Example Of Supply Chain Management Business Essay


The best companies in this world are discovering a powerful new source of competitive advantage. Its called Supply Chain Management. But what is supply chain management? Why the supply chain is so important?

One of the most significant paradigm shifts of modern business management is that individual businesses no longer compete as just autonomous entities, but rather as supply chains. Business management has entered the era of internetwork competition. Beside of brand versus brand or store versus store, it is now suppliers-brand-store versus suppliers-brand-store, or supply chain versus supply chain. In this emerging competitive environment, the ultimate success of the single business will depend on the ability of management to integrate the company's intricate network of business relationships 1, 2 and 3.

Increasingly, the management of multiple relationships across the supply chain is being referred to as supply chain management (SCM). Strictly speaking, the supply chain is not a chain of one business to one business, business-to-business relationships, but a network of multiple businesses and relationships. SCM give the opportunity to capture the synergy of intra- and intercompany integration. [4] These include Supply Chain Management-related activities such as warehousing, and inventory control. Sourcing, procurement, and supply management fall under the supply-chain umbrella, too. Forecasting, production planning and scheduling, order processing, and customer service all are part of the process as well. Importantly, it also embodies the information systems so necessary to monitor all of these activities. In that sense, SCM deals with total business process excellence and represents a new world to managing the business and relationships with other members of the supply chain.

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Who Should Be Responsible For Supply Chain Management?

Purchasing and supply management professionals should become increasingly involved, and where possible lead, the development of supply chain management. However, it is recognized that not all buyers have the skills necessary to manage even the upstream part of an organization's supply chains; these can be complex networks of complex supply chains, although the supply chains within and downstream from the organization. For best results, supply chain management requires a senior sponsor appropriate to the sector; this is because it is such a central function and is fundamental to the commercial management of the business. Supply chain management is at the fulcrum of the business as it involves responsibility for the end customers' demand right through the organization to the suppliers, and where appropriate, beyond. Such a role requires objectivity, an open mind and an ability to work with all stakeholders within the chains such as Sales, Marketing, Finance, Production (if manufacturing), Procurement, Logistics and Distribution. In particular, supply chain management need to work closely with Account Managers who are best placed to feed information back into the supply chain. Many organizations still work in functional silos instead of cross-functionally - supply chain management demands this crosscutting approach to managing the customers' needs.

The key skill of an effective supply chain manager is relationship management. Good purchasing and supply management professionals are well equipped in this skill. The ability to manage customer relationships, both internal to the organization and external, and supplier relationships is fundamental to success in supply chain management. In essence both supply chain management and backward integration are means to an end, and companies should select whichever of these two approaches is most appropriate for them in specific circumstances. There are also many hard skills which are also key, notably process design (redesign); IT integration/role of ecommerce; supply chain modeling; and performance management. The skill of the purchasing professional working in a supply chain management environment lies in getting suppliers interested in working with the buying organization i.e. so that the suppliers position and perceive the buying organization as a valuable long-term client relationship which is worth investment. A key competence is sophisticated interpersonal skills e.g. an ability to persuade, influence, communicate, facilitate, coordinate and manage the human implications of change Purchasing and supply management professionals wishing to promote and develop supply chain management must adopt all of the above skills and competencies but most importantly, should be able to think in terms of the whole business. To achieve maximum benefit, supply chain thinking would of course pervade the whole of the company's corporate strategy; supply chain considerations would be as integral a part as Marketing, Production or Finance. [5]

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The Advantage of the Supply Chain Management

To remain competitive, some of the small firms have to offer superior quality goods at the lowest prices possible. The need to minimize product costs makes effective supply chain management vital. There are costs involved in every process of the product life cycle, and it is the responsibility of management to ensure that these costs are kept low, so the company can continue to pass along these savings to the consumer.

The Supply chain management involves identifying those processes that increase cost without increasing the value of the final product. These processes are wasteful and do not add value, and should be eliminated whenever possible. The resource wastage is a common source of increase production costs. Often this is due to improper planning. A company that employs supply chain management is able to achieve efficiency of its operations since only that value adding activities are encouraged. This ensures that the organization's processes flow smoothly and output keeps in line with the company's needs. Besides that, A company that employs supply chain management can foster close-knit relationships with its suppliers and customers, ensuring the timely fulfillment of orders. A company known for its timeliness and responsiveness will attract more customers, and will grow as a result of increased output and sales. All Businesses existing in this market is to make profits. One of the most efficient ways of increasing a company's profit is by ensuring that costs are kept as low as possible. The application of supply chain management by a small company leads to cost reductions due to elimination of wasteful processes. Since these are operating costs for the company, the savings on these costs reflect increased profits by the company.