what is supply chain management essay

what is supply chain management essay

The Importance and Key Concepts of Supply Chain Management

1. Introduction to Supply Chain Management

Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers. In a sense, it represents a course of action for getting it done. This is a brief introduction concerning the importance and key concepts of supply chain management. Traditional business organizations have very limited insight into their supply chain, and we can only see a step ahead in the supply chain of material flows. Predictable impacts from supply chain partners are of a financial and product-based nature. But increasing demands from customers make it essential to integrate the supply chain more effectively into the business. This aim is the objective of supply chain management when it is applied to a commercial organization – to enhance transparency and competitiveness. The advantage SCM offers to customers goes beyond conventional customer-related factors, such as price, quality, and delivery. Today, advantages of SCM also take other dimensions into account, such as delivery lead times.

2. Key Components of Supply Chain Management

Even within those commodity groups from which considerable Defense purchases are made, thousands of classified items are obtained on an infrequent basis. As usage and production demands for these special items are extremely low and lead time is long, evaluating the true cost of production hiatus realistically for Defense items must consider both the higher initial procurement cost and the fact that reconstitution will come with a far heavier price tag in the ways of increased inventories, extended production lead time, major repair (overhaul) cost, and manufacturing facility reactivation. The discovery of sources of supply becomes a necessity if such items are to be available when required. Therefore, discrete focus on a viable supply chain is crucial.

In an era of tight budgets, particularly those for stockpiles and the vegetating defense inventory, small quantities of virtually every item are procured on a “when and where needed” basis. Piles of stock no longer carry the warfighter through rough commercial usage periods, but rather are limited to the unique, high-cost, short-term lead-time items not possessing the flexibility of commercial producers. The new Defense supply system (also applicable to most corporate producers) is now without even moderate stocks on the shelf, operating at minimum inventories consistent with that initial purchase that ensures minimal survival of suppliers until robust financial times return. This effect is a consequence of the extreme cost of front-end inventory, both in terms of shelf-life and investment restrictions. However, assuring such production readiness depends upon intelligent investment in supply sources.

3. Challenges and Strategies in Supply Chain Management

The adoption of SCM in companies is a major challenge and encompasses several strategic, organizational, human resources, and other issues. For many years, companies have utilized the organizational structures for operations processes such as marketing, distribution, and manufacturing. Often, manufacturing and service processes are analyzed and structured to organize customers, form the materials, the flow of the materials, the flow of information, equipment, and human resources to assure the fulfillment of the contract. Requirements for understanding elements of the supply chain management strategy include a detailed understanding of applicable supply chain factors, the comprehension of the supply chain as an entire system, a focus on critical success factors, employees, strategy, and corporate culture, and levels of supply chain performance and measurement requirements. Supply chain management strategies may reduce costs, inventory, and overhead by sharing information and introducing strategic planning. Becoming aware of the key elements of supply chain management is a good starting point toward understanding and successfully implementing an effective supply chain management strategy.

Manufacturing companies encounter several issues and challenges when faced with managing their own supply chain. The rapid change in international trends, coupled with the continued pressure from both customers and competitors, forces companies to focus on core competencies if they wish to remain competitive both in the international arena and within their own domestic situations. Supply chain management (SCM) is critical for many large companies. It is essential to ensure their production processes are compliant with a highly competitive environment, and both the internal and external components (suppliers, producers, clients, etc.) of the chain cooperate as a tight spiral to ensure the fulfillment of a contract both on time and within budget. Corporate efficiencies can be obtained from establishing beneficial relationship arrangements and contracts.

4. Technological Innovations in Supply Chain Management

Of course, technology changes alone are not enough; changes should also happen in process control methods and control concepts, for example, the idea of autonomation applied in Toyota production systems. In this way, people do not need to focus on boring and routine tasks in production. Looking forward, the trend to employ more innovative solutions in different areas of the supply chain should continue, for example, from cooperation to collaboration, or certified network partners. Nevertheless, the next step after employing technology-enabled innovations could be finding hidden win-win values for supply chain partners.

Continued technological development is the only option for supply chain management to address today’s demanding customer requirements for increasingly faster, cheaper, and better product delivery. This chapter reviews technology solutions in supply chain management and proposes the application of innovative technology such as Internet of Things, Blockchain, Big Data, Cloud Computing, and 3D Printing in managing different aspects of the supply chain. These innovative technologies can significantly bring improvement in supply chain functions and provide opportunities for making supply chain process innovative and disruptive. They can help to change the way we look at different components including suppliers, internal processes, products, customers, and external product handling issues.