Supply Chain Management

How Supply Chain Management Helps To Improve Company Profitability

Supply Chain Management

Introduction

Supply chain is defined as the organized set of relationships between suppliers of materials and services, which covers the transformation of raw materials into products and services and delivers them to the firm 's customers. SCM synchronizes the functions of a company and its suppliers with the material flow, the services and customer needs (Gunasekaran, 2001).

Efficient supply chain work better in the demand forecasting and product or service is stable. Examples of competitive priorities are low cost, quality, on time delivery. Responsive Supply Chain The purpose of the supply chain reaction through the ability to respond quickly locate, inventory and market demand, to hedge against demand uncertainty. Supply chain for the best response when demand is unpredictable, is the frequent introduction of new products, high product variety. Example of a competitive focus on: the development of fast, fast delivery, customization, volume flexibility, high performance design quality.

SCM process tackle the basic business problems of supplying the product to assemble demand in a uncertain and complex world, from the point of vision of the whole supply chain. Smaller product cycles and greater product diversity increased supply-chain costs as well as complexity. The new concept of globalization and outsourcing of business and fragmentation has made it vital that this matter be considered from the perspective of the whole supply chain, rather than the more limited view of individual companies. Advances in information technology contributed to a real-time exchange, coordination and decision-making company. (Hugos, 2006)

Importance in Business

SCM is not just the order completion. It includes all the processes and operations starting from the product generation through end of life recycling and disposal. Now, most of the competition is with the domestic and global competitive pressures in a new world economy. They are forced into the strategy development and continue to downward pressure on their prices, so the pressure is equal to their profits. In achieving operational excellence is one of the most positive ways to develop and implement effective supply chain management process. Supply chain management supports company to achieve financial growth as well as operating on their competitive advantage.

They are: a better response to customer demand more responsive to changes in the market more efficient and profitable supply chain management, cost control is an organizational objective to manage customers and supplier interfaces between the major changes. Management of the company must be responsive to the specifications from their suppliers as well as its customers. The company which has an imbalance of supply chain will see their negative impact on overall profitability. When the supply chain between customer demand and the balance is inconsistent with the company will bear the cost of the product standard cost.

These additional costs are in the form of speed up material premium over the cost of setting fees too high cost of shipping inventory costs, speed up the loss of customer orders and customer demand is unpredictable revenue model and prediction of change is ...