strategic supply chain management essay example

strategic supply chain management essay example

The Importance of Strategic Supply Chain Management: A Comprehensive Analysis

1. Introduction to Strategic Supply Chain Management

Strategic supply chain management (SCM) is one such approach. Specifically, its focus is a holistic, integrated, organization-specific, and long-term planning and management of all processes of the supply chain. Built on its areas of emphasis in the supply chain, strategic SCM provides the necessary structural basis for many critical operational areas such as operations planning, supplier selection, network design, logistics, and, most importantly, information technology. While the need for strategic SCM is clear, strategic benefits remain theoretical for the most part, especially when set against current market pressures for organizations to continually look for faster and better supply chain operational results. In fact, many organizations are challenging the strategic versus operational pay-offs that can be achieved within a supply chain and question the saliency of strategic SCM as an important focus of attention.

Companies have to re-evaluate their role and position in their respective supply chains in order to gain a sustainable competitive advantage, specifically in today’s context of increased competition, heightened customer demands, and widespread globalization. As a result, strategic supply chain management (SCM) and the strategic development of the supply network have become a major focus for both researchers and supply chain managers. This paper provides a comprehensive analysis of the importance of strategic supply chain management derived from the key themes of integrating sources of supplier, customer, and inter-organizational relationships and competing through resources. The typology of these two major perspectives provides a framework for future strategic supply chain research. Given the nascent stage of strategic SCM as a key contributor to operational gains, the assessment serves to identify future research trends and realign industry and educational requirements for supply chain professionals.

2. Key Concepts and Principles of Strategic Supply Chain Management

Nevertheless, success and survival in today’s business environment has propelled a considerable amount of attention to supply chain management (SCM) as firms confront customers – especially as focal aspects in the strategic planning of SCM. In the quest for supremacy, organizations must alter the way business is performed, particularly in the area of business processes by integrating its resources and capabilities within the internal functional areas. SCM is multi-disciplinary, instigating commencing routes from marketing, engineering, sourcing, logistics, information systems, and operational management. It has its foundations in the field of logistics and operations management, but has rapidly moved towards the integrative with cross-functional proactive orientation.

Strategic supply chain management (SCM) is vital, albeit an underrated driver of organizational performance, particularly in the three major sectors such as the public sector, manufacturing sector, and services sector. In other words, SCM facilitates the response of an organization to rapid environmental changes and transfigures its solitary value-enhancing activities. Besides, SCM provides a systematic process in coping with the turbulent business environment. Incorporating the tacit and explicit knowledge of chain partners, SCM further develops dynamic capabilities and competitive advantages. Drawing on this theoretical and empirical examination, we advise practitioners of SCM managers and scholars to revamp their eclectic approach to SCM, essentially from a much-neglected and less comprehensive proactive perspective.

3. The Role of Technology in Enhancing Supply Chain Management

When market trends, directions, and operational methods tend to drive companies towards differentiating business processes, the tools of customization, collaboration, and complex collaboration become powerful catalysts for operational success. These dynamics, discussed in previously described value chain alignment methods, are becoming strategic inflection points with profound implications for industry and supply chain. These dynamics also create opportunities for technology companies with market-transforming applications. With the strategic choice made, selection and implementation should be managed to create a seamless process that offers simplicity and clarity on resources used, management responsibilities, and timetables. Maintain a holistic view of the business case that captures these aspects and keep costs to a minimum. Gradually build on the advantages realized and make adjustments to continuously align technology investments with the emerging state of the enabling technology and the capabilities of the enterprise.

The limits of successful supply chain management are constantly challenged by unforeseen events and disruptions. The scope of work related to analyzing supply chain risks and designing mitigation measures is evolving because of ongoing advances in technologies such as molecular assembly, quantum computing, and autonomous vehicles. Despite abundant availability of promising applications, successful implementation of these technologies in supply chain management is often stalled due not only to financial concerns, major technological roadblocks, and resistance to change, but also to a disconnect on strategic alignment between the corporation and its supply chain partners. The strongest benefits of technology in supply chain management are realized through enhancements that differentiate the company as graphically illustrated in Competitive Advantage Graph. No, or simple improvements that bring the company into industry standards, can best be realized by looking at the left side of the graph.

