Although there are many views of supply chain management (SCM), at present, many practitioners look upon SCM as the management of key business processes across the network of organizations that form the supply chain. A supply chain is a network of manufacturers, suppliers, distributors, transporters, storage facilities and retailers that perform functions like procurement and acquisition of material, processing and transformation of the material into intermediate and finished tangible goods, and finally, the physical distribution of the finished goods to intermediate or final customers. According to the definition given by the Global Supply Chain Forum, supply chain management is the integration of key business processes from end-user,to original suppliers that provides products, services, and information that add value for customers and other stakeholders. There are eight business processes that are carried out across the supply chain. They are: Customer Relationship Management: Customer relationship management involves establishing a framework for building Continue reading
Supply Chain Management Concepts
Understanding Different Types of Supply Chain Risk
There have been many different definitions of supply chain risk, but it can be broadly defined as the variation in the distribution of possible supply chain outcomes, their likelihood, and their subjective values. However, this definition has since been expanded upon to account for all the different departments and functions that operate within a supply chain. This leads to an overall definition of supply chain risk as any risks for the information, material and product flows from original supplier to the delivery of the final product for the end user. Simply put, supply chain risk refers to the probability of a risk event occurring the supply line and when the product goes on sale. Furthermore, risk sources are the predominant causes of risk events, which are the environmental, organizational or supply-chain variables which cannot be predicted with certainty and which impact on the supply chain outcome variables. Identifying Supply Chain Continue reading
Concept of Supplier Relationship Management (SRM)
An important feature of a world class organisation is the way the organisation has been able to develop and link its suppliers with its external processes. Supplier relationship management can be defined as the relationship that exists between the supplier and its buyer based on long term commitments and trust with the ultimate aim to maximize the potential value of the relationship. This will include the management of different forms of supply relationships such as partnership, joint venture and vertical integration. The critical importance of supplier relationship types to achieve supply chain competitiveness can be viewed under the following headings: The effective use of strategic partnership Typical traditional short term relationship is characterize by irregular or ‘one-off’ transactions that give rise to supply uncertainties, difficulties in choosing suppliers, and is price oriented making this type of relationship unreliable and unsupported. Organisations can move from this type of relationship towards a Continue reading
What is a Lean Supply Chain?
A supply chain is a network of facilities, functions and activities that are involved in fulfilling customer demand. Supply chain is the network of organisations that are involved through the upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hand of the ultimate customer. The coordination within the entire chain is therefore very important. The supply chain covers activities on the business process, procurement, production, inventory carrying, storage, handling and distribution within an organisation. Supply Chain Management is therefore, the integration of key business processes across the supply chain for the purpose of adding value for customers and stakeholders. The size of the business determines the extent of Supply Chain Management it will get itself involved in. Companies invest heavily in Supply Chain Management to give their customers value for their money since supply chain management is Continue reading
Case Study: Zara’s Supply Chain Success Story
Zara is a Spanish fashion clothing manufacturer and retailer, formed in the 1970’s It is known that only two weeks are required for Zara to complete the development and shipment of a new product to its stores, which outweighs the average of fashion industry of six months, thanks to the collaborative relationship with customers and suppliers. Zara mainly targets on young and urban female customers and acceptable prices are offered. There are always new products in Zara stores. Even though usually Zara stores are spacious but the stock is displayed in limited quantity. This kind of strategy gives customers a sense of originality and exclusivity. Most of the stores display clothes only when they have a full set of major sizes, so customers would not be upset to find out that the needed size is not available. As shoppers enter the stores, reaction between Zara and customers starts with creating Continue reading
Global Supply Chain Management – Drivers and Activities of Global Supply Chain
Nowadays with globalization, global supply chain management is becoming a very important issue for most of businesses. The main reasons of this trend are procurement cost reduction, purchasing risks control, revenues increasing and etc. For instance, companies may set up overseas factories to benefit from tariff and trade concessions, lower labor cost, capital subsidies, and reduced logistics costs in foreign markets. Moreover, easy access to abroad markets and close proximity to customers result better organizational learning. On the other hand, improved reliability can be obtained as a consequence of closer relationship with suppliers. There are some issues that should be considered in managing a global supply chain. First of all, the company should decide about its general outsourcing plan. For whatever reason, businesses may prefer to keep some aspects of supply chain nearer to home. The second issue that must be incorporated into a global supply chain management strategy is Continue reading