Critical Importance of Supply Chain Management - Literature review Example

Supply Chain Management - individual report Introduction Reading through the surfeit ofliteratures, it is obvious that there exist numerous definitions of supply chain managements (Varkey, Horne and Bennet, 2008). However, an integral conceptual consensus on the meaning of supply chain management (SCM) is often beyond a reasonable doubt. A supply chain is in essence a group of independent institutions connected together through the services and products that they jointly or separately add value. Over the last four decades, the theory and concept of business management have witnessed profound development and changes. Most old ways of conducting business have been disputed and many new approaches and ideas have been established including business process re-engineering, lean thinking, strategic management, blue ocean strategy, agile manufacturing and supply chain management, which is undoubtedly the rapidly developed approach globally. The first appearance of supply chain management dates back in 1980s and was applied on cost reduction and purchasing activities. It is imperative for managers to understand that their organizations are part of the supply chains, which enable their activities, lose or win in a market competition. The arena of business completion is gradually moving from the corporation against the corporation to supply against supply chain. The endurance of any business activity today largely depends on the ability to cooperate within the parameters of the supply chain. Accordingly, aspiring becoming an outstanding business through an inward looking management model is extremely illusive. The most practical and assured way of running a business is coordinating it through adequate structural configuration, strategic positioning, integration, leadership and collaboration. Supply chain management is ubiquitous and pervasive. This implies that most aspect of business activities requires supply chain management. The NHS was established late in 40s and consist a supply and purchasing agency in charge of supply and purchasing related activities in UK and Wales (Chan, Nelson, Tang, and Lau, 2002). The NHS case study is an overview about its progress and impact on NHS spending. This paper examine the following (a) the relevance and importance of (SCM) to the case study NHS Supplies for the National Health Service, (b) the level of extensive search of the relevant literature, the relevance of presented literature contents to the (SCM), and the level of evidence relating to creative learning from the literature, (c) the relevance and the level of critical evaluation of the NHS in relation to the (SCM), (d) the role of information technology in managing supply chain management with supply chain management (SCM), and (e) how the introduction set up the supply chain management’s background. The Relevance of the Supply Chain Management to the NHS Materials and the Critical Importance to the Supply Chain Management NHS offers health care services to citizen based in England and Wales (Chan, Nelson, Tang, and Lau, 2002). In England, NHS represents 79% of gross domestic product and in spite of considerable privatization programmes in the last two decades; half of NHS is publicly managed. The UK government controls 40 percent of the gross domestic product meaning that public sector expenditure is extremely beneficial to the UK taxpayers and economy (Christine, Roxanne and Terry, 2000). Conversely, state spending is relatively uncoordinated and fragmented activity. In recent years, the government has attempted to synchronize spending across government. For example, in 2000, the Office of Government Commerce (OGC) coordinated three cabinet agencies in accordance with the procurement practice, policy and development in an effort to improve efficiency of government’s procurement budget. The four primary objectives of OGC include providing expertise and guidance to support the smooth delivery of procurement projects, create the government market to be more attractive and efficient for customers and suppliers, develop a supportive framework procurement activity and to deliver effective and efficient services to internal and external customers (Chan, Nelson, Tang, and Lau, 2002). In view of this role, government initiative supply chain management plays fundamental roles as it provides relevant ideas necessary for the coordination of government spending in UK and Wales. Supply chain facilitates in serving the end clients in the targeted markets across UK (Christine, Roxanne, and Terry, 2000). The supply chain management would be useful in maintaining the existing employees and develop the work precursors and philosophies, which are necessary in turning the performance around. The SCM is critical in adopting purchasing methods that leverage aggregated procurement, integrate logistic facilities to reduce inventories and expand product catalog to increase cost saving. NHS supply chain manages supply, delivery and sourcing of medical consumable products for 600 NHS healthcare and trust organizations in Wales and England (Christine, Roxanne, and Terry, 2000). The chain supply offers a single point of connection to 620, 000 products that include bandages, sutures, cleaning equipments, and wheelchairs that are available via online catalog. Integrating supply chain management is indispensable as it provides a close coordination of processes and operations under the shared value and vision among the various trust organization in UK. A well integrated supply chain in UK and Wale will exhibit