Strategic Implications of Supply Chain Management - Essay Example

? Supply Chain Management Insert Insert Grade Insert Insert Organizations need various inputs or resources that will ensure that they continue to effectively operate in the contemporary business environment. There is also an issue of an increasing importance of laying an emphasis on customer service excellence. Organizations are today conscious of improving their processes and procedures so that their customers are ever satisfied. This is because satisfaction is a key element of ensuring that organizations are able to compete in their respective industries as well as ensure that they attain their performance objectives (Stock and Lambert, 2001: 19). With constant changes in the operational environment, most organizations are aware that performance and competitiveness in their respective markets can only be enhanced through creation of an active supply chain. This paper looks at some of the strategic implications of supply chain distribution in an organization and their influence on productivity and competitiveness of organizations. Various scholars have come up with various definitions to illustrate on what is meant by supply chain. According to Jacoby (2009:17), supply chain is a process through which goods are channelled from the point of production to the point of distribution, aiming at reaching consumers at the right time to gain profit. Processes involved in chains of distribution are so numerous that it requires aggressive business people to implement all of them. Such activities involve managing people, trying to utilize information, which helps in service delivery and utilization of the available resources in order to maximize output. It is also worth to discuss supply chain management, which goes hand in hand with supply chain. Supply chain management is a term used to describe the network through which goods move from their raw nature through the processes of execution, procuring, processing, and distribution to the final consumers with an aim of creating and increasing net value. The supply chain management can be best understood by considering its classification and by looking at the components that constitute the supply chain. Such components include procurement procedures, the process of acquisition of raw materials, conversion of the raw materials into finished products and lastly logistics. All these have a role to play in ensuring that final consumers get the quality products and services they require at the right time. Considerably, a business should have it in mind that the driving force behind consumer satisfaction should not overwhelm the expenses incurred in production. The cost of production and other legal charges like taxes should decide the cost of goods and services. However, offering quality goods and services should be at the heart of every profit making organization. It is not appropriate for a company to talk about supply chain without generally taking into consideration that it should be their objective to increase sales and in turn maximize profit. Every profit making organization has a role to play in ensuring that the correct supply chain application creates business and customer relations hence improve not only sales but also the required rapport in a business friendly environment. In line with this, it is in order to look at some of the contributions of supply chain to competitive advantages and profitability. According to Blanchard (2010: 12), carefully selected supply chains help in the reduction of cost of production. Companies and businesses can only achieve double-digit growth through effectively cutting on the cost of operating business. This can be done through opting for the best and reliable factors of production such as labour. Other subsidiary factors that facilitate production such as transportation costs can be minimized by setting up a business closer to the source of raw materials. This will not only minimize time wastage from the point of manufacturing to the consumers but it will also reduce other problems associated with having a long chain of distribution. With the dynamism that has hit the business arena over the past years, competition among businesses has become outdated. Competition has been reduced to the effective use of supply chains. There is need to develop appropriate supply chain in order to remain relevant in the business arena. When critical supply chains are carefully integrated with the best business competencies, such businesses are bound to make maximum profit and customer satisfaction. This is also a contributing factor of having efficient supply chain and aggressive management in the business. The two components of supply chains that comprise of strategic sourcing and strategic logistics help a business in getting the first hand information within the business and from customers. They help also in passing information from one department in an organization hence facilitate in arranging for activities such as transportation, books and record keeping, designing and monitoring of the whole process of production. Lastly, it is important to see the discrepancies and comparison in trying to explain the most challenging components of supply chain management. These are supply chain method and supply chain theory. A critical analysis of the two will show the difference. Mentzer (2001: 21) defines supply chain management as a systematic coordination of business functions within an organization in a bid to enhance supply chain as well as productivity. Supply chain practice refers to the process of managing the supply chains or an integrated effort towards reaching the focal point of the business. This definition refers to the way the actual task of upward and downward mainstreaming takes place. Supply chain management theory and practice work in tandem since both rely on one another for success of a business. However, supply management practice deals with aspects of customer relations, getting the right information from them and striving to improve on the logistics and management of the whole production and sales units. This will majorly help in enhancing favourable competition with other businesses, and surety of competition advantages. Competitive advantage is a factor in today’s business environment because of the changes that have been brought by market liberalization and technological revolution. To be able to remain relevant in the market, organizations will constantly look to improve their processes for the reduction of production costs and enhancement of quality of products or services rendered. A good supply chain management is also beneficial for quality improvement and the acquisition of supplies at relatively lower prices than the prevailing market rates. As a result, organizations are able to benefit from the resulting reduction of the costs of production. Suppliers are also able to provide the organization with information on market research and other supply chain information for the purposes of decision-making. This relationship is able to enhance the firms’ competitiveness further. Bibliography Blanchard, D., 2010. Supply Chain Management Best Practices, 2nd Edition. John Wiley & Sons, New York. Jacoby, D., 2009. Guide to Supply Chain Management: How Getting it Right Boosts Corporate Performance. Profile Books, London. Mentzer, J.T. et al., 2001. Defining Supply Chain Management, in: Journal of Business Logistics, Vol. 22, No. 2, 2001, pp. 1–25; Stock, J.R. and Lambert, D.M., 2001. Strategic Logistics Management, 4th ed. McGraw-Hill/Irwin, New York, NY. Read More