Supply Chain Management (SCM)

Overview of SCM:

To understand SCM it is crucial to understand what a supply chain is. Ganeshan’s 1995 description of supply chain was

A network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm (Ganeshan, 1995, para. 1)

Nonetheless, with the advancement of Information Technology (IT), SCM is being integrated using software based systems that aid in providing organizations with competitive advantage.

Elements of a SCM system:

It is important to know that elements of the supply chain aid in improvements in customer service and cost reduction cut through a total organization, Gould (1998). Figure 1 illustrates the crucial elements of a SCM system as described by (Gould, 1998, para. 4):

Figure 1 - Elements of SCM system

Advantages of SCM:

(“Advantages of SCM,” n.d.) provided the following advantages of implementing a SCM system:

1.      Receive regular forecasts for execution of production and sales plans

2.      Analyze different supply line models and subsequently optimize them

3.      Automate warehouse inventory management

4.      Connect elements of market analysis and friendly interface relations with suppliers

Challenges of SCM:

(“Supply chain management,” 2001) provided three main challenges apparent when integrating a SCM system; dynamic markets, globalization, and competition.

Dynamic Markets:

Change is inevitable in today’s world. Staying in sync with the ever-shifting dynamics within the industry markets and technology arenas is a difficult task.

Globalization:

With the advent of the web, IT is acting as a transformation driver towards the globalization of businesses. To keep growing, corporations have to be willing to explore beyond their backyard and offer the customer -no matter where they are- solutions and support for their unique environments.

Competition:

To stay ahead of other corporations is not an easy task. By implementing a SCM system, corporations should be thinking how their system could provide a competitive advantage over other SCM systems available at their competitor’s fingertips.