Supply Chain Management

Supply Chain Management

Introduction

The definition of "supply chain" includes the following three functions: the supply of products from a manufacturer, the manufacturing process; and Distribution of finished products to consumers through a network of distributors and retailers (Christopher, 2011). Companies participating in different stages of this process are linked together by a supply chain. To facilitate the flow of products, information flows from one end to another chain, between suppliers and customers. Such exchange of information enables all parties to plan meeting the current and future needs. Many objectives can be achieved through effective management of the supply chain: Declining stocks; Cost reduction; Improvement of appropriate timing of marketing a product and improving the flexibility. More companies in a supply chain are able to integrate and coordinate their activities; the more likely they are to optimize the flow of products from supplier to customer and to respond effectively to changes in demand.

Discussion

Supply chain management combines logistics with strategy and is of increasingly vital importance to companies. It concerns the management of 2 way flows along the chain of materials, people, information and finance from the materials (required for production) to the consumer. The notion is developed upon the image of a chain with recurrent ties between the different phases.

Traditionally, the nitty-gritty of moving raw materials and products around was regarded as the truly dull side of business. Companies knew that products had to be transported, stored, and distributed, but it hardly set the pulse racing. Competitiveness had little to do with whether raw materials arrived on Tuesday or Friday.

Today, the logistics of moving things around has become an exact science: supply chain management. It has been defined by Bernard La Londe of Ohio State University as 'the delivery of enhanced customer and economic value through synchronized management of the flow of physical goods and associated information from sourcing through consumption' (La Londe . 1997).

Importance

Supply chain management has appeared as being of critical importance to the modern organization for a number of reasons. First, the balance of power has shifted. In the past, manufacturers dictated terms to retailers. Now it is retailers who call the shots, with sophisticated systems designed so that they get what they want when they want it. Companies such as Wal-Mart now store massive amounts of information on customers. Manufacturers have to deliver to their increasingly demanding specifications (Macbeth & Ferguson, 1994).

Second, time is an increasingly important factor in overall corporate competitiveness. Speed is of the essence, whether in terms of product development, production or distribution. Late deliveries close down production lines or lead to disappointed customers who are all too willing to look elsewhere.

The third factor is the expansion of information technology (IT). IT enables companies to manage the flow of goods, materials, thoughts and information in ways never previously imagined. IT enables each element of the supply chain - whether the manufacturer, retailer or end consumer - to know the others' circumstances. For example, if a supermarket runs out of a particular product line, technology enables it ...