Operations Management assignment
Supply Chain Management
Supply chain management is the coordination of the processes and functions within a business, adopted by most companies in the UK in the late 1990’s. It deals with the internal and external factors that, when dealt with correctly and systematically, can determine a businesses success or failure. A supply chain is the network of activities that delivers a finished product service to the customer. By definition, supply chain management (SCM) is “the management of the flows of materials from suppliers to customers in order to reduce overall cost and increase responsiveness to the customers” (Reid & Sanders). SCM entails the co-ordination of the movement of good through the supply chain from suppliers to manufacturers to distributors to the final customer. The main aim of SCM is to maximise the efficiency of any given process being carried out by a company; by doing this it is allowing them to try to cut their costs and hopefully keep satisfying their customers’ needs, while at the same time maintaining their competitive position within their market. Supply chain management is seen as more of an “open system” in contrast to the traditional system used by the majority of companies just 20 years ago. The new “open system” allows room for change which is greatly needed with the current financial instability of the economy. SCM has evolved over the years and has moulded to suit the ever changing economy. First adopted by the Japanese, in the form of Geba Kai (A meeting of the minds), the now commonly found process is used by a vast amount of companies in the UK. Nowadays, SCM within a business is responsible for a product from when it’s in its raw state to when it’s a finished product, ready for consumption by customers. The chain management that Comfort Company PLC currently uses is a very traditional system, otherwise known as a “closed system”. This type of management system isolates itself from the other components in the supply chain and therefore only has communication flowing through the companies own system, this is a negative attribute as it prevents the company from getting important and influential information about the state of the other links in their supply chain. When the dynamics of change happened, it forced the breakthrough of a new approach, the “open system”. The “open system” made companies a lot more open to operational change and as a result of this it made several managers, whose companies used the closed, more traditional system, view the new approach as a loss of power; this consequently made a lot of companies resist against the change. The new and more flexible “open system” was adopted firstly by the Japanese in the form of “Geba Kai”, they were closely flowed by the British who quickly followed them in adopting it. There are still some nations that, even now, rigidly stick to their old ways and use the “closed system”, two examples of these nations are the Americans and the Germans.
Along with the list of positives the company will gain by changing from a traditional chain system to a more formal supply chain management (SCM) system, there are also a few strategic reasons why a company should change to the newer system, reasons that will help them to stay on par with the other business’ within their industry and within the whole business sector. One of these reasons is globalisation. As stated in “Operations management: Along the supply chain”, Two thirds of today’s businesses operate globally through global markets, global operations, global financing, and global supply chains”. Globalisation means that British companies, such as Comfort Company PLC are going to have to be prepared to compete in markets that are foreign to them and also have foreign competition within their own domestic markets. Companies that adopt, or have already adopted, a formal supply chain management system will have an advantage upon those who...
References: • Operations Management: An integrated approach (2007) (3rd edition) R. Dan Reid, Nada R. Sanders. Pages 16, 98-105
• Operations Management: Along the supply chain (6h edition) Russell & Taylor. Page 9.
• Tutur2u.net (2011) Competitive advantage (WWW) Available from: http://tutor2u.net/business/strategy/competitive_advantage.htm
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