Supply Chain Management – Tell me why I need to know it?

Supply chain management would have gone back to being more a philosophy had it not married the tools and techniques that have come of age recently and is merely run more on credence and interaction. Let us go further into those developments that have escaladed it to the reckoning as a result of which the management within the organisation has paid attention to:

• Date and revolution of information
• Dynamic market that is getting more challenging and evolving all the time
• The interaction with various entities to look at relationship management more seriously.

The revolution of information
When the mainframe computers were first introduced in the market it would occupy an entire room. With the advent of integrated circuits (IC), the overall cost and efficiency of computing devices’ power requirements has increased exponentially. As a result the computing output has improved leaps and bounds in the current space.

With the arrival of PCs, optic fibre networks and the vast penetration of Internet, the real time capture of information related to the supply chain related parameters. This has created a better eco-system for supply chain management to better exist. The later part of 90’s saw an emergence of trading communities using the online platform to effectively execute businesses solutions making the sole paper-type business transactions more or less obsolete. With the advancement of telecommunications and computer technology instantaneous communications has now become a reality. An example worthy to mention of a positive trend in supply chain management to substantiate this development is of Wal-Mart’s capability to share the daily sales report to its suppliers to enable them to plan and forecast their productions and movement of these products to be made available at the market. Such real time networks and information systems — like the one of Wal-Mart’s satellite network which has made it easier to link together the distributors , suppliers, manufacturers, retail outlets and of course the customers regardless of the geographical location where they are.

With the paradigm shifting and with customers looking out for better concepts of business appealing to them organizations are forced to look out for newer alternatives to reach the customers of which one type is the concept known as e- commerce(electronic ecommerce), wherein the transaction of information is automatically completed through interactive touch points like Electronic Data Interchange (EDI), Real Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT), Point of Sale (POS) devices and a host of other approaches to create newer customer experiences.

Globalization & Cut-throat Competition
The 2nd major trend happening in businesses as another improvement to the area of supply chain management is the opening up of markets for investors and players to enter another market for trade has also increased the competition everywhere.

The rate at which the change is happening in markets, the products/services are being offered and technology advancing has led to those situations where managers are required to take decisions in a short span of time with lesser information and higher penal charges.

Customers demand for quicker delivery of products/services, state-of-the-art technology and products/services that are better-suited to their needs. In some industries, the product life cycle is shrinking from a few years to a few months. It’s now that the global market is similar to the fashion industry where the trends are evolving faster than ever before.

In spite of all these factors we do see the best performing organisations thriving better. All this because they have embraced these challenges and changes facing today’s markets through renewed emphasis on continually improving their operations with particular mention to supply chain performance. Just to highlight a case in these lines: Johnson Controls receives an order for seats from a specific Ford plant, manufacture the required no. of seats and deliver the same within four hours. This is possible only through the presence of incredible flexible operations inside Johnson’s manufacturing set-up in addition to the trustable information links with its supply chain partners which forms a vital cog in the supply chain management process.

Also for firms to survive today they must find ways and means to increase market share globally and be also be focussed to the global economic expansion. At the same time domestic market consolidation also has not be neglected keeping in mind the global competitors. This happens with maintaining the right requirement of inventories to the customers with the right quantity. This level of performance is possible only when all the employees in the organisation are in the same frequency.

Supplier Relationship Management
The power of information has led to companies manage efficiently their operations and supply chain management with a wider range of technologies. Moreover by increasing customer demands and global competition firms have a better case to improve in improving on their supply chain management activities. All this is not merely possible in isolation without the support of the other co-operating firms which in turn shifts our focus towards relationship management.

This objective of maintaining the relationship falls on the supply chain manager. A fractured relationship within any vital component link of the supply chain can lead to serious consequences for all other supply chain partners. For ex: a not so reliable supplier of parts of a machine can virtually handicap and cripple a plant thereby leading to increased lead times and problems across the entire supply chain affecting the final customer.

To avoid such situations, firms must balance to managing the relationships with both the upstream and downstream customers/suppliers. In most cases these days to look at cost being important aspect components are sourced from various places wherein the relationship and the terms with suppliers have become more challenging and stressful. In those cases of high-tech firms, many vital components may be sole-sourced from international suppliers who are sole owners of the required technology. In such cases, it becomes more vital to choose handful suppliers paving the path for informal interaction and information sharing.

So to summarise for firms to have a better supply chain management in place organisations must have quality products or services that can be made available at all times, be cost –effective, have real-time information to synthesise and act and have the best supplier relationship. This way the supply chain management gets a lot valuable and important to take note of.