lower inventory, high visibility, high capacity utilization, high product quality and short lead time (Christine, Roxanne, and Terry, 2000). To withstand the myriad of challenges and attain lasting business success, NHS services need to adopt supply chain management that stands the test of time. A world class supply chain for NHS should have optimized processes that are measured in efficiency, cost effectiveness productivity, and high standards of customer satisfaction. A configuration of supply chain management to NHS will be critical as it show how the participating organizations in UK and Wale are connected to deliver services and products to the end consumers. A configured supply chain will indicate the number of suppliers of NHS and how the suppliers are categorized or grouped. Further, the supply chain show where organizations are geographically located the independence and ownership of suppliers and the distribution channels available. To a large extent, an organization’s operation, strategy and performance mainly depend on choice of the supply chain configuration. Nonetheless, depending on the competitive environment, product lifecycle and nature of industry, the design of supply chain may vary. For instance, technologically intensive industries such as NHS are less vertically integrated whilst process based industries tend to adopt vertically integrated supply chain. The Level, Relevance and Evidence of Extensive Search of the Literature to the Selected (SCM) Topic Supply chain management (SCM) is a network of techniques that create raw materials, transform and deliver them as final and intermediate goods for the customers. The administration of the supply chain and functions of various actors differ from organization to the organization and from industry to industry. (SCM) has become an essential issue for professionals, manufactures and researchers. Companies adopt various business methodologies to increase the performance of business. Researchers and manufactures have identified problems pertaining to supply chain process in their practice and research. It is evident that either an integrated approach or a disintegrated approach is discussed in the different literatures, but fail to address the rational (how, what, why) behind (SCM) activities. The primary goal of (SCM) is to optimise productivity of the chain by adding value that lowers the cost involved. Supply chain management focuses on linking supply agents together to cooperate within the organization in a bid to maximize performance in the supply chain and provide benefits to related parties. Integration of supply chain management has risen since its foundation in 1980s. West and Anderson (1992) extended the scale of SCM to include material management, information technology, total quality management and partnership in areas like organizational structure, behavioral and training issues and management commitment. As company’s survival rest on integration, an understanding of the integration procedure is crucial in SCM. West and Anderson (1992) observed that research and development are hardly limited to data analysis and hypothesis testing, but superior techniques like Fuzzy logic, Artificial Neural Network, and simulation are useful in SCM decision making. Supply chain management is management of money, men, material and information across and within the supply chain to optimize consumer satisfaction and achieve an edge over rivals. Successful execution of SCM is dependent upon breaking barriers between business processes and internal departments and across organizations within the supply chain. Implementation of SCM is associated with development of a culture based on continuous improvement and shared learning. The major challenges of implementing SCM are associated with surfacing of the network organization that lead to the intricate web of linkages to be managed and coordinated. Hidden and multiple goals, culture and procedures, over dependency, opportunistic behavior and conflicts over autonomy hider execution of SCM. SCM offers a strategic weapon, which enhances sustainable competitive advantage by reducing the cost without compromising the satisfaction of customers. Moreover, the tendency to comprehend the pressure, which drives the SCM, helps in improving the supply chain performance. According to Zeng (2003), the main goal and aspect of SCM is leverage experience, expertise, capabilities, and skills of the SCM team. Zeng (2003) explains that the potential barriers to SCM are classified into groups, namely managerial complexity and inter-firm competition. Under inter-firm rivalry group, barriers involved include external and internal turf wars, lack of vision of SCM, poor SCM planning, poor SCM understanding, and lack of trust. Turf war barriers, which are experienced internally and externally require urgent attention by mangers as their consequences are severe and fast leading to disruption of SCM process. Managerial complexity barriers include structure differences in SCM’s business culture and misaligned supply chain processes. Managerial complexities are characterized by IT/ARE deficiencies, lack of alliance procedures, poor organizational structure, and lack of Sc measurement. These barriers are encountered both at SC level and enterprise level; thus, the need to address them at all fronts. Solution to SCM barriers as proposed in various scientific literature include information transparency, IT architecture, formal performance tracking, CFT collaboration, SCM vision, adopt strategies, supplier certification, shared investment benefits, and attention to human