Table of contents
- Three approaches to SCM
SCM utilizes a synchronized system that controls purchasing, inventory and shipping goods and services of businesses. SCM incorporates control of processes required that manages control with a centralized approach. This allows for the attaining of a robust and efficient system that manages not only the distribution of the goods and services, but also does so in a more economical manner. (Kokemuller, 2019) Supply chain management (SCM) processes are controlled and monitored in such a way that the products and services are in the proper amount, location in a timely manner. In addition, in order for the company to be successful, this attention to detail and quality control must be attained and maintained in a consistent manner. (Bowersox et al, 2013, pg. 8)
In this essay, integration of the supply chain management concepts will be demonstrated. The necessity of integration of supply chain management in regard to company viability will also be explained. Finally, how a properly configured SCM can keep the company afloat in the global environment by taking care of the client’s needs and maintaining good relationships with vendors for transportation, inventory or supply.
Internal issues arise due to lack of cooperation within a company, from leadership to office politics to lack of technical capability, to enable such a managed structure of processing orders. External issues occur with a lack of trust with vendors on how to manage proprietary and confidential data. (Kokemuller, 2019) Additional external concerns occur when working with multiple vendors across the supply chain. “Extending collaboration across organizational boundaries is a challenging and complex endeavor. “(Florescu et al, 2019). Supply chain visibility, trust, a common vision, effective chain management processes with ongoing relationship management are all important factors to consider. “(Florescu et al, 2019).
Communication is key to internal and external process members and facilitators. Communication is improved by information sharing and regular updates between the channels and vendors. Internal relationship management have been shown to reduce waste and pollution as some of their benefits. External relationship management has worked to mitigate issues and is instrumental in use with governments (regulations), NGOs (legal demands) or customers (shape public opinion). (Florescu et al, 2019).
Three approaches to SCM
In the study of integrated supply chain management, the execution of proper SCM can be approached in a myriad of ways three of the most effective will be explored here. One of the approaches to an efficient SCM system can be derived from an effective Customer Relationship Management (CRM) system being put into place. The software or processes need to focus mainly on how to retain and increase customer relations, improve logistics of shipping and inventory so a high level of support can be attained and maintained. Finally, it needs to be a process always under review and evolving to allow the cost savings and increased availability of supply due to globalization to be effectively managed and controlled.
Below is a scale to show how CRM can be effectively implemented and how much impact can be expected. The metrics used within the scale include the following (also shown in figure 1) under various categories:
- Operational benefits- sales management, campaign management, customer service management, analysis of customer’s database.
- Benefits in customer life cycle- customer loyalty, customer satisfaction, customer share of wallet, customer recovery. (These can always be improved as some clients have left due to lack of satisfaction on the way their account was handled)
- Effectiveness- market share, sales from the target market.
- Benefits in performance adaptability- adaptation of products and services, launch of products and services.
- Efficiency- performance of applied resources. (Downtime between projects needs to be filled better. Technology resources (new CRM, better time management system) and people resources (training, multitasking) need to be of focus.) (Venturini & Benito 2015) Slide 1 (Venturini & Benito 2015)
Another approach is that of a real time and dynamic logistical approach. An improvement of the level of service that brought to the customer can be brought through e-SCM. (Salgado et al, 2011). e-SCM, makes consumption information available in real time, ends up being more dynamic and efficient than the traditional demand forecasting models, and aims to analyze how e-SCM can collaborate in maintaining adequate levels of inventory and interruptions in the supply chains. In general, traditional statistical forecasting models, based on time series and are isolated, are no longer adequate to adjust to the demand, as the tools based on these models do not update the demand in real time. This is fundamental in current business dynamics. This can help to alleviate how functions of SCM, executed successfully to the highest standards, does not approach and perform effectively in cost or execution. (Bowersox et al, 2013, pg. 10)
One e-SCM inclusive case study used a research method that involved the study of multiple cases in a segment of a chain involving a large retailer, its distribution center and a supplier of home appliances. (Salgado et al, 2011)
From the above example, the results showed that after the integration of the chain segment by the e-SCM, there was a reduction in the level of the inventory (36.8% in retail and 18% in the industry) and in inventory turnover (from 18.3 to 5.1 days in retail and from 19.6 to 3.2 days in the distribution center), aside from the variation in the interruption (from 17.3% to 2.6% in retail and from 3% to 0.1% in the case of the distribution center). Therefore, the study highly indicates that the integration of the chain through the e-SCM may contribute to the SCM’s competitiveness. (Salgado et al., 2011)
The e-SCM may assist the players in the supply chain in solving problems related to the logistics, the sales or in the study of the customers' habits, as is the case of the CRM as shown above (Salama et al., 2009). A concept that will be given emphasis and dealt with in this research is the relationship of the e-SCM with the adjustment of the demand forecast. Today, this partnership is essential for the synchronization between supply and demand, that is, between the links of the supply chain and, consequently, for the adequate levels of inventory (Salgado et al., 2011). This is due to the fact there is a need for an adequate pace of purchases, production, distribution and provision of the supply chains which has to adjust to the speed of the final consumption. This avoids the lack or excess of merchandise, not only in retail, but in the entire supply chain. These adjustments in the chain are only possible if the information flows in real time. This is only possible through the e-SCM, for the demand forecast is done in longer periods like weeks, by-weekly or months (Lo et al, 2008). It is worth remembering that e-SCM and forecast are not excluders, but in fact, they complement each other. (Salgado et al., 2011)
The final approach, that will be demonstrated, is how the SCM methodology is advancing using shared storage and processing functionality. The future of supply chain management will be shown as it is now starting to be incorporated into the cloud (c-SCM). The concept of staging the SCM resources in the cloud are mainly for resiliency and responsiveness (SCR). The main three dimensions of SCR are the ability to deliver demand (order fulfillment time), rapid detection and reaction to supply chain risks, and flexibility to adapt to demand uncertainty (Giannakis et al, 2019).
