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Supply Chain Management

By:   •  Research Paper  •  2,206 Words  •  December 23, 2009  •  1,790 Views

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Essay title: Supply Chain Management

Table of Contents

Introduction 2

Supply Chain Strategy 2

The process of SCM 4

Benefits of SCM Strategy 5

Benefits of IT supported SCM 6

How to develop a SCM strategy 6

IT and Process Design 7

How to choose the most suitable IT support (SCM software) 11

References 17


Today, transforming raw materials into finished goods in a cost-effective way, while providing dependable delivery of those goods day after day, requires a clear understanding of supply chain. It also requires having control of a realistic plan and the ability to implement it.

Supply chain management is a relatively new field of study. Due to supply chain integration, logistic professionals are now occupying more influential positions on the organization charts of their respective companies. IT supported solutions will be the future trend for supply chain management.

Senior executives at leading companies view supply chains as critical drivers of shareholder value and competitive differentiation. Confirming that perspective, the research shows a strong connection between high-performance supply chains and financial success.

Leading companies incorporate supply chains into their business strategies and devote significant attention to designing integrated operating models. For example, Nokia’s frequent and a very flexible and efficient global supply chain supports rapid product market innovations, which are major contributors to fast revenue and profit growth. In effect, Nokia has altered the playing field with rapid-response manufacturing, quick-ship logistics and a global supply web that links Nokia suppliers and plants; the company also supports vendor-managed inventory and collaborative planning.

Another example is Zara, a Spanish clothing manufacturer and retailer. The company’s supply chain strategy: dictate industry standards for time to market, costs, order-fulfillment and customer satisfaction.

Zara owns nearly all of its 582 retail stores. Its managers send customer feedback to in-house designers via handheld devices, keeping the designers instantly abreast of fast-changing trends, which helps Zara reject less desirable merchandise more quickly. The result is better-managed inventories, tighter links between supply and demand, and reduced obsolescence costs.

Zara also acquires fabrics in only four colors and postpones dyeing and printing until close to manufacture, thus reducing waste and minimizing the need to clear unsold inventories. With these supply chain innovations, Zara can deliver new styles in three to six weeks, compared with up to five months for competitors.

Companies that excel in supply chain management build innovation into their operating models, with particular regard to outsourcing the information technology solution, internal/external integration, and matching supply and demand.

A supply chain is 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 distribution of these finished products to customers. A supply chain essentially has three main parts, the supply, manufacturing and distribution:

1. The supply side concentrates on how, where from and when raw materials are procured and supplied to manufacturing.

2. Manufacturing converts these raw materials to finished products and

3. Distribution ensures that these finished products reach the final customers through a network of distributors, warehouses and retailers.

The chain can be said to start with the suppliers of your suppliers and ends with the customers of your customer.

Supply Chain Strategy

A company’s SCM (Supply Chain Management) strategy forms the framework for operational supply chain management. Supply chain management is successful when the measures taken support the strategic aims of the company. The necessary acceptance in the company can only be generated if this is the case. Vice-versa, the SCM strategy naturally also has a considerable effect on the business strategy (as regards location

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