factors. Zeng (2003) reviewed the key benefits of SCM as proposed in literature and include increased revenues, product availability, SCM cost reduction, responsiveness, capital utilization, reduction in logistic costs, economic value added and decreased order cycle time. Organizations must willingly manage SCM as it alters inventory investment across the organization and helps in addressing economic fluctuations. The cost of supply chain may tend to rise because of various parameters like fright charges, mounting real estate fees, and enormous capital necessary for operating global businesses. Perfect planning in SCM in regard to production schedule, material arrival, and distribution reduces the inventory cost and the wasted energy and time. Customer satisfaction is paramount for staying abreast in aggressive environments and can be attained by quickly responding to consumer needs. Efficient customer response (ERC) is a SC strategy, which attempt to solve the inefficiencies in the SCM. When consumer driven vision is executed efficiently, it leads to a competitive edge that includes increased productivity, customer contentment, and decline in cycle time and inventory. Warwick (2007) provides six stages required for implementation and adoption of SCM practice namely plan, analyze, develop, integrate, deliver and return. Planning requires managers to formulate strategic plans for the entire chains. The analysis phase involves identifying various types of uncertainties, which can affect information chains and supply chains. Develop stage involves identifying appropriate suppliers and developing trust and cordial relations among various partners. Integrate stage requires integration of various activities like production, procurement, inventory management, manufacturing, customer service and order processing. Deliver is about receiving and delivering good as planned in the SCM processes. Return, which is the final stage, entails managing problems associated with returns such as reverse logistics and gate keeping. The Relevance and the Level of Critical Evaluation of the Case Study Materials Relating to the Selected Topic with Ability to Identify and Apply Supply Chain Models and Their Characteristic In early 90s, a mixed pattern of composition for supply and purchasing was experienced throughout the NHS in UK and Wales. Criticisms were leveled against NHS practices and policies regarding the buying processes for various products. In the same period, over 127, 000 order points in health authorities, trusts, and directly managed units placed the order to the supply market. On estimates from purchase ledgers, data files and reports indicated the number of suppliers rendering services to NHS at 50000 suppliers (Christine, Roxanne, and Terry, 2000). Mixed pattern of buying practices was evident in trust hospital where items were ordered by practitioners using written order with no reasonable budgetary controls. Suppliers often complained that nurses placed orders using telephone and had good delivered to their accounts. NHS had 30 different IT systems used for procurement with an inexistence of coding system for goods (Christine, Roxanne, and Terry, 2000). However, the interpretation and uptake of product via the national coding system was uniform across the NHS departments in both UK and Wales. Purchasing trends varied extremely across the whole portfolio of spend. Pharmacists were autonomous in their storing, distribution, coding of drugs and often guarded their functions from supplies staff. Regional consortia for procurement were inadequate in some organizations while some specialists acted independently and separately; thus, distancing from sharing information across similar organizations. Due to the numerous criticisms against the National Audit Office and NHS’s team, arrangements for integrating SCM were proposed. With an SCM in the process, a single national body operating within the NHS would provide the necessary remedy to the problems of variable standards, facilities and inconsistency. Further, for coordinated activities especially among the nurses and specialist, a supply chain would help in synchronizing and managing internal capacities. Each functional department in UK and Wales would avoid over capacity and bottlenecks as evident earlier. Newly intergraded SCM at NHS would ensure there is safety of the inventories, flow of products from supplier synchronized, and delivered goods are managed. Appropriate SCM model for NHS operation requires management to adopt the six strategies identified by Warwick (2007) namely plan, develop, return, integrate, deliver and analyze. These changes are fundamental in the planning and implementation stage of SCM process at NHS. Ability to Appreciate the Role of Information Technology in Managing Supply Chain Management with Links to Case Study The application of IT is deemed a prerequisite for the efficient controls of the current’s complex supply chains (West and Anderson, 1992). In spite of the acknowledged role of the information technology in the (SCM), the number of empirical research assessing this role is limited. Today, organizations are rarely considered as independent entities rather as part of multi- echelon network of supply series that distribute goods and services to consumers. (SCM) literature recommends that integrated controls of organizational networks provide significant benefits. Exploitation of (IT) is an imperative requirement for running these networks and is associated with improvement of supply chain management. Although the role of IT for competent (SCM) is acknowledged, research