Supply Chain Management In Todays Climate Business Essay


Nowadays the business climate has rapidly changed has become more competitive as ever in nature. Gaining the competitive advantage is so significant for company. SCM (Supply Chain Management) has allowed company to rethink their entire operation and restructure it so that they can focus on its core competencies and outsource processes that are not within the core competencies of the company.

With this opportunity, the student has explained several topics which related to the Supply Chain Management.

The supply challenge

The fast-growing, short life cycle characteristics of consumer goods products make for a very complex supply chain. No matter how complex the manufacturing process, the first supply chain challenge is developing a good prediction of customer demand which is, knowing what customers are going to buy, how much they will buy, and where and when they will buy it. The second challenge, assuming the company first has a good demand plan, is how to optimally manufacture the right product at the right time, and how to optimally get the products to the proper distribution point to meet customer service requirement, while always considering cost.

Creating a demand-driven supply chain

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In order to support a demand-driven supply chain, consumer goods companies must employ performance-driven supply chain practices, such as continuous business monitoring and proactive alert notification, which give them complete global visibility across their supply networks to adapt to changes in demand and adjust accordingly based on real-time insight into worldwide operations (Cousins, et al. 2008).

Using supply chain technology to reduce operating expenses

Using supply chain technology can help consumer goods companies reduce inventory investments while maintaining or improving customer service levels. Applying supply chain applications, manufacturers can invest in inventory that has the potential to contribute greater profitability while meeting customer expectations. For example, companies can compare the cost of 97 per cent service levels to 96 per cent, or see the impact of leveraging time-phase inventory policies to deliver 98 per cent service levels during peak seasons versus 96 per cent during slower periods (Cousins, et al. 2008).

The make-buy challenge

As a manager in a company, he/she has to distinguish and design his/her company's fulfillment supply chain and its technology supply chain. The manager should use a combined understanding of business cycle dynamics, value chain structural dynamics and corporate strategy dynamics to design a robust supply chain strategy.

In detail, a manager has to know if a company does too much outsource may lose its competitive advantage among the market. Company has to build a sourcing strategy tree to understand the position of each supplier, and then integrate make-buy decisions with supplier relations. When making make-buy decision, company should not focus merely on the cost, quality and time implications of the decision.

Sourcing strategies and supply chain configurations

Sourcing strategies

It is vital that it accurately define what it is that its strategy aims to source. This is done using a Business Requirements Definition (BRD), if company's sourcing strategy is to deliver a breakthrough result in terms of cost reduction and service improvement.

In addition, there will be a number of groups of people who have an interest in the outcome, so company's sourcing strategy will not sit in isolation. The Business Requirements Definition sets out what company's sourcing strategy needs to deliver if all stakeholders are to be satisfied. It is a structured description of what you need to source from supply markets and covers the full range of stakeholder needs.

Company need to find out the right sourcing strategies which suite the company's situation, as we know that a right sourcing strategy is important to gain the competitive advantage.

Supply chain configurations

Supply chain configuration is one of important problems among the high-level supply chain management, which either completely or partially incorporates some of the specific supply chain management problems. Problems that are relevant to supply chain configuration are as follows:

a) Network design. It is the core sub problem of the supply chain configuration problem.

b) Sales and distribution. Individual ordering and marketing activities can not identifying supply chain configuration problems.

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c) Logistics design. Choosing the right inventory and distribution approach.

Forecasting and demand planning interacts with configuration decision making by providing demand data or forecasting algorithms, and there are usually no specific forecasting components within configuration decision making models (Christopher, M. 2005). Therefore, demand planning and forecasting can be perceived as a problem, which is not necessarily an area of expertise for a supply chain configuration analyst, even though configuration problem decision making would not be possible without demand data.

Strategic supplier selection

Strategic supplier selection processes require consideration of a number of factors beyond those used in operational decisions (Christopher, M. 2005). With increased emphasis on manufacturing and organizational philosophies such as Just in Time (JIT) and total quality management (TQM), and the growing importance of supply chain management concepts, the need for considering supplier relationships from a strategic perspective has become even more apparent.

While supplier selection is one of the most fundamental and important decisions that a buyer makes, it may also be one of the most difficult and critical (Christopher, M. 2005). This is mainly due to the increased levels of complexity involved in considering various supplier performance and relationship factors.

Buyers must analyze and document the importance of several of the aforementioned factors (quality, competency, process capability and hours of operator training in total quality control), converting instinctive qualitative indicators to concise empirical measures.

Supplier development

Reducing company's costs has been forced to achieve with the growing competition within the global economy for many years. However, traditional approaches have been limited to eliminating wastage within an enterprise. Another way is that through outsourcing. Cooperation with subcontractors can make them more efficient and thus enable goods to be purchased at lower prices.

Supplier development is a broad concept aimed at strengthening the performance of subcontracting firms not only by enabling them to acquire the skills and capacities required of them by the main contracting enterprise but also by raising their awareness and assisting them in reducing their costs (Mangan, et al. 2008).

Aligning supply with corporate strategy

"To make money for our owners" is the traditional commercial business goal. How businesses go about doing that is where they differ. Larger companies will have a Vision and Mission statement and one or more goals. These define in what market(s) the organization will operate in and how it will go about differentiating itself from its competitors. They also help the organization priorities its limited resources.

There are many dimensions in which a company may chose to compete depending upon what they perceive to be the factors most important to the customer base or market they are targeting. It is not possible to excel at all of them at the same time. Such strategies require quite different management and investment approaches in provision of resources, skills, capacity and planning. These need to be matched by the choice of external resources which is the responsibility of procurement.

Performance management

Performance management is the systematic process by which an agency involves its employees, as individuals and members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals (Christopher, M. 2005).

Employee performance management includes:

planning work and setting expectations,

continually monitoring performance,

developing the capacity to perform,

In effective organizations, managers and employees have been practicing good performance management naturally all their lives, executing each key component process well. High standards are set, but care is also taken to develop the skills needed to reach them. Formal and informal rewards are used to recognize the behavior and results that accomplish the mission. All these component processes working together and supporting each other achieve natural, effective performance management.


With the above analysis, it can be seen that Supply Chain Management has a very significant position on company's development.

Para 2 and 3 has explained the challenges on supply and make-buy. Therefore making the right decision is also important at this moment.

The following Paragraphs have given the clear explanation about how to deal with the problems which are relating to the supply chain management.

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As we can see that dealing with supply chain management probably is very important for a company's development.