How does effective supply chain management relate to competitive advantage? What are some ways that firms can use to exploit this advantage where possible? Please explain. Please give a few examples with the explanation---thanks
SUPPLY CHAIN MANAGEMENT
The field of supply chain management has become tremendously important to companies competing in the global marketplace. Supply Chain refers to the entire network of companies that work together to design, produce, deliver and service products. Companies have extended beyond their corporate walls to encompass their entire supply chain.
What is a Supply Chain? It is a network of facilities that include:
• Material flow from suppliers and their ‘upstream’ suppliers
• Transformation of materials into semi-finished and finished products
• Distribution of products to customers and their ‘downstream’ customers
It is critical to go beyond the immediate suppliers and customers to encompass the entire chain. Hidden values can often emerge once the entire chain is visualized. There is more to supply chain management that just materials flow; information and financial flows are equally important. In most supply chains, the upstream activities respond to forecasts, while the downstream side waits for orders to be placed.
Supply chain management is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service, manufactures that product or service and delivers it to the customer. In manufacturing, every step in every business process may affect a customer. Customer loyalty and production management are mutually dependent. At the end of the day, the customer wants the goods – at the right time, right place and right price. The question is how does a company synchronize supply and demand in real time to maximize revenue and profits? There are a number of drivers on both the supply and demand sides.
On the supply side, the drivers are: a) managing costs to drive profits, b) customers need to have accurate availability and shipping information, and c) streamlining and integrating separate systems to form an end-to-end customer fulfillment system. Research shows that it is five to ten times more expensive to acquire a new customer than to keep an existing one. Even on the supply side, an organization should be concerned about overall customer satisfaction.
On the demand side, the drivers stem from the need of an integrated, multi-channel selling process. Revenue through multiple sales channels can lead to a wealth of benefits if the sales channels are maximizing their ability to bring revenue in. The sales processes should be integrated throughout the entire enterprise by tying your customer relationship management systems to the supply chain management systems. It is also important that the best sales opportunities are identified. The sale process should provide interactive selling capabilities through any sales channel – so that everyone involved can focus on the best possible opportunities to ensure that they are always building positive customer relationships.
There is a strategic value from integrating customer-facing systems with supply chain systems. Enterprises that connect customers directly into their demand chain in real time can expect to reduce operational costs, improve customer satisfaction and loyalty and maximize profits.
There are five basic components for supply chain management.
1. Plan. This is the strategic part. A strategy for managing all the resources that goes toward meeting customer demand for your product/service is needed. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers.
2. Source. Suppliers that will deliver the goods and services needed should be chosen. Companies should develop a set of pricing, delivery and payment processes and create metrics for monitoring and improving the relationships. Processes for managing inventory and services received from suppliers should be put together.
3. Make. This if the manufacturing step. Schedule activities necessary for production, testing, packaging and preparation for delivery. As this is the most metric-intensive portion, measure quality levels, production output and worker productivity.
4. Deliver. This is referred to as logistics. It involves coordinating the receipt of orders from customers, developing a network of warehouses, picking carriers and setting up an invoicing system
5. Return. This is usually the problem part of the supply chain. A network for receiving defective and excess products back from the customers and supporting customers who have problems should be created.
Integrating ERP, CRM and SCM leads directly to costs savings and more efficient business processes. It also provides a better service to the customer, making it easier for them to do business with your organization. Enterprises that connect customers directly into their demand chain in real-time will reduce operational costs, improve customer satisfaction and loyalty and maximize profits. Clearly, these organizations stand to gain strategic value from integrating customer-facing systems with supply chain management systems. An integrated, collaborative CRM/SCM solution can connect demand with supply in real-time, giving enterprises true market-driven operations. Enterprises should work toward connecting all the steps between marketing campaign, sales order, fulfillment, payment, support and profitability analysis. The competitive impact of an integrated solution includes:
• Increased sales and revenue opportunities
• The ability to match supply with customer demand
• Real-time visibility and control across all customer transactions
• Dramatic order and fulfillment process improvements
• Reduced order and fulfillment costs, and
• Improved customer service and loyalty.
Most companies identify the order to cash process as a supply chain management process. However, the process actually starts ...
Supply chain management is examined.