Extending the Organization - Supply Chain Management

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Basics of Supply Chain

• A supply chain consists of all parties involved, directly or indirectly in procurement ( purchasing raw materials).
• Supply chain management involves the management of information flow between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.
• SCM is becoming increasingly important in creating organizational efficiencies and competitive advantages.
• It improves ways for companies to find the raw components they need to make a product or service, manufacture that product or service, and deliver it to customers.
• Typical supply chain : Supplier's Supplier, Supplier, Manufacturer, Distributor, Retailer, Customer, Customer's Customer

The Five Basic Supply Chain Management Activities

IT Roles in the Supply Chain

• Creating the integrations or tight process and information linkages between functions within a firm - marketing, sales, finance
• Between firms which allow the smooth, synchronized flow of both information and product.

VISIBILITY

Supply chain visibility -  is the ability to view all areas up and down the supply chain.

Bullwhip effect - occurs when distorted products demand information passes from one entity to the next through the supply chain.

*Information technology allows additional visibility in the supply chain.

CONSUMER BEHAVIOR

Demand planning software - generates demand forecasts using statistical tools and forecasting techniques.

Ones an organization understand customer demand and its effect on the supply chain it can begging to estimate the impact that its supply chain will have on its customers and ultimately the organization's performance.

COMPETITION

Supply chain management can be broken down in: 

Supply chain planning software - uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. SCP depends entirely on information for its accuracy.

Supply chain executive (SCE) software - automates the different stems and stages of the supply chain.

SPEED

During the past decade, competition has focused on speed. New forms of severs, telecommunications enabling companies to perform activities that were once never thought possible.

Another aspect of speed is the company's ability to satisfy continually changing customer requirements efficiently, accurately, and quickly.

Supply Chain Management Success Factors

• To succeed in today's competitive markets, companies must align their supply chains with the demands of the markets key serve.

• To achieve success such as reducing operation costs, improving asset productivity, and compressing order cycle time, and organization should follow the seven principles of SCM outlines.

• One of the benefits is to know immediately what is being transacted at the customer and of the supply chain instead of waiting days or weeks for the information to flow.

• Organizations should study industry best practices to improve their chances of successful implementation of SCM systems. The following are keys to SCM success.

MAKE THE SALE TO SUPPLIERS

The hardest part of any SCM system is its complexity because a large part of the system extends beyond the company's walls.

WEAN EMPLOYEES OF TRADITIONAL BUSINESS PRACTICES

Operations people typically deal with phone calls, faxes, and orders scrawled on paper and will most likely want to keep it that way.

ENSURE THE SCM SYSTEM SUPPORTS THE ORGANIZATIONAL GOALS

It is important to select SCM software that give organizations and advantage in the areas most crucial to their business success.

DEPLOY IN INCREMENTAL PHASES AND MEASURE AND COMMUNICATE SUCCESS

Design the deployment of the SCM system in incremental phases.

BE FUTURE ORIENTED

The supply chain design must anticipate the future state of the business.