Global pressures on retail production have put more emphaisis on supply chain management. Businesses are no longer single entities
but part of larger economic chains and vines. These organizations seek to
create efficiencies by managing relationships with others within the chain to
reduce transaction costs as well as integrate services to ensure their chain is
operating at a maximum. According to the
paper by Ohdar and Ray (2012) new ways of managing the supply chain management
system are needed and worthy of study.
Supply chain management is not confined to logistics
alone and includes components of relationship management. It may include concepts
such as forecasting, procurement, manufacturing, distribution, inventory
control, transportation, and customer service. The integrated approach to
supply chain management may also apply to customers and suppliers as they fit
within this general process and seek to maximize opportunities.
Each company determines the
extent to which they desire to manage this process. Generally, the larger a
company is they more ability they have to create efficiencies in the
distribution process by building shared software platforms, sharing resources,
tracking arrangements, and developing automatic purchasing algorithms. One can see
this at work with bar codes and other tracking methods. Such systems allow for
wider control and analysis of the entire chain.
A number of models and frameworks
exist:
-Outsourcing and Strategic
Alliance: Contractual agreements and long-term strategic relationships with
related industries within the economic chain.
-Transportation and Logistics:
Shipping, storing, materials management and general flow of goods.
-Performance measures and
evaluation: A system of metrics that
determine the quality and performance of the supply chain management system.
-Vendor-managed inventory: The
manufacturer or distributor uses systems to automatically make purchases and
deliveries to the buyer.
-Postponement Strategies: Systems
that help to manage inventory and customer need to ensure economies of scale
improve as well as reduce inventory costs by delaying purchases.
-Information Sharing and SC
Integration: Working collaboratively with suppliers and buyers by sharing
information and working together to created entire supply chain efficiencies.
-Agile: The ability to be agile
and respond quickly to demands, the environment and customers.
-Reverse Logistics and
Environmental Issues: Generally short-term leases on equipment and containers
that make their way back to the main company.
-Marketing and Distribution
Planning: A system that tries to mirror
real world distribution needs.
-Optimization: The process of
creating efficiencies in the system that may include safety stocks.
Each of the frameworks provides a
way to view and see the distribution system. Creating efficiencies requires an
analysis of the overall supply chain, needs of suppliers, and the needs of
customers. By viewing the entire supply chain process it is possible to develop
stronger systems that service customers, maximize cost efficiencies, integrate
information, and reduce inventory. An integrated model helps the various
businesses within a particular network coordinate their activities and create
additional savings in transactional costs.
The paper helps one think about
the entire supply chain that moves from the input of materials, the development
of products, the association of companies that foster that development, and the
distribution of products. Such chains works a little like a loop in that
the first part is concerned with productive creation and development, the
second part with sales and distribution, and the third part with financial
management. The paper does not discuss these concepts or the loop but certainly
it would be worthwhile to view such a loop to understand the entire process.
When companies study such
economic chains they often look at the specific interactions within the entire
process. This has a benefit in terms of understanding how these interactions
contribute or detract from the efficiency of the system. However, it is also
important to view the entire chain in order to determine if integrative
platforms through developments in software and information sharing would
provide even higher levels of competitive structure.
Ohdar, R. and Ray, P. (2012). Models and
methodologies in supply chain management: review and reflections. IUP Journal of Supply Chain Management, 9
(4).
