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Successful SCM
requires a change from managing individual functions to
integrating activities into key supply chain processes.
An
example scenario: the purchasing department places orders as
requirements become appropriate. Marketing, responding to
customer demand, communicates with several distributors and
retailers, and attempts to satisfy this demand.
Shared
information between supply chain partners can only be fully
leveraged through process integration. |
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Supply chain business
process integration involves collaborative work between buyers and suppliers, joint product development,
common systems and shared information.
According to Lambert and
Cooper (2000) operating an integrated supply chain requires
continuous information flows, which in turn assist
to achieve the best product flows.
However, in many companies, management has reached the conclusion
that optimizing the product flows cannot be accomplished without
implementing a process approach to the business. The key supply
chain processes stated by Lambert (2004) are :
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Customer
relationship management
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Customer
service management
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Demand
management
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Order
fulfillment
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Manufacturing flow management
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Supplier
relationship management
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product Development
and commercialization
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Returns
management
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One could suggest other key critical
supply business processes combining these processes stated
by Lambert such as:
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Customer service Management
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Procurement
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Product development and Commercialization
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Manufacturing flow management/support
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Physical Distribution
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Outsourcing/ Partnerships
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Performance Measurement
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a) Customer service management process
:
Customer service provides the source of customer information. It
also provides the customer with real-time information on promising
dates and product availability through interfaces with the company's
production and distribution operations.
b) Procurement process :
Strategic plans are developed with suppliers to
support the manufacturing flow management process and development of
new products. In firms where operations extend globally, sourcing
should be managed on a global basis. The desired outcome is a
win-win relationship, where both parties benefit, and reduction
times in the design cycle and product development is achieved. Also, the purchasing function
develops rapid communication systems, such as electronic
data interchange (EDI) and Internet linkages to transfer
possible requirements more rapidly. Activities related
to obtaining products and materials from outside
suppliers. This requires performing resource planning,
supply sourcing, negotiation, order placement, inbound
transportation, storage and handling and quality
assurance. Also, includes the responsibility to
coordinate with suppliers in scheduling, supply
continuity, hedging, and research to new sources or
programmers. |
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c) Product development and commercialization :
Here, customers and suppliers must be united into the product
development process, thus to reduce time to market. As product life
cycles shorten, the appropriate products must be developed and
successfully launched in ever shorter time-schedules to remain
competitive. According to Lambert and Cooper (2000), managers of the
product development and commercialization process must :
1. coordinate with customer relationship management to identify
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customer-articulated needs;
2. select materials and suppliers in conjunction with procurement,
and
3. develop production technology in
manufacturing flow to manufacture and integrate
into the best supply chain flow for the
product / market combination.
d) Manufacturing flow management process :
The manufacturing process is produced and supplies products to the
distribution channels based on past forecasts. Manufacturing
processes must be flexible to respond to market changes, and must
accommodate mass customization. Orders are processes operating on a
just-in-time (JIT) basis in minimum lot sizes. Also, changes in the
manufacturing flow process lead to shorter cycle times, meaning
improved responsiveness and efficiency of demand to customers.
Activities related to planning, scheduling and supporting
manufacturing operations, such as work-in-process storage, handling,
transportation, and time phasing of components, inventory at
manufacturing sites and maximum flexibility in the coordination of
geographic and final assemblies postponement of physical
distribution operations.
e) Physical Distribution :
This concerns movement of a finished product/service to customers.
In physical distribution, the customer is the final destination of a
marketing channel, and the availability of the product/service is a
vital part of each channel participant's marketing effort. It is
also through the physical distribution process that the time and
space of customer service become an integral part of marketing, thus
it links a marketing channel with its customers (e.g. links
manufacturers, wholesalers, retailers).
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f) Outsourcing/Partnerships :
This is not just outsourcing the procurement of materials and
components, but also outsourcing of services that traditionally have
been provided in-house.
The logic of this trend is that the company
will increasingly focus on those activities in the value chain where
it has a distinctive advantage and everything else it will
outsource. This movement has been particularly evident in logistics
where the provision of transport, warehousing and inventory control
is increasingly subcontracted to specialists or logistics partners.
Also, to manage and control this network of partners and suppliers
requires a blend of both central and local involvement. Hence,
strategic decisions need to be taken centrally with the monitoring
and control of supplier performance and day-to-day liaison with
logistics partners being best managed at a local level.
g) Performance Measurement :
Experts found a strong relationship from the largest arcs of
supplier and customer integration to market share and profitability.
By taking advantage of supplier capabilities and emphasizing a
long-term supply chain perspective in customer relationships can be
both correlated with firm performance. As logistics competency
becomes a more critical factor in creating and maintaining
competitive advantage, logistics measurement becomes increasingly
important because the difference between profitable and unprofitable
operations becomes more narrow. A.T. Kearney Consultants (1985)
noted that firms engaging in comprehensive performance measurement
realized improvements in overall productivity. According to experts
internal measures are generally collected and analyzed by the firm
including :
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1. Cost
2. Customer Service
3. Productivity measures
4. Asset measurement, and
5. Quality |
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External performance measurement is examined through customer
perception measures and "best practice" benchmarking, and includes
:
1) Customer perception measurement, and
2) Best practice
benchmarking. |
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