Why implement supply chain management?

Why implement supply chain management?
Why implement supply chain management

There are significant differences between supply chain management and traditional logistics management in terms of inventory management, cargo flow, cost, information flow, risk, planning, and inter-organizational relationships. These differences make supply chain management more advantageous than traditional logistics management. .

From the perspective of inventory management and supply logistics, in supply chain management, inventory management is coordinated among supply chain members to minimize inventory investment and costs; while traditional logistics management is to push inventory forward or Backwards, depending on who has the most initiative in the supply chain. In fact, traditional logistics management pushes inventory to suppliers and reduces inventory investment in the channel, simply shifting inventory. The solution to this problem is to reduce uncertainty by providing information about production planning, such as sharing information about expected demand, orders, production planning, etc., and make safety stocks lower.

From a cost perspective, supply chain management optimizes the supply chain by focusing on the final cost of the product. The final cost mentioned here refers to the actual total cost when it reaches the customer, including the price at the time of purchase, delivery cost, inventory cost, etc. The traditional logistics management is still limited to the minimum within the company in terms of cost control.

Risk and planning are two other important aspects that differentiate supply chain management from traditional logistics management. In supply chain management, risks and plans are realized through shared sharing and communication among supply chain members, while traditional logistics management only stays within the company. In terms of inter-organizational relationships, members of supply chain management reach cooperation based on the control of final costs, while traditional logistics management is based on cost reduction within the company.

Supply chain management is implemented because supply chain management is more dynamic than traditional logistics management and can bring substantial benefits to supply chain members. However, in order to successfully implement supply chain management, there must be good information sharing among supply chain members; and it is not easy for enterprises pursuing different goals to achieve open and honest information sharing. , especially when a company cooperates with many of its competitors, it is more difficult to achieve information sharing. Therefore, successful supply chain integration requires first of all that all node enterprises agree on the following aspects: jointly recognize the service demand level of the end customer, jointly determine the location of the inventory in the supply chain and the amount of inventory at each inventory point, jointly formulate Policies and procedures, etc. to manage supply keys as an entity.

The first aspect above is relatively easy to achieve, but this goal is often overlooked in decision-making. The end customer's service needs are the key to identifying inventory in the channel, and successful manufacturers can recognize the customer and its needs, and then coordinate the flow of inventory in the manufacturer's own country and throughout the channel. The second aspect is the basic operating principle of logistics management, that is, the content to meet customer needs should include what is needed, where is needed and how much is needed. The third aspect requires the sincere cooperation of all node companies in the supply chain. Only when each node company looks at the problem from the perspective of the entire supply chain can it be easy to understand and make concessions to each other, and jointly formulate certain policies and policies. procedures, and then establish a comprehensive logistics organization.

Methods of Supply Chain Management and Optimization

There are many methods for supply chain management and optimization, and each enterprise is different. A special phenomenon is found from countless classic cases: some very good supply chains mostly adopt wrong strategies (not learning The strategy made by the case), such as ZARA, such as DELL, their supply chain is indeed very good, but their supply chain strategy is almost difficult to be transplanted.

Therefore, instead of blindly learning from other people's supply chains, it is better to settle down and focus on researching your own supply chain. why? The reason is: each enterprise is different, and each has its own characteristics. Since the supply chain is the prescription of the enterprise, the prescription it uses is also different.

For example, if an enterprise is strong in A and weak in B, and the supply chain it adopts is weak in A and strong in B, it complements each other's advantages. If you rashly introduce his supply chain without analyzing it, for him, it is a set of software that runs well in the computer, and for you, the implanted virus is! Because of this, it determines the non-replicability of your enterprise's supply chain system, and it is because of this non-replicability that determines the irreplaceability of your enterprise's core competitiveness. This is the core, the foundation.

The following is a brief introduction to a few "cases of applying different methods of supply chain":

(1) The supply chain management of companies such as Toyota, Nike, Nissan, McDonald's and Apple is implemented from the perspective of the network chain;
(2) Shell Petroleum developed the SIMON (Inventory Management Order Network) information system through IBM's Lotus Notes, thereby optimizing its supply chain;
(3) Li & Fung's supply chain optimization method is to integrate the manufacturing resources of all suppliers in production, and operate as a whole, based on the perspective of integrating suppliers;
(4) HP printers and Toyota are geographically re-planning the distribution of supply and sales manufacturers through McKinsey Consulting to fully meet customer needs and reduce operating costs, which are choices based on geographic locations.
(5) Procter & Gamble adopts the method of classification, which is adapted to the specific situation of the supply chain operation, through the logistics of treasure supply. Detailed classification and the adoption of targeted strategies can achieve significant optimization of the supply chain, which is based on the refinement of classification.

The development trend of supply chain management

Supply chain management is by far the most advanced form of enterprise logistics development. Although supply chain management is very complex, dynamic and changeable, many companies have gained rich experience and achieved remarkable results in the practice of supply chain management. The current development of supply chain management is showing some obvious trends:

1. Time and speed

More and more companies recognize that time and speed are one of the key factors affecting market competitiveness. For example, in the IT industry, most PC manufacturers at home and abroad use Intel's CPUs. Therefore, how to ensure that Intel's latest CPUs are installed in the first time has become a natural choice for PC manufacturers to gain competitiveness. In a word, in the supply chain environment, time and speed have been regarded as the main sources of improving the competitive advantage of enterprises, and the procrastination of one link often affects the operation of the entire supply chain. Each enterprise in the supply chain realizes the close connection of logistics and information flow between them by various means, so as to achieve the purpose of quick response to the final customer's request, reducing inventory cost and improving the overall competition level of the supply chain.

2. Quality and Asset Productivity

Supply chain management involves many links, which need to be closely linked to ensure the quality of each link. Any link, such as the quality of transportation services, will directly affect the quantity of suppliers' stockpiles, the quantity of distributors' warehousing, and ultimately affect the user's evaluation of product quality, timeliness, and price. Nowadays, more and more companies believe that logistics quality innovation is evolving into a powerful force to improve supply chain performance. On the other hand, manufacturers are increasingly concerned about the productivity of their assets. Improving asset productivity is not just about reducing inventory within a business, but more importantly reducing inventory in supply chain channels. The trend of supply chain management development requires companies to cooperate and share data to reduce inventory in the whole supply chain channel.

3. Streamlining the organization

The type and quantity of supply chain members are the direct cause of the complexity of supply chain management. Under the current supply chain development trend, more and more companies are beginning to consider reducing the number of logistics suppliers, and this trend is very obvious and rapid. For example, MNC clients prefer to outsource their global logistics supply chain to a few, ideally a single logistics provider. Because this is not only conducive to management, but also to provide unified standard services on a global scale, which better shows the whole set of advantages of global supply chain management.

4. Customer service

More and more supply chain members are starting to really value customer service and customer satisfaction. The traditional measurement is based on "order delivery cycle", "percentage of complete orders", etc., but now it pays more attention to the customer's feeling of service level, and the measurement of service level is also based on it. The result of the shift in the focus of customer service is to attach importance to the relationship with the logistics company, and regard the logistics company as a partner who provides high-level services.

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