Supply Chain Management in a Companys Daily Business Processes - Literature review Example

Introduction

Supply chain management (SCM) is an important section that deals with the oversight of finances, information and materials from the producers or manufacturers through various intermediaries to the final consumer of the goods. It takes the approach of the coordination and integration of how commodities and services flow from the producers and manufacturers to the final consumers and mostly considers the network of companies to ensure the goods reach the consumer. The flows in supply chain management are categorized into three and include finance flow, information flow, and product flow. The product flow concentrates on how goods move from the supplier to the consumer while including the services given to the consumer together with returns made by businesses involved. Information flow, on the other hand, includes the documents used in the supply of goods in the supply chain. It includes various ways of conveying orders and updating documents on the delivery status of goods. Title and consignment possession, payment timetables and credit terms form part of the financial flow. Technology has played an important part in facilitating SCM and ensuring efficiency in the process. Two kinds of software are used in supply chain management. They are the execution and planning applications. Planning applications have complex algorithms, which are effective in ensuring that the orders are filled in the best way possible. Execution applications concentrate on tracking the good’s physical status together with the financial data and how materials are managed.

Literature review

Gil et al. (2010) studied supply chain management regarding a method and a system that can be used in the management of a supply chain. The system and method mostly focus on the transactions between several associates in the supply chain including the data in real time that is associated with the transaction. The transaction in this study focuses on providing access to the data from those involved in the transactions. The people involved may be suppliers or producers together with other retailers in the supply chain. Gil et al. (2010) introduced usage of technology in the system which further enables the business to carry out transactions in an efficient manner since more technology is being embraced by partners in the supply chain, and the methods and systems utilizing technology have greatly increased efficiency in terms of movement of goods among different partners in the supply chain. It is an invention which concentrates on bettering transactions and ensuring effective coordination in the supply chain. This technology and the various systems and methodologies in place based on technology are greatly improving communication among different sections of the supply chain and thus ensuring the goods reach in good time, and communications take place effectively.

Mentzer et al. (2011) further looked into the clarity belying the supply chain management. The study focused on coming up with a clear definition of supply chain management to ensure that a management construct is held uniformly by researchers and practitioners in SCM. The researchers were seeking a consensus on a clear and accepted definition, which would lessen confusion regarding the definition of SCM. Furthermore, the study reviews many of the definitions while categorizing and synthesizing them. Lambert and Cooper (2000) studied issues in SCM while delving into the supply chain management definition and the various integrations that need to be made to ensure success in the supply chain management. They focused on coming up with a framework that would ensure progress and success in the end and its implementation. Concepts were illustrated using different companies in the supply chain. While going through the supply chain, the study can come up with a clear definition especially when perusing through literature involving SCM. The practical nature of assessing the supply chain physically and defining various concepts is further effectual in aiding not only the understanding of SCM but also the progress of the companies participating in the supply chain.

Srivastava (2007) studied another vital topic involving SCH on the green aspect. Further definitions and divisions of SCM can be seen from the results of the study. SCM does not only concentrate on the business side but also on how the various activities in the supply chain impact the environment. Since the topmost activities of the SCM are greatly linked to the environment especially those factories that release greenhouse gasses in the process of producing various goods. The study dealt with the environmental aspect associated with the supply chain. Green supply chain management (GSCM) according to the study is in its infancy and has not shown much progress. More participants in the supply chain management make great use of the natural environment, and their activities may affect the environment as a result. Mathematical tools together with the categorization of the studies of GSCM are focused on in this study. Sarkis et al. (2011) further studied GSCM while focusing on different theories and further aligned the literature to come up with future directions of the GSCM. The literature reviewed in the study organizes the literature dwelling on outcomes, diffusion, and practices of GSCM. GSCM is thus an important area, which needs to be studied further to ensure that the supply chain functions associated with the environment together with the applications are clearly understood.

