Supply Chain Management Strategy
Introduction
The concept of SCM (Supply Chain Management) has been in practice for centuries,
holding a significant position in market business development. Companies involved with supply
chain management usually emerge as the principal market developer and players. Supply chain
management has integrated major business activities into a series of process that include the
obtaining of raw materials, transportation, production and allocation and distribution (Lavastre,
Gunasekaran and Spalanzani, 2014, p. 3382). How well and effective supply chain management
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has played in the development of companies can be traced to the development of the global
market economy. It is through the effective management of supply chain that an integrated
system of business operation has been attained globally. Companies can obtain products,
distribute and supply all over the world. Hence, it can be observed that supply chain management
is the backbone of business operation in helping companies achieves organizational objectives.
In the past several years the world has experienced an increasing economic volatility, as
observed in the economic recession, customer demand, fuel and commodity pricing and the rapid
movement of raw material (Sandberg & Abrahamsson, 2010, 57). This significantly continue to
affect business objectives and daily operation. Companies must respond to conditions of reduced
labor pool, stagflation, deflation, energy consumption and sustainability in attaining their
organizational goals (Hamister, 2012, p.427). However, effective strategic supply chain
management together with well-defined tools and plans will help alleviate the pressure that
business organization is experiencing today and bring a change in market development globally.
Importance of Effective Supply Chain Management
Boost Customer Service
One of the primary objectives and core contribution of any business organization is to
focus on how their clients are well attended and offering comfortable service to their clients
(Milliken, 2012, 4). It is a business goal to attract most customers to the company as this triggers
sales and general incomes for a company. This is only attained through a consistency working
environment and service oriented toward clients. Supply chain management is the right tool in
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ensuring that companies achieve their objective of securing a stable and safe flow of customers
throughout the year.
Customers are usually motivated by the effort a company put in providing service, care
and attending to their needs and demands. Clearly, Supply chain management is an effective
component of business performance. They ensure right product assortment, quality and quantity
are delivered to the customer when they are needed and where. The supply logistic plays a major
role in product allocation at different point of customers demand. SCM helps a company identify
markets that are in high demand for their products and then respond promptly (Seuring & Gold,
2012, 555). Additionally, the system ensures that the clients receive quality service and
streamline every business operation towards the satisfactory of the customers. A happy client is a
good indicator of a prosperous business organization. Companies invest in their customers
through boosting the efficiency of their supply chain management to satisfy the clients demand
adequately and needs.
Inventory control and Visibility
The Enterprise Resource Planning is one of the pervasive tools for Supply Chain
Management. ERP is responsible for controlling the flow of raw materials, from one point of
production to the next throughout production. Its primary target is bringing a balance in the
inventory control, inventory visibility and work order management, purchasing among many
others. The Supply chain management through the ERP tool systematically coordinates the
manufacturing operation, record keeping in the inventories efficiency (Kanungo, 2012, p. 2-3). It
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helps an organization to keep their complex facilities running smoothly, with any organization
that has a well-defined inventory system. SCM is responsible for maintaining an efficient
system, which in return bring low inventory cost and offers consistency in timely availability of
products and services. This attracts more customer, investment and increases business operation
and profits. Thus, SCM is considered an important ally of inventory management in improving
productivity in attaining organization objectives.
Inventories determine the value of a company and are regarded as a valuable asset to any
organization. Every business must establish a standard inventory turnaround that is equally
optimum for the management and operation of the firm. The inventory turnaround dictates the
company prosperity, and this is attained through having a well established strategic supply chain
management system. In this case, Enterprise resource planning is responsible for the
management, storage, and interpretation of the inventory and product in a company (Groznik, &
Trkman, 2012, p.1101). It plays a significant role in the integrated view of business processes
and activity. SCM through this tool is able to identify and track business activities, resources and
raw material allocation, and the general production capacity of an organization. Through
adopting a well-structured Supply Chain Management system, a company is capable of
facilitating information flow and management connection both internal and external.
Capital Efficiency and Reduced Time-To-Market
The primary objective of business is to subsidize production cost and maximizes the
output. This is significantly attained through the help of Supply Chain Management. Most
companies that invest in supply chain management concentrate on demand forecasting, correct
order management, and market allocation. This assists the company in avoiding waste and risk
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associated with distribution and supply of products as well as production. Supply chain
management assists in identifying the right place to invest and the process through which the
company can require resources and distribute their product without experiencing massive losses
(Richey, et al., 2011, p. 365).
Demand prediction in SCM is effective in assisting a company maintains upfront in a
competitive environment. Capital and cost of operation are equally controlled when the company
forecast demand and provide a correct order management. Supply Chain Management
responsively address customers request based on time management, product mix, flexibility, and
quality (Arlbjørn, Freytag & de Haas, 2011, 277). This makes a company stays independent in a
competitive market and reduce the cost of operation and management. The power of capital
efficient and time management as expressed in SCM is substantial in the development of a
company towards goal orientation. Every company with a well-structured supply chain system
maintains a low cost of operation through saving time and avoiding product waste.
Improve Marketing and Sales Competitiveness
The main aim of business is to make a profit through marketing and sales. Every business
operation must strategize on their marketing and sales to counter the competitive pressure from
other business companies. In this light, the implication of Supply Chain Management has been
effective in designing companies marketing and sales. Moreover, an integrated supply chain
helps companies to position themselves as major products suppliers improving their marketing
position within a competitive environment (Kirovska, Josifovska and Kiselicki, 2016, p. 7).
