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Importance of Supply Chain Management in Modern Business
Supply Chain Management (SCM) as defined by Tom McGuffog is "Maximising added value and reducing total cost across the entire trading process through focusing on speed and certainty of respon to the market." Due to globalization and ICT, SCM has become a tool for companies to compete effectively either at a local level or at a glob早操健身操al scale. SCM has become a necessity especially for manufacturing industry when it comes to deliver products at a competitive cost and at a higher quality than their competitors. Here are some of the reason SCM has become important to today's manufacturing industry.
Competitive Edge through Core Competencies
Today's business climate has rapidly changed and has become more competitive as ever in nature. Business now not only need to operate at a lower cost to compete, it must also develop its own core competencies to distinguish itlf from competitors and stand out in the market. In creating the competitive edge, companies need to divert its resources to focus on what they do best and outsource the process and task that is not important to the
overall objective of the company. SCM has allowed company to rethink their entire operation and restructure it so that they can focus on its core competencies and outsource process that are not within the core competencies of the company. Due to the current competitive market, it is the only way for a company to survive. The strategy on applying SCM will not only impact their market positioning but also strategic decision on choosing the right partners, resources and manpower. By focusing on core competencies also will allow the company to create niches and specialization of core areas. As stated in the Blue Ocean Strategy outlined by Chan Kim, in order to create a niche for competitive advantage, companies must look at the big picture of the whole process, and figuring out which process can be reduce, eliminate, rai and create.
供应链物流管理
As an example stated by Chan Kim, the Japane automotive industries capitali on its resources to build small and efficient cars. The Japane automotive industries gain competitive edge by utilising their supply chain to maximi their core competencies and position itlf in a niche market. The strategy works and now Toyota Motor Corporation, a Japane company, is considered to be the number one auto car maker in the world beat
ing Ford and General Motors of the United States.
关羽走麦城Value Advantage
SCM has allowed business nowadays to not just have productivity advantage alone but also on value advantage. As Martin Christopher in his book, Logistics and Supply Chain Management: Strategies for Reducing Cost and Improving Service' states, 'Productivity advantage gives a lower cost profile and the value advantage gives the product or offering a differential 'plus' over competitive offerings.' Through maximizing added value and also reduce the cost in the same time, more innovation can be added to the product and process. Mass manufacturing offers productivity advantage but through effective supply chain management, mass customization can be achieved. With mass customization, customers are given the value advantage through flexible manufacturing and customized adaptation. Product life cycles also can be improved through effective u of SCM. Value advantage also changes the norm of traditional offerings that is 'one-size-fits-all.' Through SCM, the more accepted offerings by the industry to the consumers
would be a variety of products catered to different market gments and customers preferences.
泡菜年糕As an example, the Toyota Production System practiced in Toyota, evaluates its supply chain and determines what is value added activities and what is not value added activities. Non added value activities are considered to be 'Muda' or waste and therefore must be eliminated. Such non added value activities are overproduction, waiting, unnecessary transport, over processing, excess inventory, unnecessary movement, defects and unud employee creativity. The steps taken to eliminate waste are through Kaizen, Kanban, Just-in-time and also push-pull production to meet actual customer's demands. The Toyota Production System revolutioni the Supply Chain Management towards becoming a leaner supply chain system that is more agile and flexible towards meeting the end urs demands.
Razamith Sovereign is undergoing his Masters in Engineering Business Management in University of Warwick, United Kingdom. A General Manager in a technology company, he
provide uful advice through his articles that have been found very uful in managing his daily operation of the company. To find more information on Supply Chain Management plea visit
