SUPPLY CHAIN MANAGEMENT

Supply Chain Management

Supply Chain Management

Task 1

Supply Chain Management

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.

SCM process tackles the basic business problems of supplying the product to assemble demand in an 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 (Lee, 2005).

Supply Chain Management And Business Functions

SCM is not just the order completion. It includes all the processes and operations starting from the product generation through the 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 an effective supply chain management process. Supply chain management supports company to achieve financial growth as well as operating on their competitive advantage.

SCM Drivers

The supply chain management strategy of an organization should be determined by the strategic goals and objectives of that organization. In return, the SCM strategy finds out the manner in which the supply chain will execute with respect to effectiveness and efficienc(Khan, 2008). The four chief drivers of supply chain management are:

Facilities Driver

A facility transforms or processes inventory into another product, or it stocks up the inventory before delivering it to the next facility. Toyota is an example of a company that stresses effectiveness in its facilities. Toyota's goal is to open a facility in every major market where it does business. These local facilities protect the company from currency fluctuations and trade barriers and thus are more effective for Toyota's customers.

There are three primary components that an organization should consider when determining its facilities strategy:

Location

Capacity

Operational design

Inventory Driver

Companies require inventory to offset any discrepancies between supply and demand, but inventory is a major cost in any supply chain. Inventory's impact on a company's effectiveness versus efficiency can be enormous. Effectiveness results from more inventory, and efficiency results from fewer inventories. If a company's strategy requires a high level of customer effectiveness, then the company will locate large amounts of Inventory in many facilities close to its customers, such as Dillard's strategy demands. If a company's strategy requires a high level of efficiency, the strategy of a low cost producer, for instance, then ...