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The best companies around the world are
discovering a powerful new source of competitive advantage. It's
called supply-chain management and it
encompasses all of those integrated activities that bring product to
market and create satisfied customers. The Supply Chain Management Program
integrates topics from manufacturing operations, purchasing,
transportation, and physical distribution into a unified
program. Successful supply- chain management, then, coordinates and
integrates all of these activities into a seamless process. It
embraces and links all of the partners in the chain. In addition to
the departments within the organization, these partners include
vendors, carriers, third- party companies, and information systems
providers. . Within the organization, the supply chain
refers to a wide range of functional areas. These include Supply
Chain Management-related activities such as inbound and outbound transportation, warehousing, and
inventory control. Sourcing, procurement, and supply management fall
under the supply-chain umbrella, too. Forecasting, production
planning and scheduling, order processing, and customer service all
are part of the process as well. Importantly, it also embodies the
information systems so necessary to monitor all of these activities. Simply stated, "the supply chain
encompasses all of those activities associated with moving goods
from the raw-materials stage through to the end user." Advocates for this business process
realized that significant productivity increases could only come
from managing relationships, information, and material flow across
enterprise borders. One of the best definitions of
supply-chain management offered to date comes from Bernard J. (Bud)
LaLonde, professor emeritus of Supply Chain Management at Ohio State
University. LaLonde defines supply-chain management as follows: "The delivery of enhanced customer and
economic value through synchronized management of the flow of
physical goods and associated information from sourcing to
consumption. "As the "from sourcing to consumption" part of our last
definition suggests, though, achieving the real potential of supply-chain
management requires integration--not only of these entities within
the organization, but also of the external partners. The latter
include the suppliers, distributors, carriers, customers, and even
the ultimate consumers. All are central players in what James E.
Morehouse of A.T. Kearney calls the extended supply chain. "The goal
of the extended enterprise is to do a better job of serving the
ultimate consumer,". Superior service, he
continues, leads to increased market share. Increased share, in
turn, brings with it competitive advantages such as lower
warehousing and transportation costs, reduced inventory
levels, less waste, and lower transaction costs. The customer is the
key to both quantifying and communicating the supply chain's value,
confirms Shrawan Singh, vice president of integrated supply-chain
management at Xerox. "If you can start measuring customer
satisfaction associated with what a supply chain can do for a
customer and also link customer satisfaction in terms of profit or
revenue growth," Singh explains, "then you can attach customer
values to profit & loss and to the balance sheet." |
