Principle Of Supply Chain Management

1085 Words5 Pages
Supply chain management is a concept that has existed for many years. It is based on two main principles. The first principle is that practically, every product that reaches an end-user, is as a result of the cumulative and concerted efforts of several organizations. These organizations are collectively referred to as the Supply Chains. (Robert Handfield, 2011) The second principle is that even though supply chains have existed for quite a long time, most organizations have only paid attention to what was happening within their “four walls.” Few businesses understood, much less managed, the entire chain of activities that ultimately delivered products to the final customer. The result was disjointed and often ineffective supply chains. From…show more content…
Supply chain strategy is a broad term used to define how the supply chain should operate in order to be competitive in a market. Supply chain strategy is an iterative process that evaluates the cost benefit trade-offs of operational components. Business strategy involves leveraging the core competencies of the organization to achieve a defined high-level goal or objective. It also includes the analytic and decision-making process surrounding what to offer (e.g., products and services), when to offer (timing, business cycles, etc), and where to offer (e.g., markets and segments) as a competitive plan. While the business strategy constitutes the overall direction that an organization wishes to go, the supply chain strategy constitutes the actual operations of that organization and the extended supply chain to meet a specific supply chain…show more content…
At some point, a business strategy must be executed and typically, this is done through the operational components of a company. Supply chain strategy also focuses on driving down operational costs and maximizing efficiencies. For example, an organization may choose a strategy directed at supplier management as a way to remain competitive. By providing a clear purpose, the organization keeps sight of the strategy and is able to devise tactical steps to achieve these goals. Another reason for having a supply chain strategy is to establish how you work with your supply chain partners, including suppliers, distributors, customers, and even your customers’ customers. As the marketplace becomes more competitive, it is critical to reinforce existing relationships and work together. And for all these reasons, an effectively executed supply chain strategy results in delivering customer
Open Document