Stardtler (2014) further looks at the essence regarding SCM. The essence of SCM in this regard is related to supply chain planning. The origins of SCM are further deliberated upon in this paper to understand the inception of SCM together with its progression in business history. Seuring and Müller (2008) study on the concept of sustainability focused on already published papers on sustainable supply chains together with coming up with a threefold conceptual framework. Performance and risk were strategized as a result together with a sustainable SCM for the goods in the market. The study, therefore, delves into the sustainable practices of the supply chain using the literature available. Advanced planning and sustainability in supply chains are important in understanding how the supply chains operate and how they can be managed effectively. The software is used in advanced planning system as seen by the study carried out by Meyr et al. (2015). There are different modules associated with Advanced planning systems (APS) that help in planning different tasks as required by the respective entity. SCM in this regard can use APS to organize tasks and ensure efficiency in the operations of the supply chain. Craig et al. (2008) focuses on the sustainability and looks at the connection between SCM and economic, social and environment performance. As a result, it gives a more vivid picture of the relation between SCM and the environment particularly the various activities that are linked with having an effect on the environment.

Zhu and Sarkis (2006) studied a cross-sectional comparison of Chinese companies about GSCM. GSCM application is compared to companies using practices and drivers of GSCM in China while concentrating on electronic and thermal power production facilities together with automobile industries. Green supply management, in this case, is shown to have been adopted by companies using varying practices and drivers associated with GSCM. In Zhu et al. (2008) investigated the readiness with which manufacturers implement GSCM. Data was gathered from companies in China. The first and second order constructs of the implementation of GSCM have been proven reliable and valid. The measures are quite important in determining how different companies execute effective GSCM practices.

Rao and Holt (2005) investigated the effect of GSCM on the economy, environment, and the performance of different corporations in South-East Asia. Green supply chain management mostly aims to reduce the stress on the environment and ensure that companies are accountable in the way they carry out their activities especially in the industrial sector. In this regard, some companies may need to reduce their use of electricity, which has a grave effect on the environment and focuses further on greener options like wind and solar power. Such practices may hurt the profitability of the company. Studying green supply management creates tangible practices that help in the conservation of the environment while at the same time helping the company and not hurting it and its partners in the supply chain.

Case study

Expert skills in dealing with SCM are being sought by many companies. Since supply chains are complex, it mostly becomes hard to deal with the problems and find the root causes. If there are problems affecting the supply chain, it may affect the company’s operations. As such, supply chain management requires experts to solve difficulties affecting a specific supply chain. Therefore, managers are employed to deal with issues affecting the supply chain and are mostly in high demand to maintain normality in the supply chain. Whirlpool is one company that manages its supply chain in ensuring that all activities carried out in the supply chain are normalized (Ashenfelter et al. 2013). Whirlpool deals with the manufacture of appliances and has an extensive supply network. Whirlpool commands a large market and mostly supplies household items that are in great demand in America and its foreign markets. The case study is going to show the various challenges that have faced whirlpool and how it dealt with them and returned on track to become one of the most profitable online and offline business in the market. Modernity has brought with it many application and software, which have further added to the efficiency in communication between the partners and businesses in the supply chain together with the data given to the customers through media.

Challenges in the SCM of Whirlpool

Whirlpool deals with the manufacture of household appliances. Their products have been proven reliable and thus of great quality. It commands a large customer base together with suppliers and other partners who form part of its supply chain. Such partners have played an important role in supplying goods and providing services to the company, and have helped in keeping it aloft in the market. Though the company was successful, challenges started to arise in the year 2000. Any unreliability in the supply chain affects many people and the business activities of the company. The supply chain had numerous fluctuations which resulted in lower or higher delivery of goods and this brought uncertainty in the various branches of the company especially among the customers. The uncertainty in the delivery of inventories affected its businesses, as more customers were disappointed due to lacking the items they needed from the business. Another factor, in this case, was that some of the goods were mostly taken to the wrong location and thus affected the confidence the customers. The inconsistencies significantly affected the existing relationships between Whirlpool and its partners in the supply chain together with its customers. The partners significantly contributed to the supply chain, which was not effective in meeting the demands of the customers in the respective Whirlpool branches. As a result, customers did not get the goods they needed at their desired time. Lack of clear communication channels frustrated the business partners who were mostly instrumental in ensuring that the goods reached the company in good timing. As such, the SCM problems had to be fixed to ensure that no difficulties occurred.

