Key issues in scm

The supply chain management issues concern activities of the firm at various levels of decision making, ranging from operational level to strategic level via tactical level. The strategic level : The decision making at this level is made with long term objectives and with long lasting effects. These include decisions regarding location of various facilities, including the manufacturing plant, distribution warehouses and the structure of the distribution channel. The tactical level: Decision making at this level is concerned with purchasing and production functions, inventory policies and transportation strategies. These decisions will be usually updated on an annual basis. The operational level: Decision making at operational level will concern day to day management of activities such as scheduling, routing and vehicle loading etc. Your text provided details of some of the key issues identified by the authors. Your text is laid out in that line. The key issues in contemporary supply chain management are:

Configuration of distribution network : This issue deals with the design of a distribution network to serve a specific market. This will consist of a set of warehouses and retail outlets, together with the manufacturing plant and supply sources. The design will be based on consideration of location and capacity of each of these elements. The total network cost will include the costs of inventory at various levels and costs of transportation between various facilities. This will also determine the level of service available to the customers. Inventory control: This is concerned with the levels of inventory to be held at various points in the supply chain. As inventory represents costs, the sensible approach is to hold as low an inventory as possible but businesses are forced to hold inventories as a buffer to counter the affects of an uncertain demand. How to minimise the uncertainty and therefore the necessity of holding unnecessary inventory which increases the cost at the end?? This is one of the key issues in supply chain management. Distribution strategy: The distribution strategy is concerned with the distribution of the firm's products. There are several strategies available such as cross-docking, the classical distribution strategy or direct shipping. Which one is the best suitable for the firm to achieve its supply chain and corporate goals?? Supply chain integration and strategic partnering: This is concerned with the complex issue of strategic inter organisational partnership for achieving competitive advantage. This is about sharing of information and efficient use of the information for coordinating business processes to deliver a superior value to the customers. How to achieve this and what are the challenges? This is one of the emerging issues in supply chain management. Product design: This is concerned with the design of the product and its impact on total cost of the product. How does the design of a product affect the various cost elements within the supply chain? It is possible that the design determines the strategies to be

followed regarding inventory or transportation. The design may also determine the length of the product life cycle and the extent of uncertainty associated with demand for this product. How to leverage design to achieve supply chain management objectives. Information technology and decision support systems: The enabling role of information and communication technologies has been identified. The concerns of contemporary supply chain management are the efficient use of modern technology including the Internet and computerised decision support systems. The technology allows acquisition of vast quantity of data, information and their subsequent processing in accordance with selected decision criteria. Will these technologies emerge as key determinants of success in the management of supply chains? Customer value: The key issue is the definition of customer value in an age of increasing consumer power. How will supply chains will be designed to provide value to the customers and how will firms define value?

Definition of Supply Chain Management. A number of definitions have been proposed for supply chain management. Perhaps the best is simply, "an integrative approach to managing supply and distribution networks." The key word is "integrative," making the chain work better and at lower cost than would be possible by managing each segment of the chain independently. Another way of defining supply chain management is to state that it is the management of physical materials, services, information, money, and time across and between organizations in a business relationship in a manner that achieves the objectives of all the organizations at the least total cost. Objectives of Supply Chain Management. Some common goals of supply chain management include: Reduce waste and nonvalue-added activities (i.e. cost reduction) including excess inventory, increase customer service/responsiveness, improve supply chain communication (speed/timeliness, accuracy of information, information sharing), reduce cycle time (e.g. new product development, supply leadtime), improve coordination of efforts (continuous improvement, understanding of goals) (Ellram 1994).

Examples of Competitive Advantage for a Supply Chain. Competitive advantage accrues to supply chains in a variety of ways. Some of these include:

Ability to maximize leverage with other supply chain members Ability to identify and manage cost drivers Optimization of supply chain capacities/release of unused capacity/no added capital balanced supply/demand throughout the chain Improvement in total supply chain response time Leverage technology adoption of current technology by other supply chain members Improved sourcing processes that enable optimal commodity strategies Improved cash flow throughout the chain

Benchmarks and performance measures that represent the integrated operation of chain members rather than individual company results Improved competitiveness of the supply base resulting from upgrades necessary to participate in the supply chain Ability to tier strategies and implement enhanced business strategies Lower total cost of ownership for purchased materials and services Improved economic value added (EVA) throughout the chain Reduced cycle times across the chain Reduced transaction costs for supply requirements Reduced supply process costs Ability to charge lower prices for products Ability to provide higher quality products Improved ability to consistently meet customer requirements for quality Improved ability to meet customer delivery requirements Improved Ability to provide improved customer service before, during, and after the sale transaction Ability to more effectively communicate with customers to determine their requirements

Concept of Core Competency. Supply chains, not surprisingly, often develop competitive advantages around their core competencies. Core competencies can be defined as those activities that a firm does best and most cost-effectively, and which are central or "core" to success in its business. Thus there are some firms that only market, outsourcing all manufacturing, production, and sourcing activities, because their core competency is marketing. The core competency concept must be kept in mind when designing supply chains because, in an ideal supply chain, each member will perform those things that are their core competencies and assign to other chain members those things that are not core competencies.

Supplier relationship management is a comprehensive approach to managing an enterprise's interactions with the organizations that supply the goods and services it uses. The goal of supplier relationship management (SRM) is to streamline and make more effective the processes between an enterprise and its suppliers just as customer relationship management (CRM) is intended to streamline and make more effective the processes between an enterpriseand its customers. SRM includes both business practices and software and is part of the information flow component of supply chain management (SCM). SRM practices create a common frame of reference to enable effective communication between an enterprise and suppliers who may use quite different business practices and terminology. As a result, SRM increases the efficiency of processes associated with acquiring goods and services, managing inventory, and processing materials.

Push pull
A push strategy means that you put all your efforts in pushing the product into the market. Sales people would use the term hard selling. Pushing means that you see how to stock your distribution channels up to the roof and then expect the pressure of inventory will make them sell your product, promote it and push it rather than competitor products. The benefit of a push strategy is that you dont need large marketing budgets; the downside is that it can ruin your relationships. A pull strategy is when you invest so much into advertisement and marketing, that consumers demand your product and the retailer has no choice but stocking it, it is pulled out of his hands. Downside: VERY expensive, benefit: Your product is so popular than you are in abetter position to negotiate. You can combine the two depending how you distrubute the weight of your campaign.