The Supply Chain Management (SCM) is affected by the type of organization that uses it for managing its business operations and how the organization is structured to manage its business operations.

Supply Chain Management in Organization

Supply chain management is a process that helps an organization in managing the downstream and upstream flow of finances, information, services and goods, which includes the storage and movement of finished goods, work-in-process inventory, and raw materials from production point to consumption point. Interlinked or interconnected channels and networks of businesses are involved in the stipulation of goods and services, which are essential for end consumers in a supply chain process. SCM is also known as a process that looks after the planning, design, execution, monitoring and control of supply chain activities, which are aligned with organizational objectives: to build a competitive organizational infrastructure; to create net value; to synchronize supply and demand; to leverage global logistics; and, to measure organizational performance according to the global standards.

Supply chain management is heavily used in the areas of logistics, operations management, information technology, and procurement; it encourages strong integration among these organizational areas to enhance organizational performance. The organization can develop an effective strategic coordination among its business functions through supply chain management, which is important for accomplishing broader business goals. Capacit y management and planning are some of the critical concepts provided by SCM, which are helping organizations in planning of their production and storage capacity.

The study of SCM and the shift from production and operations management started in the late 1980s. Nevertheless, it was not until the mid-1990s when the research over supply chain management started seriously. It was the time, when organizations started looking more intimately at their supply chain as a method to reduce expenses. The procurement process had a more transactional approach in the 1980s, as at that time the buyer for an organization was mainly looking for gaining price leverage over a supplier. That approach was more about getting the lowest possible price for the product or service by only concentrating on the transactional benefit that each party would gain. In such type of transaction there was no value added activities that a buyer was engaged in with the supplier, which never encouraged strong relationship among the suppliers and buyers. The importance of building relationships between the supplier and buyer started to emerge in the late 1990s. This change occurred mainly due to the reason that organizations were no longer competing domestically or regionally, they were competing globally.

The swift increase in globalization and information technology required organizations to develop and control their relationships with their supply chains in order to endure in the current dynamic business environment. This was the time when the change from production and operations management to SCM was observed and also organizations began to become actively involved with both their upstream and downstream companies effectively. Out of the evolution of supply chain management the focus on strategic alliances and strategic sourcing started to gain momentum. Strategic sourcing is a collaborative approach that continuously re-evaluates and improves the buying activities of the organization, while strategic alliances are long-term relationships with suppliers and customers formed with an intention to influence the operational and strategic efficiencies of both organizations. Strategic alliances push the organization away from its normal transactional method of buying raw materials to building a strong relationship with the suppliers. Therefore, to be successful in this ever changing business environment and to deal with the growing competition organizations should focus on implementation of effective supply chain management practices.

Duties of Supply Chain Manager

The supply chain managers have a great impact on the organization's success, as these managers are involved in almost all the facets of the business process, which deals with planning, buying, production, transportation, storing & distributing, serving customer and much more. The supply chain manager is the key person, who is responsible to look after the upstream and downstream flow of goods and services in the organization. These managers are involved in designing and implementation of strategies and policies that could help in developing strong connection among the various parts of the organization. The performance of the organization in terms of increase in sales, maximized profits and controlled expenditure can be effectively managed by improving the supply chain, which is only possible if the supply chain managers are skilled and experienced to that level.

Generally, organizations with flat organizational structure have better supply chain activities than the organizations based on tall organizational structure. This is mainly due to high collaborative activities, improved communication and performance. The supply chain manager normally reports to the project manager in flat organizations and the project manager is responsible to manage a team of regional managers, who look after the business regions in which the organization is running business. The responsibility of a supply chain manager is comparatively less in flat organization than tall organization, as he/she has to look after less or no hierarchal levels.

Supply chain manager guides the regional project manager about the internal position of the company such as finished goods on hand and work-in-process goods that facilitates in managing and improving the demand and supply area i.e. managed by a team of regional managers effectively. Flat organization structure generally promotes decentralized decision making process, which encourages higher level of employee involvement. It is the duty of a supply chain manager to maintain effective communication among the various organizational units and keep on providing feedback to the regional project manager, so they could manage the external business activities effectively. The supply chain managers should have an ability to choose the right collaborative strategy, which is essential to make sure that the supply chain partners are on a path that creates the premium business practices.

Success Evaluation in Supply Chain Management

Supply chain managers have faced huge uncertainty related to workable framework and concepts that are available for the development of SCM practices and that could be easily understood, measured and implemented. It is the supply chain management that helps the organization in managing its various business functions in an effective way. Organizations face critical challenges due to the competing interests related to climate change, ethical energy consumption and demand for greater transparency that affects the day-to-day business operations. Supply chain management practices have provided greater level of strength to organizations in controlling and managing business risks. The success of supply chain management can be evaluated through the level of success the organization has attained with its implementation. If the organization was able to maximize its sales, attain higher profits or control its expenditure, it clearly indicated the success of SCM.

These days, organizations are considering effective supply chains essential to compete in the network economy and global market, as it helps in managing growing customer demands effectively and at the same time it reduces the managerial control over the daily logistics operations. The effectiveness of supply chain management can be observed in the organization if there is less control and more supply chain associates. SCM is a process that improves collaboration and trust among supply chain associates, which ultimately improves the velocity of inventory flow (upstream and downstream) and inventory visibility.

Customer Relationship Management, Order Fulfillment, Customer Service Management, Manufacturing Flow Management, Demand Management, Vendor Relationship Management, Product Development & Commercialization are some of the most critical supply chain processes that can help the organization in managing its business operations effectively. Each of these processes play an important role in keeping the organization aligned with its mission. It is extremely important for the organization to have effective supply chain management for business expansion, as it offers ways to bring effective coordination among various organizational units that are required to get the job done effectively. Information and physical flows are the two critical tasks which are mainly managed by SCM and if these flows are managed effectively it confirms the success of SCM measures.

KEY TAKEAWAYS

Supply chain management is critical for overall operations of the organization. SCM helps in managing the physical and information flows within the organizational setting. Supply chain managers are responsible to manage planning, buying, producing, transporting, storing & distributing, and customer service handling activities. Organizational performance, productivity, efficiency and profitability are some of the critical measures that can help organization in evaluating the success of supply chain management.

EXERCISES

What is the role of strategic sourcing and strategic alliances in supply chain management?

How supply chain management helps in developing strong relationships among the suppliers

and customers?

Define supply chain management process?

What was the main reason behind the evolution of supply chain management?