What is Supply Chain Management?
This essay is about defining “what is supply chain management.” We will look into the different areas of a supply chain and the way they are managed. We will also study the way supply chains work on an international level.
A supply chain is defined as the process that encompasses production from the raw materials all the way to the end customer. Supply chain management focuses on the overall flow and integrates the supply and demand management across the companies whom are involved in the specific supply chain, in order to deliver customer value at the lowest cost (Blanchard, 2010). The market forces and constant changing demand drive a supply chain, and the success of a supply chain creates competition
…show more content…
The focal firm must develop company strategies and then outsource to external organisations both upstream and down stream, to will help them achieve their strategy. Each part of a business has there own individual objectives to create value in the business. This may be hiring the right employees, controlling finances or building relationships with others in the supply chain. There are 4 levels of integration, which lead to a cohesive supply chain. Internal process integration aims to increase relationships within the company’s functional sectors, in order to promote an efficient workplace.
Backward and forward process integration aims to collaborate with the 1st, and sometimes 2nd, tier organisations and build successful relationships. Forward integration reaches downstream to the customers, and customers’ customers, whist backward integration leads upstream to the first and second tier suppliers. Lastly, complete integration is the ideal theory that promotes open communication and strong relationships in order to add the most value to the supply chain as possible (Fawcett,
…show more content…
Without these, there is great risk of creating the bullwhip effect. The bullwhip can be defined as the amplification of demand order variability’s in the supply chain. The bullwhip effect begins at retail level, when demand for products slightly change. To ensure each party along the supply chain has enough stock to equal demand, orders are slightly exaggerated in order for them to have ‘just-in-case stock’. Larger orders are made as we move further from the retailer. Once the demand has decreases again, all upstream suppliers have excess product because they have safety stock. This causes them to reduce their orders and this effect ripples through the supply chain. The bullwhip effect leads to unnecessary increased costs, potential wastage and inconsistent orders, creating a difficult supply chain to manage. In order to minimize the consequences cause by the bullwhip effect, the members of the supply chain need open connections and communication, and each party needs to create strategies that benefit not only themselves but those both upstream and downstream from
Cover the issues involved with supply chain management such as placement of supply chain management within the organization and the relationship supply management holds with other departments, with an overview of management efforts in supply chain management.
In the 1960s through the 1970s, companies realized strong engineering, design, and manufacturing functions were strong market strategy keys to create and capture customer loyalty. As the demand for new products rose in the 1980s, these market requirements were to increase their flexibility and responsiveness to adapt existing products and processes or to develop new ones in order to meet customer needs. As manufacturing improved in the 1990s, managers began noticing material and service inputs involving suppliers and their major impact on an organization’s ability to meet customer needs. As a result of these changes, organizations now find that it difficult to manage their own organizations. First, they must be involved in the management of their network of all upstream firms that provide directly or indirectly, as well as the network of downstream firms, which are responsible for delivery and market service of the product to the end customer.
Whenever a problem arrises you have two options let it go or do something that will fix the issue and make your customers happy. The final point on the compass is integration which pulls all of the delivery systems into one, creating a complete operating
In a survey result shown that majority said lack of supply chain management skills and knowledge was the greatest barrier within their own organizations, in view the network of company to work together successfully, though, requires managers to use subtle persuasion and education to get their own enterprise and their trading partners to do the right things. The cultural, trust, and process knowledge differences in company are such that firms successfully managing their supply chain must spend significant amount of time influencing and increasing the capabilities of themselves and their
In today’s competitive environment, it is important for any business to focus on the customer and to provide unique value in order to achieve a sustainable competitive advantage. Without virtual integration, competitive advantage is lost. Successful implementation of virtual integration initiatives allows supplier companies, which are performing only certain processes, to work together as one entity. Therefore, operations become more efficient by reducing inventory, assuring quality, and reducing delivery time. More importantly, the organization maintains the ability to thrive in a competitive marketplace by achieving increased customer satisfaction through unique and strategic core competences. Virtual integration will redefine corporations and , eventually, entire industries as supply chains evolve into a new business model of cooperation and sharing.
Before we start, we would like to briefly introduce the definitions of Supply Chain and Supply Chain Management (SCM).
The expression Supply Chain Management was initially instituted by Keith Oliver. The idea of ‘Supply Chain’ in administration was of great significance , in the mid 20th century , particulary with the formation of assembly line.
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...
The purpose of supply chain is to improve overall performance of a business. Whether organisation is functioning national or worldwide the competition is always increasing and offering products at the lowest possible cost with the best possible customer service is a way to ensure market share.
Lean manufacturing and just-in-time processing are great business strategies that can severely stress a supply chain. The supply chain and supply chain management is a critical operations management element for any major company to succeed and remain competitive in the global market. The supply chain is one of many pieces critical to maximizing value to the end customer and requires close management to minimize external impacts. If a company is relying on another company to supply the raw materials needed for their production line, then impacts to this other company could impact their supply chain. Careful risk management is needed to optimize performance. As a company expands into global markets and global suppliers, this risk and management challenge is multiplied. The global nature of the company could impact important activities such as transportation, funds transfers, suppliers, distributors, accounting and information sharing. Disruption to the supply chain can significantly reduce revenue, cut market share, inflate costs and threaten production. A major disruption would have obvious impacts to profit, but could have additional intangible impacts to the credibility of the company if products are not delivered on time.
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,
Today’s organizations are faced with increasing levels of global competition, customer’s demanding value for their money and high stakeholders expectations on investment returns. Gattorna (2003), notes that firms are now pursuing supply chain management as a strategy to competitive advantage. Firms in a supply chain relate, transact, and partner on different levels; from product design and development to product delivery. Through supply chain management a firm pursues value creation through timely product delivery, cost management, inventory control and customer service (Beamon, 1999).They do so individually or through synergies formed with other organizations to increase customer service
In other words, it aims to link all the supply chain agents to jointly cooperate within the firm as a way to maximize productivity in the supply chain and deliver the most benefits to all related parties [2].
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.