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Birth of Supply Chain

Dr Vijay Sangam, 14:08, 02 Sep 2020

Evolutionary change in the supply chain is inevitable and corporate Darwinism is a fact; only the fittest of organizations will survive. The reality is that the rate of growth has increased exponentially in recent years. As a result, time is, in fact, currency in today’s supply chain domain. Organizations that ignore change are doomed to perish rapidly. Those that react to change will find themselves managing crises, fighting fires, and withering slowly. Companies that plan for change will smooth operational turbulence and mitigate business risk. And those with the foresight to drive change will achieve strategic advantage and tactical superiority.

There is no such thing as an optimized supply chain. The entire exercise is akin to aiming at a moving target. As a result, we must focus our efforts on finding a balance between value, quality, service, cost, risk, and myriad other factors. The object is not necessarily to be “optimized,” a far too lofty and costly goal. You simply need to be closer to being optimized than your competitors. The gap between your current supply chain performance and that which is possible is the weapon that a savvy competitor will turn against you.

The success of a whole business organization depends on the maturity and flexibility of a business process. All organizations are faced with a lot of challenges. Regarding that, they are continuously improving their competitiveness and how they could win the battle on a fluctuating market. Some of those challenges are globalization of the economy, continually lowering the sales price of products and services, as well as the request for higher product quality. In the observed organization Supply Chain Management (SCM) is considered as a critical process, where maturity and development affect profitability.

Research shows that the origins of the term ‘Supply Chain Management’ or ‘SCM’ became known when Keith Oliver, a consultant at Booz Allen Hamilton, used it in an interview for the Financial Times in 1982, and the term was slow to catch on. It only gained momentum in the mid 1990’s when a flurry of articles and books came out on the subject.  In the late 1990’s it rose to prominence as a management buzzword, and operations managers began to use it in their titles with increasing regularity.

Today, the supply chain management profession continues to evolve to fit the often extended and global needs of supply chains.  Due to the supply chain now covering a broad range of disciplines, the definition of what a supply chain is can become blurred. It is not uncommon for supply chain management to be confused with the term ‘logistics management’.

Below are some of the commonly accepted definitions of supply chain management:

  • The management of upstream and downstream value-added flows of materials, final goods and related information among a company and its’ suppliers, partners, resellers and final consumers.
  • The management of material and information flow in a supply chain to provide the highest degree of customer satisfaction at the lowest possible cost.
  • The integration of key business processes across the supply chain for the purpose of creating value for customers and stakeholders.

According to the Council of Supply Chain Management Professionals (CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes coordination and collaboration with channel partners, which may be suppliers, intermediaries, third-party service providers, or customers. Supply chain management integrates supply and demand management within and across companies.

Supply chain management is an integrating function with the primary responsibility of integrating major business functions and processes within and across companies into a cohesive and high performing business model.

It includes all of the logistics management activities in addition to manufacturing operations. It drives the coordination of processes and activities across marketing, sales, product design, finance, and information technology.

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