Importance of Supply Chain Management in Modern Businesses Supply Chain Management (SCM) as defined by Tom McGuffog is "Maximising added value and reducing total cost across the entire trading process through focusing on speed and certainty of response to the market." Due to globalization and ICT, SCM has become a tool for companies to compete effectively either at a local level or at a global scale. SCM has become a necessity especially for manufacturing industry when it comes to deliver products at a competitive cost and at a higher quality than their competitors. Here are some of the reason SCM has become important to today's manufacturing industry:- Competitive Edge through Core Competencies Today's business climate has rapidly changed and has become more competitive as ever in nature. Businesses now not only need to operate at a lower cost to compete, it must also develop its own core competencies to distinguish itself from competitors and stand out in the market. In creating the competitive edge, companies need to divert its resources to focus on what they do best and outsource the process and task that is not important to the overall objective of the company. SCM 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. Due to the current competitive market, it is the only way for a company to survive. The strategy on applying SCM will not only impact their market positioning but also strategic decision on choosing the right partners, resources and manpower. By focusing on core competencies also will allow the company to create niches and specialization of core areas. As stated in the Blue Ocean Strategy outlined by Chan Kim, in order to create a niche for competitive advantage, companies must look at the big picture of the whole process, and figuring out which process can be reduce, eliminate, raise and create. As an example stated by Chan Kim, the Japanese automotive industries capitalise on its resources to build small and efficient cars. The Japanese automotive industries gain competitive edge by utilising their supply chain to maximise their core competencies and position itself in a niche market. The strategy works and now Toyota Motor Corporation, a Japanese company, is considered to be the number one auto car maker in the world beating Ford and General Motors of the United States.
Scott and Westbrook (1991) and New and Payne (1995) describe supply chain management as the chain linking each element of the manufacturing and supply process from raw materials through to the end user, encompassing several organizational boundaries.
As one of the leading automobile manufacturers in the world, Toyota ranks within the top three worldwide. Due to their unique business model, they are now have a market share of 14% in the first four months of this year. That is an astonishing 2.3% jump from the previous year. According to Autodata.com, the Toyota City based automaker ranks fourth in United States sales.
Based on the definitions given by APICS and CSCMP, we believe that SCM is much broader than the fundamental functions such as manufacturing, distribution and logistics. It can contribute to information flows between organizations and its suppliers to eliminate the bullwhip effect and escalate the productivity and capability inside the firm as well.
Supply chain management is basically refers to the fundamental supply chain analysis of the organization which predominantly describes functionalities from source to the delivery point. In this process of delivery, supply chain management framework divides in four categories: In Planning the products and suppliers evaluated and selected, Sourcing pull the information process including contracting, ordering and expediting, Moving is a physical process from suppliers to end user and Paying is the financial process including payment and performance measurement.
‘Supply chain management integrates supply and demand management within and across companies. It encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, thir- party service providers, and customers’. (Web: Council for Supply Chain Management Pr...
Supply chain management has been defined as that process that involves the management of information, materials, and all the finances that are handled within and across the entire supply chain process (Christopher, 2016). The management is usually done through out the entire supply chain management from that moment when the suppliers are involved through all the manufacturing activities, different distribution activities, and the way that the products are served to the final product consumer (Turban, et al., 2002). The process also includes all the activities that different organizations offers to their customers as after sale services for purposes perfecting their services and products towards their highly valued customers (Christopher,
Japanese automobile industry has reached the biggest country in the world more than the American automobile industry in the car production.
Introduction: Toyota Motor Corporation is a very successful automobile manufacturer that is recognized globally. They have continued to obtain and retain a competitive advantage over their counterparts, despite recalls over many years. Regardless of recalls, Toyota has been quick to rectify their shortcomings and continue to lead the automotive industry with their innovative measures. In this essay, I will discuss key internal factors for Toyota. Within those factors will include Toyota’s core competencies, which are what they do really well in comparison to their competition, three of their strength’s, which will include their posture within the automobile market and their heavy focus on research and development, and two of their weaknesses.
According to the Oxford Advanced Learner’s Dictionary, supply chain is the sequence of processes involved in the production and distribution of a commodity. From an industrial engineering point of view, the management of the supply chain is really important in order to give the customer the product they want, when they want it, as often they want it at a reasonable price but at the same time without sacrificing the profit of the company. A supply chain manager needs to make sure that all of these happen flawlessly.
The HRM strategy in Japanese companies is supported by the six pillars of Japanese employment practice lifetime employment, company welfare, quality consciousness, enterprise unions, consensus management and seniority-based reward systems. Toyota is at the heart of global manufacturing, a company that has grown over 70 years to become the world's third largest vehicle manufacturer. (Toyota worldwide 2006) Toyota is the seventh largest company in the world and the third largest manufacturer of automobiles, with production facilities in 26 nations around the world employing more than a quarter of a million people. The decision to manufacture in Europe was based on a corporate policy of building vehicles where the customers are and The United Kingdom was chosen for many reasons including its history of vehicle manufacture, the large domestic automobile market, its components supply base and its excellent links with the rest of Europe.
Many manufacturing and distribution companies now consider Supply Chain Management (SCM) as a vital strategic discipline for corporate survival and competitive advantage. SCM has gained importance as companies have realized that their capacity to reinvent competitive advantage depends less on their own internal capabilities and more on their ability to develop a network of business partners, in search of resources to assemble the right blend of competencies which help achieve their business objectives
Supply chain management involves the movement of products, services, and information between and within businesses, the creation of value, and support of enterprises in the pursuance of a competitive advantage in the market place (Kilty, 2000). It involves the cooperation and coordination of activities of all parties for the production and distribution of products to the final consumer with mechanism in place to optimize inventories across the entire supply chain (Haan, et al., 2003; Viswanathan and Piplani, 2001). With effective management of products to create added value and competition among firms move from national to regional and to a global level, new strategies are being adopted by a number of manufacturers and retailers, particularly, in the
In all, supply chain operation management has helped many global companies in handling and distributing their products as it is a one-stop solution provider from one warehouse direct to end user. By building trust among the trading partners with effective communications would improve performance metrics both the company and the solutions provider.
Cooper et al. (1997) stated “there is definitely a need for the integration of business operations that goes beyond logistics. The integration of business processes across the supply chain is what all call supply chain management”. Therefore, SCM aims for improvement of all material, informational and financial flows both within the internal supply chain and the extended supply chain from the original supplier to the end
The rapid growth and success of Toyota’s Lexus LS and other Japanese automakers reflects Japan’s strength and global dominance in the automobile industry. It is the third biggest producer of automobiles in the world.