Supply Chain Management Defined
Supply chain management can be defined as the efficient and effective implementation of the policies and tasks necessary to satisfy a firm’s customers, employees, and management. Supply chain management focuses on the careful management of the processes involved in the production and distribution of products and services (1998).
More often than not, small companies don’t really have the capabilities to implement Supply chain management. Instead, these companies engage in activities that various schools of management typically associate with Supply chain management. These activities include the manufacturing of products, product development, production and distribution.
However, supply chain management deal with all operations done within companies and organizations. Activities such as the management of purchases, the control of inventories, logistics and evaluations are often related with Supply chain management. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, supply chain management includes the analysis and management of internal processes.
Strategic Advantages of Efficient Supply chain Management
· Economies of Scale and Scope in manufacturing and operations management and development.
· Unique Quality Technology owing to heavy emphasis on Supply chain Management
A supply chain’s commitment to operations management & development activities has always been one of the top strategies to remain competitive in the market.
· Differentiated Products
Through the production and marketing of differentiated products originating from the operations management and development activities, the supply chain is able to create its own firm-specific advantages. The continuous pursuit of supply chain management and development processes enables the supply chain to produce a steady stream of originally differentiated products which makes it difficult for competitors to find substitutes. Because of this differentiated approach, the supply chain is able to market their products worldwide, which enables them in turn to maximize the returns on operations management and development expenditures.
Common Global Supply Chain Management Strategies
The common global supply chain management strategies of companies focus more on the management and access of information rather the creation of irrelevant products and services. For this reason, companies have developed a unique set of guiding principles for their global supply chain management – simplicity, cost-efficiency and effectiveness. Total commitment to these principles makes the products and services of companies very user-friendly to its customers.
Successful companies have been able to achieve a broad market leadership through various efficient supply chain management strategies being implemented over the years. These companies also exert efforts to communicate with their customers in every local culture about their services and their impressions. And this is no easy thing because their regular clients and customers have different tastes in terms of service preferences. This critical information gathered by companies paves the way for them to make the right decision regarding the appropriate supply chain management innovations to pursue.
The supply chain management strategies of successful companies are focused mainly on driving the growth of its services and improving the company’s financial performance. These innovations have also helped secure significant acquisitions and partnerships. And more importantly, these supply chain management strategies have led to the release of the potentials of the company’s employees, thus building a quality performance- based culture.
The supply chain management strategies of successful companies are practically reinforced by the local employees themselves. These moves certainly allow the company to improve even more without the costs of introducing new technologies. These efforts have resulted in increased financial gains for the company and have allowed the establishment of distribution networks for its services.
On the other hand, the global supply chain management strategies of most successful companies have changed for the better at the start of the new millennium and began pursuing service differentiation. True enough, the differentiated services of companies are able to satisfy the needs of customers through a sustainable competitive advantage. This allows companies to desensitize the prices of their services and instead focused on the values that generated not only a comparatively higher price but also a better margin.
The global supply chain management strategies of most successful companies serve as the link between the established supply chain management standards and practices in the company. They are able to articulate, organize, and most importantly integrate the content and processes of the company supply chain management policies with integration of appropriate technologies. It also facilitates multiple levels of company policies and decision making.
In general, the global supply chain management strategies of most successful companies are ongoing processes that translate organizational, public policy, and technology needs of the company into concrete actions. It allows the company to take advantage of the latest supply chain management innovations while at the same time minimizing the negative impacts of unexpected challenges. The global supply chain management strategies of most successful companies provide a clear pathway for the implementation of the supply chain management systems which could result into a more efficient expenditure of resources and an improvement in company performance.
The global supply chain management strategies of most successful companies reflect the policy and environment of the company. However, the global supply chain management strategies cannot guarantee the needed changes. The global supply chain management strategies ensure that the processes of supply chain development, implementation, and evaluation are included as the integral components of the implementation of the necessary supply chain management systems. Well-designed global supply chain management strategies would be a dynamic tool that will serve as a guide for the company’s innovations. They would also represent opportunities for dialogue and supply chain development that enhance company decision making.