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Since marketing has become a highly competitive entity; companies that adopt the most
significant SCM system especially with the emergence of new players, tend to flourish in their
sales and production. A well-developed supply logistic dictates the position of a company in
terms of its marketing and sales. SCM helps a company to enhance customer satisfaction through
offering quality, reliable, timely service and products. This intern improves the competitive
pricing and company performance resulting in a generous profit for the enterprise.
Nevertheless, supply chain management is responsible for integrating different marketing
and sales activities such as production, distribution, pricing and advertisement to boost business
marketing position. SCM developed marketing evaluation to identify significant targeting
regions and customers demand (Luthra, Garg & Haleem, 2013, 930). It also helps in developing
a marketing comparison strategy among various factors that influence production, distribution,
and consumption in marketing and sales. This helps in sales prediction to avoid risk and loss that
a company can possibly incur during operation.
How organization compete with supply chain
Eliminating Redundant Steps in business operations
Companies have adopted strategies in enhancing the efficiency of supply chain
management throughout their business operation. One of the processes through which companies
manage to establish competition in supply chain management is through eliminating redundant
and unproductive steps in the business process (Choi, 2012, n.p). This includes saving salary cost
to help workers avoid unnecessary procedures. Additionally, prevent overproduction of
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commodities and distribution to market in supply management of products helps in eliminating
redundant business process. Supply chain management is essential in controlling cost and
pricing. Hence, companies must adjust their quality, marketing strategy to ensure standard
income profits.
Supply Chain Management assist in the reduction of labor cost and lost sales. Most companies
have advanced in their method of production and inventory to ensure less loss is accounted
during marketing and stock inventory. Strategies like FIFO and VIVO are some of the inventory
tools that are being adopted to enable competitiveness in supply chain management is maintained
(Simpson, et al., 2015, 88).
Technology Advancement
Another process that companies have riveted towards competing with the supply chain is
through the advancement in technology. Modern innovation in the business organization has
created a tremendous impact on how business operates their supply chain management. It is
through technology that global marketing and supply chain management has been attained.
Companies are able to conduct production distribution, supply, production, and marketing at a
global platform. Further, it has increases the target consumers for companies broadening the
scale of the supply chain. International organizations operate through the global market to
conduct their supply management system (Sharma, 2013, 287).
E-commerce, electronic communication, and internet marketing are all attributes of
modernized technology in the supply chain management sector. Companies have advanced the
way they supply, distribute and product their product to the consumer without incurring extra
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costs. Relatively, the incorporation of technology in SCM has widened the scope of business
operation for companies further increasing their organization objectives. Technology has
simplified how SCM is operated and managed, increasing the use among companies. As a result,
the level of competition among companies has increased. Communication tools and planning
tool are the chief informational technology advancement that has brought upscale competition in
the supply chain management sector.
Value Added Process
Product flexibility, quality, and the general production system also plays a critical part in
influencing the process of the supply chain. This influences the competition in cost, distribution,
production and supply of commodities to consumers (Kuei, Christian and Chinho, 2010, p.
4458). Additionally, value added process dictate how customer are attracted to products
produced by a company. The product flexibility can shift the demand either positively or
negatively; same can be accounted for quality and the production system. The value added
process is an issue affecting the supply chain management of business (Seth, Goyal & Kiran,
2015, 248). This causes the existence of competition between an organization operation and its
supply chain.
Sustainability and Social Responsibility
The external environment is essential in analyzing the factors that ripple competition
among business organization and SCM system. The supply chain network is frequently
quantified by the social environment or a company. This is determined by the economic, social
and environmental issue surrounding the environment. The organization must establish a strong
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relation with those involved in the logistic networks who are the clients. Aspects of social ethics,
culture, and tradition plays a significant role in the supply chain (Ashby, Leat, & Hudson-Smith,
2012, 497). These factors define the business operation and its supply chain management. The
external surrounding is responsible for defining the consumer trends and demand in the market;
it also influences the distribution, supply and production of the product to the target market. The
company must, therefore, comply with their social surrounding and sustainability to effectively
conduct supply chain management (Beske & Seuring, 2014, 320).
Social Policies and Regulation
The government also contributes on how organizations compete with their supply chain.
Supply chain management laws and regulation are imposed to help control the flow of good and
service in any logistic network. This affects the process through which companies operate their
supplies, distribution and production of goods. The tax efficiency can influence the globalization
of supply chain management among different government operation system. Same applies to
international and local policies and regulation in business operations.
Conclusion
Supply chain management has a strategic place in promoting company success and companies
must therefore work towards streamlining their supply chains to deliver optimal value. This is
particularly important, based on the current trends in the economy that have rendered companies
susceptible to unforeseen financial impacts. Effective supply chain management plays the
imperative role of boosting customer experience, inventory control, visibility, capital efficiency,
marketing and sales competitiveness. In order to sustain this, companies must compete with their
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supply chain and thus ensure that they provide the best value. This can be done through
eliminating redundant business operations, technology advancement, process value addition,
promoting sustainability and participating in corporate social responsibility. Adhering to social
policy and regulations can enhance a company’s ability to compete with the supply chain.
References
Arlbjørn, J.S., Freytag, P.V. & de Haas, H. 2011, “Service supply chain management”,
International Journal of Physical Distribution & Logistics Management, vol. 41, no. 3,
pp. 277-295.
Ashby, A., Leat, M., & Hudson-Smith, M. 2012. Making connections: A review of supply chain
management and sustainability literature. Supply Chain Management, 17(5), 497-516.
