In the Supply Chain Management (SCM), there is the management of the flow of goods and services; it also involves the raw material, and the process, which includes the inventory. However, when the goods are finished there is the delivery of the goods, to take the material from the origin to the consumption point or to the final consumer, can be called as SCM. In supply chain end consumer matters, there is the need to take the product through the management process, which includes the planning, design, execution, monitoring, controlling etc. However, other objects are also included in SCM, the companies have the competitive infrastructure and focusing on the demands of giving or providing the worldwide logistics or the services to all type of consumers (Jacoby, 2010).
Importance of Supply Chain Management
Organizations are focused on managing the SCM so that the effective services can be there, the companies’ are doing efforts to compete in the networked economy and the global market. It could be said that supply chain is the new management paradigm, which has the new business concepts and has the multiple companies or the business process. However, the network can be successfully operated through the SCM, there are few strategies that need to be focused on the effectiveness, moreover, there can be the complex networks, but the supply chain focuses on the output and input processes. There are multiple multinational companies, that have the significant results and success through applying the concept of SCM in their companies, effective results could be seen.
In the 21st century, the multinational companies have the joint ventures and are the focus on the strategic alliances. There are the business partnerships and the company through the effective management focused on the technological changes that can give benefits to the companies. The companies in the supply chain network are giving importance to the transaction cost, the companies showing the capabilities through the collaboration with the different SCM practices. SCM is considered important to achieve the business goals because there is independently focus on the market orders and the consumer choices. Firms nowadays are focused on the innovation practices so that more productivity and the profitability can be bought in the organization, however, the firms are expanding geographically.
The History of Supply Chain Management
There is the focus on the term Supply Chain, from many years, there are six major movements that are considered important or observed essential in the studies. The movements or studies bring the evaluation in the supply chain management. However, the six major movements are creation era, integration era, SCM 2.0, specialization phases one and two and the globalization era (Baldwin, Kawai, & Wignaraja, 2014).
The term Supply Chain was first coined in 1882, by the Keith Oliver, from the 20th century the concept of Supply Chain is there and considered important, there is the creation of the assembly line. However, with the tome there are the changes in the characteristics of the Japanese’s management practices, moreover, the in this era, there are several aspects of the Supply Chain as there is the re-engineering, cost reduction, and effectiveness, large scale attention etc. In 1999, there is the introduction of Supply Chain Management by the Robert B. Handfield and Ernest L. Nichols, Jr.
The era of the supply chain management was highlighted in the 1960’s when there is the development of the electronic data interchange (EDI), and there is the introduction to the enterprise resource planning (ERP) through the 1990’s. The era of the supply chain management had continued in the 21st century, there were internet collaboration efforts, which took place so that the effectiveness could be there through the cost reduction or adding the value to the processes. In this era, for the first time the production of the material, storage of the material, control on the material, distribution or management of the material take place, an example if such supply chain management is Tesco.
Globalization could be considered as the era, when the business transactions or the products exchange or given to the global countries or companies, for the advantages, the benefits then started. The globalization is considered as the third movement of supply chain management, development, in this era, the attention is given to the supplier relationship in the global system so that there could be effectiveness in the expansion of supply chain. However, in the organizations, the global business started and the companies did efforts to increase the competitive advantages, through managing the function or the processes efficiently. The companies considered their core businesses and the categorized the supply chain management, though the global sourcing.
Supply chain management 2.0 could be described as the evaluation of the processes and the changes with the supply chain with the time, however, with the time; there were the changes, which were considered as a tool to manage the new era of a supply chain. The growing popularity of the supply chain programs, give effectiveness to the companies, there are the several collaboration platforms that connected the buyers and suppliers so that there could be the supply chain finance, transactions. It could name as the World Wide Web that has increased the productivity, collaboration and the sharing among the users. There are the specific tools, methodologies, and the processes to speed up the supply chain; however, the global competition is increasing with time (Hugos, 2011).
Specialization phase one
In the 1990’s, there was the specialization era, when the core competencies and the specialization were being focused. However, there were the outsource functions take place in this phase. The function of the other companies and the management requirements were distributed across the company walls. There was the deep analysis of the process, the contractor, and the manufacturer managed the bill of the original equipment manufacturers (OEMs). The customers’ requests were also supported and the specialization models created, for the manufacturing and the distribution. The changes were brought according to the unique characteristics demand example, the region, channel etc.
Specialization phase two
The specialization in the supply chain, take place when there was the failure in managing the process, in the 1980’s. There were the transportation brokerages, the problems with the warehouse management and the inventory. However, specialization was focused, so that the principles example, execution, planning, collaboration etc. can be effectively done. In phase two, there are rapid changes in the market forces the locations suppliers, logistic providers showed significant effects on supply chain infrastructure.
Summary of Supply Chain Management
In the paper, it is analyzed that Supply Chain is essential for the business process, however, it is important to follow the process efficiently for the benefits, the companies are getting success in the international market as they globalize and focused on the prices effectiveness or reduction and by adding the cost. Through the history, it could be known that Supply Chain Management is developed in the century, people and businesses now are well aware of the process, there is the need to think about the future of Supply Chain Management.
Future of Supply Chain Management
The competition can be increased in the future; there can be more technological factors to improve the supply chain processes. There can be risk, flexibility, and performance challenges (Wang & Koh, 2010). However, there is the need to assess the risks related to the Supply Chain Management process, however, there is need to adopt the excellence model of Supply Chain for the effectiveness, through improving the visibility and innovation the performance can be sustained.
- Baldwin, R., Kawai, M., & Wignaraja, G. (2014). A World Trade Organization for the 21st Century: The Asian Perspective. Edward Elgar Publishing.
- Hugos, M. H. (2011). Essentials of Supply Chain Management. John Wiley & Sons.
- Jacoby, D. (2010). The Economist Guide To Supply Chain Management. Profile Books.
- Wang, L., & Koh, S. L. (2010). Enterprise Networks and Logistics for Agile Manufacturing. Springer Science & Business Media.