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Importance of supply chain management Essay
Explain the importance of supply chain management
Customer relationship management in retail
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Introduction A few decades ago, the true understanding of the impact of supply chain management was alien to many companies (Moore, Baldwin, Camm, & Cook, 2002). As Moore et al (2002) continue to state, few companies within different industries understood the important link between strategic goals and supply management principles. This, in effect, meant that purchasing departments were undervalued, seen more or less as order takers and placers, while enjoying little or no respect from other organizational arms. However, this trend, culture and tradition was to reach an instant demise with the comprehension by many companies of the importance of lean management in reducing waste from processes, effectively achieving competitive advantage and …show more content…
Customer demand fluctuations influence the manner in which the supply chain responds and, therefore, it is important to anticipate these functions by utilizing information accurately. Some of the key supply chain business process as stated by Lambert & Cooper (2000) include: demand management, customer service management, customer relationship management, procurement, order fulfillment, product development, manufacturing flow management, and returns. Customer relationship management identifies essential customers or customer groups as targets of the business, key to its core mission. Customer service management provides real-time information across different aspects of the supply chain such as product dates and availability. Demand management refers to inventory practices with regard to customer ordering patterns. Customer order fulfillment entails meeting client needs in regards to product availability dates and is influenced by distribution …show more content…
L., Hamblin, L., Hutchinson, L., Novak, L., & Vivar, J. (1999). Supply Chain Management: A Recommended Performance Management Scorecard. Logistics Management Institute. http://www.acq.osd.mil/log/sci/exec_info/scorecard.pdf Lambert, M. D., & Cooper, C. M. (2000). Issues in Supply Chain Management. Elsevier Science, Inc. Accessed on 3rd July, 2014 from http://www.mmt3000.dk/Upload/D10%20Lambert-Cooper.pdf Moore, Y. N., Baldwin, H. L., Camm, F., & Cook, R. C. (2002). Implementing Best Purchasing and Supply Management Practices. RAND. Accessed on 3rd July, 2014 from http://www.rand.org/content/dam/rand/pubs/documented_briefings/2005/DB334.pdf Nagurney, A. (2012). Commercial vs. Humanitarian Supply Chains. Humanitarian Logistics and Healthcare. Accessed on 3rd July, 2014 from http://supernet.isenberg.umass.edu/courses/SC-MGMT597LG-Spring12/Nagurney_Humanitarian_Logistics_Lecture_2.pdf Oloruntoba, R., & Gray, R. (2006). “Humanitarian Aid: an agile supply chain?” Supply Chain Management: An International Journal, Vol. 1(2): 115-120. Available online from http://www.emeraldinsight.com/journals.htm?articleid=1546187 Rodman, K. W. (2004). Supply Chain Management in Humanitarian Relief Logistics. Airforce Institute of Technology. Accessed on 3rd July, 2014 from
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. In order to succeed, managers have to realize that they cannot do it alone and they must work together on a daily basis with the whole organizations in their supply chains. Because supply chain management involves all functions within an organization, managers need to know what a supply chain is, why it is important, and the impact of supply chain management on the success and profitability of their organization. Today, Wal-Mart topped the list of the America’s biggest companies on the Fortune 500 list, “with sales of almost $345 billion — more than a quarter of a trillion dollars” (Forbs). Wal-Mart’s supply chain management is becoming recognized as a core competitive strategy.
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.
An increasing focus on core competencies, and the concomitant increase in outsourcing of components and services, has also placed greater emphasis on supplier management. In addition, much of the traditional in-house development activities have been pushed onto suppliers. Purchasing is thus increasingly regarded as a strategic weapon, centered on its ability to create collaborative relationships for firm advantage” (Handfield, et al, 2005, p.1). Although they work hand in hand, there is a distinct difference between supply chain strategy and the overall business strategy.
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,
“The concept of Supply Chain Management is based on two core ideas. The first is that practically every product that reaches an end user represents the cumulative effort of multiple organizations. These organizations are referred to collectively as the supply chain. The second idea is that while supply chains have existed for a long time, most organizations have only paid attention to what was happening within their “four walls.” Few businesses understood, much less managed, the entire chain of activities that ultimately delivered products to the final customer. The result was disjointed and often ineffective supply chains.” (Handfield)
According to research conducted by Monczk (2010), there is a strong indication that top level managers will be included in the supply chain much more in the future, mainly in the form of adding value through supply than in cost reductions. Top companies are already focusing their efforts on supply chains in the process of making business plans, and consider that better supply management can lead to better results in all branches of the company (Kearney, 2002). According to Dwyer (2010) there is evidence to show that companies allocate larger amounts of expenditure towards supply. This means that supply chain, besides raw materials, maintenance materials and other functions takes an increasingly prominent role in decision making regarding machinery, construction/acquisition of property and related equipment procurement. Top management in leading companies, almost without exception, finalises decisions concerning supply in over 70% cases – excluding salaries – which led to nearly 10% cost reduction (Dwyer, 2010). When compared to companies where management finalises up to 40% of costs, the difference is obvious, the latter has shown only 1% cost reduction.
The key performance drivers of Supply Chain Management (SCM) are - facility effectiveness, inventory effectiveness, transportation effectiveness, information effectiveness, sourcing effectiveness, pricing effectiveness, delivery effectiveness, quality effectiveness and service effectiveness. These drivers include various performance markers that may be measured quantitatively by gathering information and applying them in SPSS. The works here may principally be quantitative with spellbinding measurable investigation. In the current world, practical supply chain management to help the triple primary concern, (nature, domain, and economy) is likewise included in the extent of supply chain performance drivers. This is relatively a quite new research region.
Essentially, the world is a large supply chain. The main problem involved in supply chain management which including the fast growth of multinational organisations and partnership in the strategic alliance ways; world enlargement and procurement; variation in the price of natural gas and environmental issues, these issues have the symbolic impact on organisation strategy and the bottom line. The reason for these rising direction, supply chain management is the most important commercial guideline in the global today (University of San Francisco,
A supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then final products, and deliver the products to customers through a distribution system [1]. The basic objective of supply chain is to “optimize performance of the chain to add as much value as possible for the least cost possible.
Zanjirani F., Rezapour, S. & Kardar, L. (2011) Logistics operations and management concepts and models, 1st ed. London ; Elsevier.
As an Industrial Engineer with more than 15 years of work experience, I choose Supply Chain Management (SCM) because I believe that logistics is the most dynamic, vibrant, challenging, technology driven area, and the future of any big national and international companies. It will give me the opportunity to know behind the scene of improving the companies’ performance by using SCM tools. If I work in this field, I can get my answers and a chance to work in the market of raw material, purchasing, production, distribution, logistics, and final goods. After finishing two semesters in the College of Business at University of Houston Downtown (UHD), I am really passionate about it and want to gain my knowledge in the logistics sector, learn new techniques and skills, and seek new opportunities.
According to Wisner & Tan (2000), supply chain management was used in wholesaling and retailing. It was described the integration of logistics and physical distribution function with the goal of reducing delivery lead time. Manufacturers and their suppliers can reduce cost, improve quality and delivery timing. Supply chain management is related with purchasing strategy, logistics, supplier integration, value chain management, supply base management, strategic supplier alliances, lean manufacturing, Just-in-Time (JIT), and supply chain synchronization. There are some benefits in a successful supply chain management. Supply chain management can reduce response time across the supply chain,
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.