SUPPLY CHAIN MANAGEMENT

Effective Supply Chain Management Does Not Ensure That Firms Are Market Winners

Effective Supply Chain Management Does Not Ensure That Firms Are Market Winners

Introduction

The purpose of this paper is to justify the statement that effective supply chain management does not endure that firms are market winners. The paper will gather and present data from different sources in order to analyze the statement; in addition, the analysis in the paper aims to provide the justification for the statement. According to diverse sources, there seems to have a crucial role of the suppliers in the whole supply chain. The suppliers' risk coping efficiency is one of the major antecedents for it. The problems pertaining to financial instability, capacity constraints, quality related risks and the technological changes are the major variables found disrupting the suppliers' stand in the supply chain. The supply risk depends on the risk sources and outcomes whereas understanding the risk sources differs from industry to industry. Supply chain risks are increasingly rampant in the era of globalization. All decision makers of the supply chain have to come across this deadlock. Moreover, procurement is one of the key activities of the supply chain management. According to different sources, the organisation's 60 percent of the sales income, invested for the procurement of material.

Procurement related risks commonly exist differently by the industry people, how they are tolerated and managed. Whereas the high-tech organisations follow the informal and decentralised process in the risk management, there the traditional manufacturing ones leaned towards the centralised and formal process. Managing supply chain risks has become one of the major concerns in the value chain. Though the severity of the risks exists in varying degrees across the supply chains, organisations perceive the risks in different ways. Some are risk takers; whereas, some are risk avoiders and want to be at the safe side of the risks. No matter what a company's attitude is in risk management, there is a little bit of impact realised throughout the chain.

In order to know about how companies react to the risks, the Economist Intelligence Unit surveyed 500 executives from various companies across Asia-Pacific, North America and Europe. The result says that, 62 percent of the respondents consider demand unpredictability as one of the major disrupting force in the supply chain. Nevertheless, more than one-half of all respondents influenced by the rising input costs and volatility in energy prices and over one-third correlate with the insolvency of partners or suppliers. According to this, one-half of the respondents opined for improving the collaborations with the partners or suppliers as the major weapon to combat supply chain risks. The asymmetric information between suppliers and the manufacturer could lead to supply chain disruption and finally lead to market failure.

Discussion

There are several risks and hazards that hinder the process of effective supply chain management. These risks and hazards have a significant influence on the process of supply chain management, and logistic process. Hence, this paper will presents several risks that associate with supply chain management process ...