Download Supply Chain Management

Tamara MacEwen
IME 415 – Winter 2001
Prof. Rosenkrantz
Supply Chain Management
In the highly competitive, global marketplaces of today, companies are forced to
reevaluate the way they do business. Customers are no longer making buying decisions
based solely on product quality and price, but are now also demanding high levels of
service and flexibility. One way companies are meeting these customer needs is by
changing the traditional supply chain which focused on products and efficiency, to a
supply chain which is innovative and customer focused.
So what do we mean by supply chain? The supply chain is all activities from
obtaining the raw materials through the delivery of a finished good or service to the
customer, also known as the end user. This includes sourcing and procurement, product
design, production planning, materials handling, order processing, inventory
management, transportation, warehousing, and customer service. It also includes the
information system that is necessary for all of these functions to be able to communicate.
The retailing and wholesaling industries were the first to hear the changing needs
of their customers. Their customers wanted shorter delivery leadtimes. Integrating the
logistics and physical distribution functions solved this need. Manufacturers and service
providers quickly followed this path with the integration of suppliers to reduce cost and
improve quality and delivery time. They took this relationship with their suppliers one
step further by building a partnership, which shares costs, risks, and profits, while
focusing on serving the customer. This new way of doing business has become what is
known as supply chain management (SCM).
Within the new supply chain, “companies must build a collaborative environment
that is flexible and adaptable to changing customer needs” (www.wavebend.com). They
must break down the traditional boundaries established to protect the company and form
partnerships with critical functions within the supply chain, such as suppliers and
distributors. They must work as a team to eliminate non value added processes, while
leveraging the capabilities and technologies of each team member to maximize value.
They must share key information in a parallel fashion to speed up the cycle time from
customer order to delivery. They must create “a virtual organization of independent
entities to efficiently and effectively manage the movement and transportation of
materials, components, products, and services along the supply chain until final delivery
to the end user.” (Wisner) They must all have the goal of maximizing bottom-line
efficiency and top-line growth while optimizing customer service.
Best Practices, LLC, performed a benchmark study investigating the practices of
over 150 companies in over 31 industries currently using supply chain management.
Some of the key drivers in achieving success are listed below.
(www.bettermanagment.com)
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Partnership Identification and Selection: Assessing company needs and
evaluating suppliers lead to the most beneficial partnerships
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Tamara MacEwen
IME 415 – Winter 2001
Prof. Rosenkrantz
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Supplier Certification: Certification establishes a common language for
communication and fosters an increased level of trust and understanding
between partners
Technology: Customized supply chain software systems and Extranets allow
increased accuracy in order fulfillment and process measurement.
Communication: World-class companies employ multiple communication
tools to decrease response times and improve supplier relationships.
Many companies have found the great benefits of implementing supply chain
management, while others have been unable to achieve their objectives. These
companies have found problems in the following areas. (Wisner)
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Lack of adequate information system/information sharing among supply chain
members
Poor inventory management throughout the supply chain
Lack of cooperation and trust among supply chain members
Lack of interest by suppliers/customers to participate in the supply chain
The companies lack of leverage in the supply chain
Geographical distance from suppliers to the company
Competition with other supply chains
Whether a company has implement supply chain management across all functions
of the supply chain or only where it is most beneficial, the results should be clear.
In the short term, it will increase productivity and reduce inventory and cycle counts. In
the long run, it will increase customer satisfaction, market share, and profits for all
members of the virtual organization. Most of all, it will allow companies to meet the ever
changing needs of their customers in the future.
References
Wisner, Joel D. and Keah Choon Tan. “Supply Chain Management and Its Impact on
Purchasing,” The Journal of Supply Chain Management, (36:4), Fall 2000, pp.3342.
www.wavebend.com/thoughtleadership_articles/supplychain.asp
www.bettermanagement.com
www.benchmarkingreports.com
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