Supply Chain Mangament (SCM) is the integration of key business proccesses from

Question

Supply Chain Mangament (SCM) is the integration of key business proccesses from intial raw material extraction to the final customer, including intermediate processing, transportation, and storage activites and final sale to the end customer. Today, the practice of SCM is becoming extremely important to achieve and maintain competitivesness. Many firms are just now beginning to realize the advantages of supply chain integration. Disuss the strategically important reasons for adopting supply chain management.

Explanation / Answer

The strategically important reasons for adopting supply chain management.

Ans. - By adopting a supply chain management system, many firms can reduce the excessive costs and shipping times.

There are 4 reasons for adopting a supply chain management system like -

1> Quality assurance - Many manufacturers in the USA has decided to relocate their operations to countries such as China, India, and Russia for production cost-cutting. This will create an option for many experienced workers to change their job. As a result, the defects and rework attributable to poor systems will increase the production cost. So the supply chain management system is needed for quality improvement, quality management systems, to improve operations.

2> Inventory buffers - Every firm has many types of customer and their demands are different. This requires to manage their inventories by minimizing holding cost and providing flexibility to meet customer demands. So the supply chain management system is needed for making the right inventory buffer levels which are determined by checking previous trends.

3> Shipping - Nowadays, for many online stores customers have got more buying options easily. So shipping option is now very important to fulfill customer demand quickly. Supply chain management systems help all firms by increasing the ways of shipping and reducing the cost to the lowest possible level.

4> Risk mitigation - For all business managers of firms have to manage risks and supply chain management systems help to identify many critical risks in business or with the suppliers.

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