associated with the use of IT is narrow as pointed earlier. The pros of information sharing depend on the predictability of market demand. For instance, information sharing has a crucial role in the environment with unknown demand. Benefits of (IT) in (SCM) are attributed to the positive outcomes of IT on transaction processing leading to smaller batch sizes and shorter lead times (Williams, De Silva and Ham, 2009). In regard to NHS scenario, the benefits of integrating IT to SCM process include a reduction of manual work, costs, information quality, and increased volume of transactions in all organizations both in Wales and UK. NHS functional departments include purchasing, logistics, customer services, finance and information, human resources, communications and business management. Purchasing department in both countries is mandated with the role of contacting with supplies and making decision pertaining to the product range. Logistics department deals with distribution and storage of products and oversees operations of the distribution and warehouses centers. Customer services serve over 1500 staffs and immense customer base across Europe. Finance and information department are in charge of financial planning, performance, management, and income collection. Human resource department has various divisions each vast with 100 staffs. Owing to the many departments, employees and tasks to be executed, integrating an efficient IT remains an ideal solution to the underling challenges. Conclusion The NHS was established late in 40s and consist a supply and purchasing agency in charge of supply and purchasing related activities in UK and Wales. The NHS Case Study is a story about its progress and impact on NHS spending. The NHS is barely a part of central government; hence, not staffed by civil servants. The features of NHS include a public service, a bank of assets, a gathering of processes and a knowledge pool. Legally, NHS is defined through orders and directions, legislation and successive act of parliament. NHS provides health care to the entire citizens based on their needs and at the point of delivery. The National Health Service (NHS) provides health care services to the general public based in England and Wales. In England, NHS represent a noteworthy proportion of GDP and in spite of key privatization exercised in the past, half of NHS is publicly managed. The government controls 40 percent of the gross domestic product an indication that public sector outflow is truly central to the UK taxpayers and the economy. Equally, state spending is comparatively clumsy and disjointed activity. In topical years, the government has attempted to harmonize spending across government. SCM refers to the processes and practices aiming for proficient and useful flow of ideas and material between corporations and its immediate customers and suppliers. IT in the context of (SCM) refers to the usage of inter organizational systems, which are critical in information sharing across organizational boundaries. Fruitful discharge of SCM is reliant upon breaking barriers between business processes and internal divisions and across institutes within the supply chain. Implementation of SCM is linked with expansion of a culture based on continuous improvement and shared learning (Wang and Ahmed, 2007). The main challenges of implementing SCM are related with surfacing of the network organization that lead to complicated web of linkages to be managed and coordinated. This paper has examined the various literature findings of SCM and related the relevance, level and evidence of the finding to the case study NHS. The task has discussed the role of IT in the SCM process and its role in the NHS operations. Lastly, paper has discussed the relevance and the level of critical evaluation of the Case Study materials relating to the selected SCM. Bibliography: Agarwal, A., Shankar, R., 2002. Analyzing alternatives for improvement in supply chain Performance. Work Study, 51 (1), p.32-37. Barratt, M., Oliveira, A., 2001. Exploring the experiences of collaborative planning initiatives. International Journal of Physical Distribution & Logistics Management, 31, (2), p.266 – 289. Chan F. S., Nelson, K. H., Tang, H. W., and Lau, R. W., 2002. A simulation approach in supply chain management. Integrated Manufacturing Systems, 13 (2), p.117 –122. Christine., H. Roxanne., S., and Terry., H. 2000. NHS- Supply for the National Health Service. [Online] Available at: < https://mail-attachment.googleusercontent.com/attachment/?view=att&th=13cb006eaa165019&attid=0.1&disp=attd&safe=1&zw&saduie=AG9B_P_Eh5auxCfwSkRrt9fPYHXc&sadet=1360255296225&sads=uKTUbK1o2W-W7lUHgfwJzQiIE4A [Accessed 06 February 2013]. Varkey, P., A. Horne, and K.E. Bennet. 2008. Innovation in Health Care: A Primer. American Journal of Medical Quality, 23 (3), p. 382-388. Wang, C. L., and Ahmed. P. K., 2007. Dynamic capabilities: A review and research agenda. International Journal of Management Reviews, 9, (1), p. 31-51. West, M. A., and Anderson. N., 1992. Innovation, cultural values, and the management of change in British Hospitals. Work and Stress, 6 (3), p. 293-310. Williams, I., D. De Silva and Ham. C., 2009. Promoting and Embedding Innovation: Learning from experience. University of Birmingham, UK: Health Services Management Centre, 7, (3), p. 78. Warwick, P. 2007. Back to the Future in NHS Reform. Journal of Health Organisation and Management, 21, (2), p. 194-204. Zeng, A.Z., 2003. Global sourcing: process and design for efficient management. Supply Chain Management: An International Journal, 8 (4), p. 367 – 379. Read More