Recent Issues in Supply Chain Management (SCM) Lesson 3.1

Supply Chain Management (SCM)

• SCM is the management of multiple relationships across the supply chain, dealing with total business process excellence and representing a new way of managing businesses and relationships with other members of the supply chain.
• SCM involves the stream of processes of moving goods from customer order through raw materials, supply, production, and distribution of products to the customer.

Features of Supply Chain Management

• Inventory Management: tracking and managing supplies of raw materials, components, and finished goods to satisfy customer orders and minimize waste.
• Procurement: automating and streamlining sourcing, purchasing, and payables across a company's supplier network, building stronger relationships with vendors and improving negotiations.
• Logistics: coordinating warehouses and transportation channels, improving on-time delivery performance and customer satisfaction.
• Forecasting and Planning: anticipating customer demand and planning procurement and production processes accordingly, avoiding unnecessary purchases and excess finished goods.
• Return Management: simplifying and accelerating the inspection and handling of defective or broken goods, automating claims processing with suppliers and distributors.

Role of Computer/IT in Supply Chain Management

• IT is a prerequisite for effective control of complex supply chains, enabling firms to develop and accumulate knowledge stores about customers, suppliers, and market demands.
• IT Systems: using interorganizational systems for information sharing and processing across organizational boundaries, including internal IT systems and identification technologies like RFID.
• Supply Chain Management: a business network defined as a set of connected business relationships, concerned with planning, coordinating, and controlling materials, parts, and finished goods from supplier to customer.

IT and SCM

• IT has increased the popularity of supply chain design and management as a business paradigm.
• IT enables online communication systems, increasing the richness of communications between firms and customers.
• IT emphasizes the long-term benefit of all parties in the supply chain through cooperation and information sharing.
• IT increases information processing capabilities, reducing uncertainty and enabling greater relationship management.
• IT decreases transaction costs between buyers and suppliers, creating a more relational/cooperative governance structure.

CRM versus SCM

• Customer Relationship Management (CRM) programs ensure parts and service get to customers when needed, automating business processes for sales, service, and support.
• Supply Chain Management (SCM) personnel ensure that all departments in the business get the raw materials they need, working with vendors.
• CRM personnel work with customers, ensuring they receive support and services, while SCM personnel work with vendors.
• SCM ensures the smooth movement of resources from suppliers to manufacturing, while CRM takes and transmits orders, handling product returns and customer support.

Benchmarking Concept

• A benchmark is a standard of performance.
• Benchmarking Process: understand existing business processes, analyze the processes of others, compare own business performance, and implement steps to close the performance gap.
• Benefits of Benchmarking: informs better decisions, exposes organizations to new ideas, allows for thinking outside the box, and provides a methodology for implementing change.

Value Addition in SCM - Concept of Demand Chain Management

• Supply Chain Management: integrating business processes from end-user through original suppliers, providing products, services, and information that add value for customers.
• Demand Chain Management: a sequence of backward-reaching processes, initiated by the end-customer, that enables companies to anticipate demand characteristics within a given market.
• Conceptual Framework for Demand Chain Management: integrating demand and supply processes, managing digital integration, configuring the value system, and managing cross-functional working relationships between marketing and supply functions.