SUPPLY CHAIN MANAGEMENT

Supply Chain Management



Supply Chain Management (Zara Case)

Supply chain management

Supply chain management is a term used to a management doctrine and to the practices required in implementing a SCM philosophy, although it can also be used to depict management processes that are not necessarily rooted in a guiding philosophy. SCM, which gained prominence as outsourcing become prevalent in the 1990s, brings together and extends the concerns of total quality management (TQM) and just-in-time (J-I-T) management techniques that preceded it (Myers, 2008, 33).

As a management philosophy, SCM is a systems approach that involves assembling a team of upstream (suppliers) and downstream (distributors and end users) partners with a common goal of satisfying a particular customer value or set of values. This outlook recognizes the interdependency of team members and attempts to foster a cooperative effort that will ultimately give the team a competitive advantage in the market place. SCM differs from earlier management philosophies in that it necessarily involves establishing sufficiently trustful relationships with the members of the chain to warrant involving them in strategic decisions. Companies may be involved in multiple supply chains and function in different roles (e.g., partner, supplier, or customer) at any given time. As a guiding management philosophy and implementation technique, SCM is particularly attractive to socially and environmentally responsible businesses, as it gives assurance that standards set to support social welfare and environmental sustainability are being met throughout the life cycle of any given product.

A supply chain, considered as a system, can also be described as a distributed network or channel through which information, materials, labour, equipment and currency flow. Though supply chains themselves are not new, four major developments forced thinking about them differently than in the past. The first motivating force came from the communications technology advances that forever changed the span of the marketplace for both the producer and the consumer. The second was the trend toward outsourcing in general, and global outsourcing in particular, which the information age enabled. The third was the increasing importance of timeliness in the marketplace. The fourth was the increasing emphasis placed on quality in all aspects of production and delivery (Mentzer, 2001, 2 ).

Make-or- buy decision

"Do" means the company developed an activity in itself. "Buy" means that the company depends on an independent company to develop this activity, possibly under a contract. Classical decision to buy or make are to develop raw materials, the chain of distribution or service centres. While some companies have been successful in performing their own processes and support activities, others buy the latter to market experts, who call market firms, for example, companies that specialize in marketing or distribution. Using these companies, a producer can get a better marketing plan, low cost distribution, better use of inventory, etc.

Defining boundaries

To resolve the make or buy decisions, the company must weigh the benefits and costs of using the market to the benefits and costs of carrying out the activity at home.

Reasons to Buy

Conventional advice is that companies should focus on ...