Benchmarking in Supply Chain Management
Benchmarking in operations management involves working across multiple enterprises in an effort to limit the supply chain time of delivering products and services to the consumers.
The uncertainty of demands in operations management is easily solved through the implementation of faster response times. The operations management of products has the luxury of longer lead times in terms of batch production in order to meet the demands. Most operations management schemes are moving in a position to support faster changes of demand by the consumers (2001).
Agile operations management schemes are able to enjoy so many advantages. As mentioned above, the supply chain management tends to shorten the supply chain itself. Also, this will significantly reduce company inventories. Forecasting, scheduling and planning, on the other hand, will significantly improve.
Elements of Benchmarking
A. Production Planning
Production planning is a necessary function within the operations management scheme in order to combat the bullwhip effect. In manufacturing companies this process is often very difficult because of the fast rate of change and the occurrences of unplanned events. Operations management schemes use several methodologies depending on the rate of demand of the customer and the price of the product. Nevertheless, the objectives of the operations management schemes for every transaction do not change: efficiency and effectiveness amidst the impacts of bullwhip effect (2005).
Production planning is being implemented by a company in order for its activities and resources to be coordinated over time. This enables the company to achieve its goals with minimal resource utilization, thereby negating the impacts of the bullwhip effect. Production planning also enables the company to monitor the progress of their plans at regular intervals and maintain their control over operations. Production planning within the company normally involves four elements: scheduling, labor planning, equipment planning, and cost planning ( 1999).
- Scheduling involves the specification of the beginning, the length or the duration, and end of the planned activities.
- Labor planning involves allocating the necessary personnel and delegation of responsibilities and resources
- Equipment planning involves identifying the types and needs in terms of equipments.
- Cost planning involves determining the costs and the possibility of their occurrence.
B. Operations Research
The occurrence of operations research within the economy reflects the growing difficulty in the management of organizations that require the effective use of valuable resources such as money, materials, equipments, and people. And the bullwhip effect is no exception to these. This is the reason why operations research is being done by companies in order to determine the most effective ways to coordinate these resources through the application of analytical methods derived from fields of studies such as mathematics, science, and engineering (1997).
Through this process, the potential problems that can be caused by the bullwhip effect are solved in different ways and alternative solutions are then relayed to the company’s management. The management then selects the appropriate course of action in line with the perations management goals. More often than not, operations research is concerned with complicated issues such as top-level strategy, resource allocation, designing of production facilities and systems, pricing and the analysis of large databases (2004).
Operations research actually may vary according to the structures and philosophy of the company. But in most cases, it centralizes operations research in one department. Operations research may also have the possibility of working closely with top level managers in order to identify and solve a variety of problems concerning the bullwhip effect.
No matter what the type or structure of the company is, operations research operates under similar sets of methodologies in order to carry out the analysis to support the supply chain’s goal to improve its overall performance. The process is started by the description of the symptoms of the bullwhip effect, followed by the formal definition of the problem.
Critical Improvement Factors
For companies to be able to effectively combat the crippling impacts of the bullwhip effect, the following improvement factors are critical:
· Financial Stability
Financial stability is crucial especially in the pursuit of operations management and development activities necessary to combat the bullwhip effect. In any industry, it is important to remain updated with the latest developments to be able to stay competitive in the market ( 2005).
· Product Performance and Price
The production of the best products comes as a result of well-funded operations management and development activities. The strong performance of products in the market could also be linked to their cost-effectiveness, significantly limiting the negative impacts of the bullwhip effect. However, supply chains have to be aware of the positioning in terms of process so as to maintain satisfactory profits margin and remain competitive in the market ( 2004).
· Marketing Strategy and Distribution
High brand awareness among the buyers has created the need for aggressive marketing, and access to strong distribution channels is critical for the introduction of new models.
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