Whirlpool had not detected the problem earlier in its supply chain. As such, the problem grew to a height where it affected the performance of the company. The different acquisitions it had made and the various new branches it had opened in new locations further brought about the problems that exacerbated the SCM issues. It was taking up new supply chains and still had to manage its previous supply chain at the same time. The acquisitions of different businesses meant that the company had to manage more than one supply chain, which it did not put enough effort to ensure that the various issues were solved speedily.

Since SCM management concentrates on information, product and financial flows, the company had not looked into the flows carefully to ensure that they were in the correct state. Such flows of information, especially from the company to the suppliers and customers together with financial flows, are important. Different companies thus brought in different supply chains, which further brought confusion since the supply chain activities were being mismanaged. Furthermore, the tracking of different production and distribution activities was not easy. Sometimes the goods in the various branches were high, but the availability was decreased greatly. The issue was further exacerbated by the expansion carried out by the company both geographically and businesswise. The company expanded its operations but did not focus on the large supply chain it had made in the end.

The company had to come up with solutions to tackle the problem before it got out of hand. SCM management is important in that it ensures the company has smooth operations, which further contribute to its success in the market. The company had to utilize its IT and also use the support of the SCM professionals to ensure that it got back on track and operated normally. The professionals intervened and used their twofold effort to come up with a new system that streamlined its activities and ensured that there were standard procedures, which would enable the rejuvenation and normalization of the company’s operations. The new system focused on employing a platform deployment, inventory, and scheduling planning together with various instruments that were used in replenishment and forecasting in the supply chain. The new system saved the company a lot of money that would have been lost due to an inefficient SCM in its businesses. Greater efficiency was evidenced when the new system was adopted to help in managing the supply chain. The new system was implemented in stages, and greater efficiency was noted in the SCM in the company. Prediction errors were reduced significantly when the new system was implemented together with increased efficiency in obtaining supplies of completed goods. Storage and transportation expenses were greatly reduced and the company thus could use the money in other activities beneficial to the business. Since the company had embraced and used expertise in dealing with its supply chain, its overall efficiency increased greatly; the company was back on track, and its previous stalled activities were being carried out with little or no hindrances. Therefore, involving experts in SCM is important to any company in that it ensures that activities are solved systematically to ensure that issues in the supply chain do not arise and hamper the company’s operations. Whirlpool presents a better example in showing how effective supply chain management can be conducted to ensure effective harmony between the partners and the company in the supply chain together with the improved profitability margins in the market.

As a result, more businesses are opting for skilled managers in operating their supply chains as most have evidenced the return to normalcy of Whirlpool whose business operations had been affected negatively by their previous inefficient management of the supply chain. There are professionals who have the experience and the needed expertise in dealing with the supply chain and rectifying it. More corporations are therefore opting to acquire professionals who are well versed in managing supply chains to help them improve and have a competitive edge in the market. SCH is therefore a critical area in organizations that cannot be overlooked by companies that want to take advantage of the market and gain a loyal customer base in the process.

Conclusion

SCM has an important place in a company’s daily business processes. The various flows, which includes; information, financial and product flows are substantially intertwined and its takes experts in SCM to note this and align the flows to ensure that the company benefits in the process. The divisions of SCM management help companies to get specific professionals who will help them deal with problems that may be affecting the company at that time. The environment has been incorporated into the supply chain through the GSCM (Hervani et al. 2005). More companies are being encouraged to embrace the GSCM to ensure they help in conserving the environment and especially in putting in place practices that reduce emission of greenhouse gases. One of essential functions of SCM is to note the different problems and further look at them thoroughly while coming up with possible solutions to the problems. Supply chain management is, therefore, critical to a company’s progress and should be taken with the seriousness to prevent disasters in the markets place due to dangerous fluctuations in the supply of goods.