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organization:
Supply Chain Management (SCM) is the management of the flow of goods and services.
It includes the movement and storage of raw materials, work-in-process inventory, and
finished goods from point of origin to point of consumption. Interconnected or
interlinked networks, channels and node businesses are involved in the provision of
products and services required by end customers in a supply chain. Supply chain
management has been defined as the "design, planning, execution, control, and
monitoring of supply chain activities with the objective of creating net value, building a
competitive infrastructure, leveraging worldwide logistics, synchronizing supply with
demand and measuring performance globally.
Advantages of SCM:
QualityAssurance
ManymanufacturersintheU.S.haverelocatedtheiroperationstocountriessuchas
China,IndiaandRussiainanefforttocutproductioncosts.Thishascausedexperienced
domesticpersonneltooptforotherjobassignments.Asaresult,productqualitywithin
thesupplychainhasbecomeapressingissue.Defectsandreworkattributabletopoor
systemsareraisingthecostsofdoingbusiness.Oneoftheadvantagesofsupplychain
managementisthatitincorporatesqualitytechniques,suchasqualitymanagement
systems,toimproveoperations.
InventoryBuffers
Inalmosteverytypeofbusiness,thereisvariabilityincustomerspending.Thisrequires
companiestomanagetheirinventoriesinawaythatminimizesholdingcostswhile
providingenoughflexibilitytomeetcustomerdemands.Ifinventorylevelsfalltoolow,
businessesmayhavetopayovertimetoproduceproductsorloseoutonrevenueby
makingcustomerswaitorshopsomewhereelse.Supplychainmanagementsystems
typicallyincludeinventorybufferlevelsthatarepredeterminedwithcarefulanalysisof
historicaltrends.
RelatedReading:LeanSupplyChainAdvantages
ShippingOptions
Asecommercecontinuestogrowglobally,buyershavemoreoptionstoorderproducts
thaneverbefore.Shippingoptionsneedtokeeppacewiththedemandsofthe
marketplace,whichrequirescompaniestoreadjusttheirsupplychainstomeetcustomers
preferences.Whetheritissmallparcelshippingorlargerbulkorders,shippinginaquick
andaccuratefashioniskeyforbusinesssuccess.Supplychainmanagementsystemshelp
companiesdeterminetheoptimalwaystoshipwhilereducingcoststothelowestpossible
level.
RiskMitigation
Managingriskisakeyresponsibilityforbusinessleaders,andsupplychainmanagement
systemsallowfortheidentificationofcriticalriskfactorsinanorganizationorwiththeir
suppliers.Whetheritisproductquality,compliancewithapplicablelawsoroperational
safety,managementmustmitigateriskinaneffectivemanner.Supplychain
methodologiesassistmanagementwithorganizingrisksandascertainingthepotentialfor
internalorexternalfailures.Withouteffectivesupplychainmanagementsystems,many
companiesareexposedtolegalrisksandliabilities.
ComponentsofSCM:
SCM components are the third element of the four-square circulation framework. The
level of integration and management of a business process link is a function of the
number and level of components added to the link (Ellram and Cooper, 1990; Houlihan,
1985). Consequently, adding more management components or increasing the level of
each component can increase the level of integration of the business process link.
Literature on business process re-engineering[28] buyer-supplier relationships,[29] and
SCM[30] suggests various possible components that should receive managerial attention
when managing supply relationships. Lambert and Cooper (2000) identified the
following components:
Planning and control
Work structure
Organization structure
Product flow facility structure
Information flow facility structure
Management methods
Power and leadership structure
Risk and reward structure
Culture and attitude