Strategic Supply Management Definition
Supply chain management is important because it can help achieve several business objectives. For instance, controlling manufacturing processes can improve product quality, reducing the risk of recalls and lawsuits while helping to build a strong consumer brand. At the same time, controls over shipping procedures can improve customer service by avoiding costly shortages or periods of inventory oversupply. Overall, supply chain management provides several opportunities for companies to improve their profit margins and is especially important for companies with large and international operations.
Strategic Supply Management Definition
Ethics has become an increasingly important aspect of supply chain management, so much so that a set of principles called supply chain ethics was born. Consumers and investors are invested in how companies produce their products, treat their workforce, and protect the environment. As a result, companies respond by instituting measures to reduce waste, improve working conditions, and lessen the impact on the environment.
At the strategic level, the business's leadership team takes high-level supply chain decisions that affect the entire organization. Such decisions around the supply chain typically mirror the business's overall corporate strategy.
A prerequisite for strategic supply chain management is to define corporate strategy. This strategy then flows into functional areas. Strategic supply chain management is the means to differentiate the business by creating the highest possible value for customers and investors.
In addition to aligning supply chain and business strategy, it is also vital to anticipate coming changes. Periodically review operational data to evaluate alignment with future goals. The supply chain processes and systems should be designed to respond to changes in the business environment. The supply chain should allow the induction of technological developments to remain competitive. Align your strategic and operational staff with the systems and processes. The person in the warehouse should be as aware of business goals as the leadership team.
The goal of strategic supplier management is to create a partnership with suppliers that provides the organization with a competitive advantage. This partnership should be based on mutual trust and respect and should result in both parties working together to improve quality, reduce costs, and increase customer satisfaction.
Strategic supplier management is a vital part of any successful business. It provides companies with a way to ensure they are getting the most out of their partnerships, by building trust and long-term relationships with their suppliers that can increase the value of products and services offered. Through strategic supplier management, businesses can also identify areas where they could benefit from additional resources or new suppliers while maintaining an overall competitive edge in the market. With careful planning and execution, organizations should be able to reap the rewards from implementing effective strategic supplier management practices.
Supply chain management (SCM) involves the movement of products and services from suppliers to distributors. SCM involves the flow of information and products between and among supply chain stages to maximize profitability.
Perhaps one of the toughest tasks of all in the entire supply chain and procurement process is mitigating the human factor and evaluating the relationships you have with your suppliers and strategic partners. Supplier management is not talked about nearly enough as other procurement processes or management, yet it is still a critical aspect of the entire chain.
One aspect of the procurement process that many companies loath to take to a digital format is supply chain management because they very often have a person on staff who is a whiz at negotiations and maintaining excellent supplier relationships.
Beyond strategic supplier management, you also have your preferred suppliers. These suppliers also have an ongoing relationship with you, and you prefer them over others, but they may not be your most strategic.
In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management (ensuring the production of high-quality products at high speed with good flexibility and low production cost), logistics and marketing channels so that the raw materials can be converted into a finished product and delivered to the end customer.[2][3] A more narrow definition of the supply chain management is the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronising supply with demand and measuring performance globally".[4][5]This can include the movement and storage of raw materials, work-in-process inventory, finished goods, and end to end order fulfilment from the point of origin to the point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.[6]
Although it has the same goals as supply chain engineering, supply chain management is focused on a more traditional management and business based approach, whereas supply chain engineering is focused on a mathematical model based one.[13]
Supply chain management, techniques with the aim of coordinating all parts of SC, from supplying raw materials to delivering and/or resumption of products, tries to minimize total costs with respect to existing conflicts among the chain partners. The technology is improving the way businesses operate.[14] An example of these conflicts is the interrelation between the sale department desiring to have higher inventory levels to fulfill demands and the warehouse for which lower inventories are desired to reduce holding costs.[15]
In 1982, Keith Oliver, a consultant at Booz Allen Hamilton, introduced the term "supply chain management" to the public domain in an interview for the Financial Times.[16] In 1983 WirtschaftsWoche in Germany published for the first time the results of an implemented and so called "Supply Chain Management project", led by Wolfgang Partsch.[17]
In the mid-1990s, the term "supply chain management" gained currency when a flurry of articles and books came out on the subject. Supply chains were originally defined as encompassing all activities associated with the flow and transformation of goods from raw materials through to the end user, as well as the associated information flows. Supply-chain management was then further defined as the integration of supply chain activities through improved supply-chain relationships to achieve a competitive advantage.[16]
A supply chain, as opposed to supply-chain management, is a set of organizations directly linked by one or more upstream and downstream flows of products, services, finances, or information from a source to a customer. Supply-chain management is the management of such a chain.[22]
Supply-chain-management software includes tools or modules used to execute supply chain transactions, manage supplier relationships, and control associated business processes.[28] The overall goal of the software is to improve supply chain performance by monitoring a company's supply chain network from end-to-end (suppliers, transporters, returns, warehouses, retailers, manufacturers, and customers).[28]
Supply-chain management is a cross-functional approach that includes managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end consumer. As organizations strive to focus on core competencies and become more flexible, they reduce ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other firms that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing managerial control of daily logistics operations. Less control and more supply-chain partners lead to the creation of the concept of supply-chain management.[30] The purpose of supply-chain management is to improve trust and collaboration among supply-chain partners, thus improving inventory visibility and the velocity of inventory movement.[citation needed][31][32] In this section, we have to communicate with all the vendors and suppliers, make some comparisons, and after that, we have to place the order.
Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy.[33] In Peter Drucker's (1998) new management paradigms, this concept of business relationships extends beyond traditional enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies.
In recent decades, globalization, outsourcing, and information technology have enabled many organizations, such as Dell and Hewlett Packard, to successfully operate collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities.[34] This inter-organizational supply network can be acknowledged as a new form of organization. However, with the complicated interactions among the players, the network structure fits neither "market" nor "hierarchy" categories.[35] It is not clear what kind of performance impacts different supply-network structures could have on firms, and little is known about the coordination conditions and trade-offs that may exist among the players. From a systems perspective, a complex network structure can be decomposed into individual component firms.[36] Traditionally, companies in a supply network concentrate on the inputs and outputs of the processes, with little concern for the internal management working of other individual players. Therefore, the choice of an internal management control structure is known to impact local firm performance.[37] 041b061a72