizing and increasing marketing materials to meet buyer requirement and to support sales plans, getting materials in final form either through sourcing, printing, knowledge, storage policy planning, order management, service standards, shipping and following and collecting information for continuous refinement.
An operation is the day-to-day creation and delivery of products and services. â€œOperations strategy concerns the pattern of strategic decisions and actions which set the role, objectives and activities of the operationâ€Â (Slack et al 2004, p.67). The main performance objectives of operation strategy are quality, speed, dependability, flexibility and cost. (N Slack, S Chambers, R Johnston, A Betts, 2006, p. 33). Better the operation strategy better the supply chain management. If the distributors company has planned well in the operations, it will make the supply chain more reliable to the suppliers and retailers visa versa.
If a company provides error free quality goods and, it will be easier to do the supply chain planning, since risk of fault services of the company is very low. Supply chain can be improved if the distributors are doing things fast, where the retailers can get the goods on time and can afford to face the consumer demand as well. Dependability objective talks about guarantee in on time delivery where this helps the supply chain on planning and improvement from the manufacture to the consumer. Consumer can believe that the retailer will supply goods or service on time, whereas the retailer can rely on distributer will deliver on time and the distributor will expect the manufacture to provide goods on time.
Flexibility is changing the nature of operation based on consumer demand and making sure of high availability of goods. The company which has high flexibility on providing goods or services will be playing a understandable role on supply chain. Distributor who can change effectively according to the demand from retailers will have a stable flow in supply chain.
The cost objective is focusing on reducing the cost in supply chain; this will force to monitor transportation cost and effective ways of supplying goods. This will make improvement on supply chain planning and also to identify correct suppliers as well.