SUPPLY CHAIN MANAGEMENT: A supply chain is the process of moving goods from the customer order through the raw materials stage. All organizations have supply chains of varying degrees, depending upon the size of the organization and the type of product manufactured. These networks obtain supplies and components, change these materials into finished products and then distribute them to the customer. Managing the chains of events in this process is what is known as supply chain management. Effective management must take into account coordination all the different pieces of this chain as quickly as possible without losing any of the quality or customer satisfaction.
Why supply chain management?
In the world, companies are looking across the value of innovation management for strategic growth. The performance of scm outputs are as follows:
III. Continuity of supply
Important of supply chain management:
Service orientation: The very basis of supply chains has been to provide superior customer service. Services are all about the value that the customer gets, which in turn depends upon his own perception about what constitutes value. The design, the alignment, the integration of the companies on the supply chain and the coordination between them are all for the customer the ultimate customer.
System orientation: System orientation is at the core of the existence of any supply chain. Synergy due to cooperation and coordination in the main gain of the supply chain.This entails that while getting optimal results for the chain as a whole, the results for the partners on the chain may not necessarily be optimal; these could be less than optimal.
But, these are substantial gains for all the parents in working together. The apparent sub-optimal gains for a company in the supply chain could be far better than if it were to operate independently outside of the chain.
Competitive and efficiency: The supply chain is a business organization. It provides value to the customer while being competitive. Competitiveness is essential for it to healthy sustain itself in order to be able to provide increasing value to its customer. Efficiency is an important element of competitiveness.
Improving visibility of demand:
Efficient supply chain improves visibility of demand by each one of the partners.
Efficient supply chain helps in improving the quality of operations of the organizations. Total Quality Management (TQM) has become a major commitment throughout all facets to industry. Overall commitment to TQM is one of the major forces contributing to the logistics renaissance.
Reduces transportation cost:
Efficient supply chain reduces the transportation cost, thus helps in increasing efficiency and reduction in carrying cost of the company. the traditional objectives of SCM is to minimize total supply chain cost to meet fixed and given demand, where the total cost is composed of raw material and other acquisition costs, inbound transportation costs, facility investment costs, direct and in direct manufacturing costs, direct and indirect distribution centre costs, inventory holding costs, interfaculty transportation costs, and outbound transportation costs.
Reduces warehousing cost:
Efficient supply chain helps in reduction of warehousing cost of the company as there will be less held up of inventory.
Rationalize Supplier Base:
Organizations that procure commodities or multiple services often find themselves with a range of suppliers. As organisations grow the number of suppliers may have supplier base of tens of thousands of...