4. Case Studies and Examples of Successful Strategic Supply Chain Management Practices

The concept of supply chain management acknowledges the flow of the material and information between the units of the company as well as between the original company such as suppliers and customers. The idea of supply chain management evolved in the late 1980s and 1990s when many companies such as Ford, Hewlett-Packard, Procter and Gamble, IBM, Toyota, and Dell applied the strategies of just-in-time (JIT) and total quality management (TQM). Many companies discovered that the sources of their improved products or services and the increased margins were those that were being controlled by their suppliers. In other words, the profitability, performance, and quality of the products were obtained from the cooperative relationships that companies developed with particular suppliers of the supply chain during the production process. The success of these companies helped to speed the process and made aware of the necessity of the creation of a strategic relation with suppliers as a partnership. In other words, the contribution of the suppliers has a great impact on the financial structure of a company. As a result, the competition was not among companies anymore, and if managed in a proper way, it could be transferred into cooperation. The industrial success heavily depends on the cooperation among all the members of the supply chain system. These companies have the basic vision that the foundations for the creation of a satisfying experience between customers and the company are based on the well-organized strategic relations at the supplier level or on having long-term contracts with suppliers such as win-win strategies. That said, companies realized that the order of the company needs to be its own order.

Before beginning, it is important to describe what a strategic supply chain management process is and what it includes. A simplified definition of a supply chain is, “a system of organizations, activities, people, and information that is involved in the movement of the product from the supplier to the manufacturer to the producer to the wholesalers to the retailer to the consumer.” It starts with the suppliers of the manufacturer, gets involved in the manufacturing process, and ends at the distribution of the manufacturer. The supply chain management process emphasizes on sharing knowledge and information among partners, vendors, manufacturers, and service providers. It is the process of integrative management of many stages as well as aspects such as material flow and information in order to provide best services and products to customers. It is obligatory that the members of the supply chain are a part of the system they want to manage in order to have a smooth and continuous obligation through input until the final output.

5. Challenges and Future Trends in Strategic Supply Chain Management

Based on these observations, our work will try to conduct an exhaustive study in the field of supply chain which includes the concepts, definitions, the historic evolution of each concept, methodologies used, problems that enterprises come across in the application of these methods, difficulties, in order to propose pragmatic solutions. This is a very heavy task, which explains a survey-oriented approach. However, to gather the maximum amount of information and try to focus our work on research that is the most innovative and promising for future applications, a further step is essential. This step involves conducting an extensive, uninformative survey concerning the exact state of supply chain management in terms of scale, scope, philosophy, information and decisional support, methodologies used, difficulties and obstacles encountered, performance measures and objectives, strategic dimensions and future trends. Our final objective will be to create a summary of supply chain management concepts overview, and future trends to be used as a tool for future research.

Challenges in supply chain management include the increasingly global scope of business enterprises, the rapidly changing business environment, the increasing importance of technology, the diversity of political, professional, economic, and cultural dimensions, the increase of risk preference, the management of sequential and cumulative uncertainties, the proliferation of third-party logistics services, and spectrum of responsibility in supply chain management. The evolution of supply chain management practices helps the enterprises to adapt to current business environment challenges, globalization of market boosted by the liberalization of trade and investment agreements, the rapid evolution of information technology, rapid product life cycle, pressure to reduce manufacturing lead times and stock inventory, increase in quality, increase in customer service level, more and more innovative products and services, and pressure to control costs and prices to remain competitive. These advances are crucial for competitive success. It will bring benefits in terms of wealth for all stakeholders.