Business Performance Improvement Technologies - an Introduction

Supply Chain Management


Supply Chain Management is one of those buzzwords that can be greatly abused - for example, by the common practice of simply changing the job title of a Materials Manager to "Supply Chain Management" with no change to function or responsibility.

However, for companies that recognize that the time is coming when "company versus company" will be replaced by "supply chain versus supply chain", Supply Chain Management takes on a whole new dimension, as the definition below attests. There are a LOT of elements in play.

One of the most neglected is the use of Replenishment as a technique to eliminate, or else at least minimize the reliance on, forecasting - surely one of the biggest time-waters in many Supply Chain environments, creating problems of too much or too little inventory that organizations spend stunning amounts of time and money trying to recover from.

Another false assumption is that high velocity and low inventory are the ultimate objectives of Supply Chain Management; they aren't, increased profits throughout the whole supply chain is the true objective, and while velocity, reduced inventory and improved availability are certainly aligned with this, they might not be the keys to increased sales. Comprehensive Supply Chain Management starts by asking, how should the whole supply chain behave in order to increase sales at the ultimate consumption point. Velocity and low inventory help but they might not be the whole picture.


Definition Of Supply Chain Management

By Sandra Maria Stammberger

Supply chain management can be defined as the process of planning, implementing and monitoring the everyday operations of a supply chain. Supply chain management is an all encompassing process as it undertakes the management of availability of raw materials, their processing into finished goods and the distributions of the same. The aim of all this is to provide the highest level of satisfaction to the customer and thus increase the business of the company. And with the increasing complexity of the supply chain, supply chain management has also become about coordinating and collaborating with the different trade partners now involved in the supply chain.

Supply chain management is supposed to be undertaken by the high level management committee of the company. The employees have to willingly adhere to their decisions in order to bring about maximum efficiency in the supply chain.

Supply chain management decisions are made on three different levels- the tactical, strategic and operational levels. Strategic level involves long term decisions while tactical level includes medium term decisions while operational level is concerned with very short term day-to-day operational concerns. The problems that the supply chain system is supposed to address includes the following:

* Distributor Network Configuration: Quantities and locations of people involved with the entire process of the supply chain including the suppliers, customers, warehouses, production facilities and distribution centers.
* Strategies for distribution: Centralized, direct shipments, push and pull strategies, cross docking and third party logistics.
* Information: Integrating systems and processes through supply chain to share relevant and significant information consisting of demand signals, forecasting, transportation and of course, inventory.
* Management of inventory: Number and location of inventory and also covers raw materials, finished goods as well as work in progress.

The flow of the supply chain execution is always bi directional and basically manages and coordinates movement of material, information and finances of the supply chain. There are some key supply chain management processes that have been identified. They are:

* Management of customer relations.
* Management of customer service
* Management of demands.
* Fulfillment of orders.
* Manufacturing flow management.
* Management of supplier relations.
* Developing the product and commercializing it.
* Managing returns.

Other key business processes which are used as supply chain procedures and are a vital part of the process and include:

* Customer service management: Steps used by companies to build successful customer relations include focusing on mutually satisfying goals; establishing and maintaining customer relations; produce feelings of positivity and trust between the customers and organization.
* Procurement processes.
* Product developing and commercializing: This includes coordinating with customer relationship management to identify customer articulated needs, selecting suppliers and materials and developing production technology to integrate and produce the best supply chain flow. * Manufacturing flow management processes.
* Physical distribution.
* Outsourcing and partnerships.
* Performance measurement regarding cost, productivity measures, customer service, asset measurement and quality.

Together with all of these the supply chain management system has managed to put into place an integrated supply and demand management within and across business firms.

Article Source:

About Us | Site Map | Privacy Policy | Contact Us | ©2004-2008 JCG Inc | Performance Improvement