SCM – A STRATEGIC ADVANTAGE

Dr.B.Sudhakar

Director

Sankara Institute of Management Science

Business breakthroughs don’t just happen by accident.  They come from the keen insights derived from learning the latest concepts, sharing in the experiences and best practices of others, and understanding changes in the evolving business environment. Supply chain management is the latest buzzword in the management arena. A network of facilitators and distributors who perform the functions of procurement of materials, transformation of materials into semi-finished or finished products, and the distribution of the finished products to customers is known as a supply network. Supply chain is common for both manufacturing and service industry. The complexity of the supply networks varies from industry to industry and the magnitude of the industry.

A very simple ideal supply chain for a single product is one where the raw material is procured from vendors, transformed into finished goods in a single step, and then transported to distribution centres and ultimately to the customers. But in reality supply chains have multiple end products with shared components, facilities and capacities. The flow of materials is not always along the same network but various modes of transportation may be considered and the bill of materials for the end items may be both deep and large. Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations along the supply chain operate independently. Organizations set their own objectives and these are often conflicting. An organisation’s marketing objective of high customer service and maximum sales conflict with the manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower the costs with little consideration for the impact on inventory levels and distribution capabilities. Similarly purchase decisions are done with available information. The result of these factors is that there is not a single, integrated plan for the organization whereas it resulted in as many plans as the businesses. Thus there is a need for a system through which the different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved, where the entire material flow is owned by a single firm and the various channel members operate independently. Therefore coordination between the various players in the supply chain is imperative for its success and effective management. A team is more competitive when each player knows how to be positioned.

Thus organizations are focused on building strong supply chain channel members and built their relationships to make a coordinated effort to win the competition. Today competition is between the supply chains of the organizations rather than the individual company. Hence Supply Chain Management has become a strategic advantage for organizations in the competitive world.