GENERAL STRATEGY OF SUPPLY CHAIN MANAGEMENT
Supply Chain Management is the strategic coordination of businesses from supplier to distributor to customer or depending on their business practices. This may also include the production supply management and strategy of business in production system from procurement of supplies and raw material to actual production to finished products, stock preservation and delivery to customers, the coordination strategy involved herein can also be included in the supply chain management.
A REAL EXAMPLE: To really understand how supply chain management works let us create a business for example we are going to establish a restaurant; what we need is first a location then a supplies of chairs and tables, kitchen equipments and basically food supplies which is more important and the personnel who are going to handle the day to day operation such as cooks and waiters. The owner is expected to lay down his money to buy and pay for all the expenses until the first operation he may found out that that in his first year of operation is a break even, but he believe he can do more.
The owner will need to think of new strategy until he learned to use the power of supply chain management by canvassing materials from various sources from vegetable to oil, bread, meat, fishes and other supplies and later found out that there are various sources in nearby town who are willing to deliver in their restaurant this way he can buy in bulk and reduce the cost of transportation plus he gets the discount very conveniently to their advantage. Later on he discovered that students can work part time on his restaurant rather than taking a full time workers this again reduce his cost in manpower. After a year the owner realized that he had doubled his income. The supply chain management strategy that he has gotten is so simple but his restaurant business has been very productive that is why he is now expanding because of his strategy in supply chain management works just fine.
In a bigger view you may thought about the companies like Mc Donald, IBM, Nokia, Toyota, Mackintosh and other companies are developing manufacturing companies from other countries and you may thought about how much production cost they are going to incur considering the rentals of land and building, labor cost, transportation cost of materials and the taxes of the country they are going to pay.
These companies is using the supply chain management strategy for example if Toyota Motors can manufacture in a certain country in Angola they will seek new supplier of metals, upholstery supplies and rubbers in that area which has a lower cost in Angola. They will need to canvass suppliers and be their business partners they will also seek workers from this country whom they can pay less, then they can distribute their products in that area and nearby countries in Africa, they can also export the products in other locations so they can earn more and the cycle continues to expand their business in other countries. This is how supply chain management works.
The primary strategy is to link business process, and its function to a more effective channel and efficient management integration. The exchange of information is essential to trace back the operation of both integral networks of participating company they may need to work together to achieve common objectives in the delivery of supplies. The strategy of supply chain management involved has popularized globalization to be implemented in most countries since businesses are integrated the distribution channel is easier and the transportation of goods and services is safer, convenient and traceable than ever before using the supply chain management strategy.
Another essential of Supply Chain Management is the supply and demand can be accommodated and mandated within countries it can also eliminate various expenses in transportation or manpower. In a supply chain management the strategy or partnership of business can be continuous, they do not have to transfer their products from various contractor but the supply or products can be transported from one places to another because of partnership of handlers that will take care of such merchandise, through this process trust and respect can be developed from various partnering company.
Logistics and Supply Chain Management is different, logistic is an independent contractor who will take care of the products and delivery while the Supply Chain can also be a business partners or a customer who are going to handle the transaction directly. There are also governing law of supply chain so that competition will be equal and there will be no ground of monopoly and by this time the supply chain management strategy focuses on a broader and more diversified strategy to optimize the most reliable sources of supply without compromising the performance of the production. The trial and error may not be the best strategy in supply chain management but the actual seeking or canvassing of supplier from various locations and allocation is much better to maintain the flow of the chain. The use of information technology makes it even more convenient in seeking suppliers from various sources.
Credit:ivythesis.typepad.com
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