The principle of "survival of the fittest" remains valid in the current global economy through the presence of ever-changing economic environment characterized. Every modern business must fight for the existence and growth in such a competition. One sure way to achieve this is to the best quality product at reasonable rate, which fits well with the contact requirements of target customers. To convey a sense of joy in the minds of consumers and offer quality goodsrelocate reasonable price manufacturer has put in its focus from pure cost determination to reduce the cost at the expense of production. To reduce costs, the main management mantra is as once quoted by well-known strategist Michael.E.Porter in his landmark book "Competitive Strategy". There are a number of strategic cost management techniques available, such as supply chain management (SCM), Business Process Re-engineering (Value Re-engineering), Total Productive Maintenanceto reduce costs. Of these, the focus is on supply chain management tool to reduce costs. In this context the present study aims to highlight the conceptual framework for SCM, modus operandi and its relevance for corporate world in the new millennium.
Supply chain management is a very powerful technique, as it increases the responsiveness to changing business conditions and increase the competitiveness of the company. In today's intenseSurvive competition and the increasingly global economy in order to grow, companies must increase their market responsiveness and competitive costs. The framework for the supply chain is a method of breaking down the linked value-creating activities from basic raw material / suppliers for the delivery of the final product as per customer / consumer.
A supply chain is a business process that manufacturers, distributors, customers and suppliers in the Will form a chain to develop and deliver products in a single virtual organization skills and resources pooled. Supply chain management is the synchronization of physical goods and associated information from the production line of low level suppliers to the consumer, making the provision of early Notice of demand fluctuations and synchronization of business processes among all the cooperating organizations in this offer> Chain.
Definition:
Definitions of prestigious sites in the last decade changed. For example, as described supply chain Yearbook 2000 SCM as "a chain of processes that facilitate doing business between trading partners, the purchase of raw materials for manufacturing to delivery of the finished product to a consumer." APICS-The Performance Advantage, offered this definition, in January 1999: "The global network used toprovides products and services from raw materials to end customers through an engineered flow of information, physical distribution and cash. "
This is offered to a small change in the 1997 definition, logistics management, describes SCM as "The delivery of enhanced customer satisfaction and economic value through synchronized management of the flow of physical goods and associated information, from procurement to consumption." The definition of development goes further than European Logistics Association, in 1995SCM has been proposed: "The organization, planning, monitoring and implementation of the goods flow from development and purchasing to production and distribution to the retail customer to take advantage of the market requirements at minimum cost and minimum capital to satisfy."
One of the first, a precise description of the SCM, International Journal of Logistics Management to determine exactly in 1990, called it "an integrative philosophy of the entire flow of the sales channel managementSupplier to the consumer. "
Several issues appear in most definitions of SCM are consistent:
• The scope extends from sources of supply for retail
• In addition to the products and services, information and financial flows are included in the price
• The goal is to satisfy the demand at the lowest possible cost
• A comprehensive and inclusive approach is needed to control the process
Cost Reduction & SCM
There are a number of costBreak available techniques for the management of costs, ranging from reduced man power reduction, strict scrutiny, compromise with the quality, overtime, etc.. But cost is only at the expense of quality waste strategy. SCM aims to reduce costs without compromising on quality. SCM strategy is to reduce costs by eliminating all non value has operations in the flow of goods from raw material supplier to the consumer. The goal of SCM is on the competitive advantages that the increaseChannel as a whole. The means to achieve this goal is by creating value for our customers better than the value competitot's offers and improve the customer experience, whether by improving efficiency (lower costs) or the added efficiency (values at the same cost) .
Decisions in Supply Chain Management: 1
Decisions for supply chain management can be divided into two broad categories - strategic and operational shall be classified. As the name implies, Strategic decisions are usually made over a longer time horizon. These are closely linked to corporate strategy and supply chain guide guidelines linked from design-wise. On the other hand, operational decisions are short term and focus on activities over a day-today basis. The expense for these kinds of decisions is an effective and efficient management of goods traded within the "strategically" planned supply chain.
Four major areas of decision on> Supply chain management are:
(1) Location
(2) production
(3) Inventory
(4) transport (distribution)
And there are also strategic and operational elements in each of these decisions.
