Importance of Supply Chain Management Essay - 965 Words

The Importance of Supply Chain Management Supply chain management (SCM) is very important and effective to all companies. David Simchi-Levi, Philip Kaminsky, and Edith Simchi-Levi defines supply chain management as â€Å"a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize systemwide costs while satisfying service level requirements.† Supply chain management, also called logistics network, includes suppliers, industrialized centers, warehouses, distributions centers, and retail outlets, as well as unprocessed materials, work-in-progress stock, and†¦show more content†¦Thomson Gale says, â€Å"In addition to helping to create an efficient, integrated company, supply chain management also plays a large part in reducing costs. Depending on the industry, companies leading in supply chain performance achieve savings equal t o three to seven percent of revenues compared with their median performing peers.† There are many different ways that SCM can help make a company more efficient and effective; such as strategic partnerships, information sharing, outsourcing, the Internet, and e-business models. The use of strategic partnerships builds a relationship between the suppliers and buyers that can help both parties reduce their cost, which also builds trust between them both. Information sharing is used by supply chain partners for manufacturers to be able to utilize retailers’ current sales information to better forecast demand and diminish lead times. It also helps manufacturers to manage the unpredictability in supply chains, and from doing this it reduces inventory and evens out production. The big responsibility to cut costs pushed more businesses to begin outsourcing, which is finding other suppliers from out of state or country to supply them with the products better and more cost effec tively. An innovation that has expanded businesses profits and services is the Internet, because it allowed manufacturers to deal directly with consumer business models. E-business models, which are related to the Internet,Show MoreRelatedImportance Of Operations And Supply Chain Management884 Words   |  4 PagesImportance of Operations Organizations’ have matured over the years; they have learned and adapted to become more strategic in every aspect of their business. One way organizations’ have done this is by understanding the importance of operations and supply chain management. The author will explain how operations and supply chain management evolved to what it is today, how this is important to the company’s strategy, and define the dimensions of the quality. 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Businesses now not only need to operate at a lower cost toRead MoreSupply Chain Management Essay528 Words   |  3 PagesSupply chain holds a special place in B2B e-business. With the growth of internet and businesses operating electronically, the product life cycle has reduced to a large extent. This has increased the competition among the organizations to better manage their supply chain to satisfy the customers need in a competitive market. With the growth of information technology, the trends in determining the demand and supply are changing drastically. The organizations are developing and implementing betterRead MoreSupply Chain Management And Healthcare Industry1745 Words   |  7 PagesSupply Chain Management –For Healthcare Industry Introduction: Economic downturn in Healthcare sector has given renewed importance to supply chain management in healthcare industry. Supply chain management has great effects on hospital organizations. On papers Supply chain accounts for 30 to 40% in healthcare industry but that is only if we consider just the cost of goods under the supply chain , instead if we look at factors like cost of inventory , cost of procuring and other costs associatedRead MoreSupply Chains and Inventory Management Essay1155 Words   |  5 PagesSupply Chain and Inventory Management December 6, 2008 Supply Chain and Inventory Management With the increased globalization, competition and complexity in global supply chains, more companies have realized that supply chain management is critical to the optimal organizations overall operation. It is no longer just the responsibility of the warehouse manager and logistics director (Pundir, 2008 and Wharton). In the past, many organizations didn’t manage their supply chains they left that