SCR denotes the speed of the supply chain to deliver demand and it can be measured in terms of order fulfillment cycle time. If customer demand can be perceived without distortions and latencies, then companies have more chances to fulfil the orders successfully. (Giannakis et al, 2019). The visibility of information across the supply chain is, therefore, a principal dimension of SCR, as it increases demand sensibility by allowing every organization along the supply chain to access the required information with transparency. (Giannakis et al, 2019).
The inherent uncertainty of supply and demand and associated supply chain risks show the need to be able to rapidly change the product mix, volume, delivery sequence and supply capacity. The rapid detection of supply chain risks and swift decisions to mitigate them can, therefore, enhance SCR. SCR incorporates the rapid detection and reaction to supply chain risks. (Giannakis et al, 2019).
Finally, SCR shows the capability of a supply chain to demonstrate significant flexibility to adapt to demand uncertainty by restructuring its operations, reconfiguring its capabilities, or realigning its strategic objectives (Giannakis et al, 2019). Information integration amongst supply chain partners can enhance supply chain process integration and flexibility through joint planning, decision making and execution in a standard system. An IT system that can reconfigure dynamically supply chain processes according to the changing requirements can enhance supply chain flexibility. A modularized and service-oriented architecture can enhance the overall system flexibility by enabling rapid system integration and process configuration (Giannakis et al, 2019).
With the utilization of a c-SCM, a supply chain-wide knowledge learning, decision making, reaction and optimization can be achieved. There are a multitude of advantages of proposed c-SCM over conventional SCM approaches. Real-time end-to-end supply chain visibility is the most promising one, which provides a basis for demand sensibility and various other capabilities. The proposed c-SCM can improve collaboration between organizations. The flexibility at infrastructure level, application level, process level, partner relationship level and cost structure level are improved. Various exceptions, disruption risks as well as business trends can be captured in real time. The knowledge learning capability can achieve a real-time reaction. C-SCM can be beneficial for several business processes, especially for those processes that are widely dispersed or require intensive partners’ collaboration, such as logistics management, purchase management, collaborative planning forecast and replenishment. (Giannakis et al, 2019).
In this essay, integration of the supply chain management concepts has been demonstrated. The necessity of integration of supply chain management in regard to company viability showed us there are many ways to incorporate best practices to a business of any kind and if tailored selectively, purposefully and consistently, results in efficiency, savings and customer satisfaction should be achieved. Finally, a properly configured SCM can keep the company afloat in the global environment by taking care of the client’s needs and maintaining good relationships with vendors for transportation, inventory or supply.
- Bowersox, D. J., Closs, D. J., & Cooper, M. B. (2013). Supply chain logistics management. Boston: McGraw-Hill.
- Florescu, M. S., Ceptureanu, E. G., Cruceru, A. F., & Ceptureanu, S. I. (2019). Sustainable supply chain management strategy influence on supply chain management functions in the oil and gas distribution industry. Energies, 12(9), 1632.
- Giannakis, M., Spanaki, K., & Dubey, R. (2019). A cloud-based supply chain management system: Effects on supply chain responsiveness. Journal of Enterprise Information Management, 32(4), 585-607.
- Kokemuller, N. (2019, August 2). What Is Integrated Supply Chain Management?. bizfluent.com. Retrieved from https://bizfluent.com/about-6690370-integrated-supply-chain-management-.html
- Lo, W.; Hong, T.; Jeng, R. A framework of E-SCM multi-agent systems in the fashion industry. International Journal of Production Economics, v. 114, p. 594-614, Aug 2008.
- Salama, K. F.; Luzzatto, D.; Sianesi, A.; Towill, D. R. The value of auditing supply chains. International Journal of Production Economics, v. 128, Jan., 2009.
- Salgado, A. P., Junior, Novi, J. C., Pacagnella, A. C., Junior, & de Oliveira, M.,Mattos Borges. (2011). E-SCM AND INVENTORY MANAGEMENT: A STUDY OF MULTIPLE CASES IN A SEGMENT OF THE DEPARTMENT STORE CHAIN/O E-SCM E A GESTÃO DOS ESTOQUES: UM ESTUDO DE MÚLTIPLOS CASOS EM UM SEGMENTO DE CADEIA DE LOJAS DE DEPARTAMENTO. Journal of Information Systems and Technology Management: JISTEM, 8(2), 367-388.
- Venturini, W. T., & Benito, Ó. G. (2015). CRM software success: A proposed performance measurement scale. Journal of Knowledge Management, 19(4), 856-875.