Location Decisions: The geographic placement of production, storage, points and procurement is the natural first step in creating a supply chain. The location of facilities involves a commitment of resources tolong-term plan. Once the size, number and location of these are determined, so are the possible ways in which flows the product by the end customer. Although location decisions are primarily strategic, they also have an impact on the operational level.
Production decisions: The strategic choices have to produce what product, and the plants around them in the production, distribution of suppliers to plants, plants to distribution channel (DC) and DC, customer markets. TheseDecisions have a major impact on the revenues, costs and service level customers of the company. These decisions are the construction of the master production schedules, planning of production processes in machines, equipment and maintenance. Other considerations are workload balancing, and quality control measures in a manufacturing plant.
Inventory Decisions: These refer to means by which to manage inventories. Inventories are available on each stage of the supply chain, either rawmaterial, semi-finished and finished products. You can also practice between the locations. Their primary purpose may buffer against the uncertainty that exists in the supply chain. Since holding of inventories can cost between 20 to 40 percent of their value, critical for the efficient management of supply chain's operations. It is of strategic importance in the sense that the top management sets goals.
Transportation choices: The mode choice aspect of thisDecisions are, the more strategic. These are closely related to the inventory decisions, since the best choice of mode is often found by trading off costs for the use of each mode of transport with the indirect cost of inventory associated with this mode. Customer service levels, and geographical location play a vital role in such decisions. Since the transport of more than 30 percent of logistics costs, operating efficiently makes economic sense. Shipment sizes (consolidatedBulk shipments versus Lot-for-are Lot), routing and planning of investment in effective control of the traffic, the press strategy.
Why supply chain.
The importance and necessity of SCM increase in the future. Customers demand faster, more rapid delivery of orders. Manufacturing will expect more knowledge to better the requirements to plan its operations and procurement processes. Similar expectations apply to external bodies. This need for increasedCoordination between customers, suppliers and service providers greater visibility and the dictates of cooperation in the supply chain.
Dynamic environment characterized by time-competitive, customized synchronization with other enterprise functions, service to specific markets and customers, with increased consolidation of suppliers and service providers, further privatization and deregulation continue to focus on outsourcing, development of performance indicatorsMeasures such as supply chain partners to closer cooperation between the partners in the supply chain and electronic commerce to communication within the supply chain is the need to increase the supply chain.
Evolution of Supply Chain Management:
Span of Responsibility
Earlier: The components of SCM have been traditionally regarded as "functional silos" and typically included outboundTransport-tion (ie delivery) to the customer, the field of storage and finished goods inventory management.
Present: Today, SCM executive branch generally has a much broader range of responsibilities. that the majority of managers have responsibility for transport, warehousing, inventory management, customer service, purchasing / procurement, MRP, production / planning and international logistics.
2.Organizational Position:
Past: SCM traditionallywas shown as a cost center, as little or no tangible value to achieve results. People who were for SCM as a rule at the manager level, reporting to the directors or vice-president responsible for operations, marketing or other functional areas.
Present: SCM executives are now well positioned. Executives responsible for marketing, sales, production and other departments are now generally accepted as peers reporting officer. In the last survey it is observed that in U.S. --Companies, 52 percent of executives report in an SCM Executive Vice President and COO / CEO. In Asia, the percentage is slightly lower (48 percent), Europe, the proportion was only 31 percent.
3. Education and Training
Earlier: Historically, relatively few universities offer SCM education. Housed in these institutions, the academics, have been taught SCM course work, usually within a larger department, such as operations or marketing. Some schools offer training andSeminars in SCM, but focus these forums tend to a specific aspect of SCM, such as carrier negotiations, inventory management techniques, storage and handling systems and international trade
Present: Today, there are numerous well-recognized universities - in the U.S. and abroad - offers degrees at all levels in the area of SCM. A recent CLM listing identifies nearly 50 SCM institutions with related curricula. Training seminars and workshops with SCMIssues abound.
4. Contributions to corporate performance
Earlier: Historically, as a cost center, SCM posts at the company level were to be considered minimal. Since reporting systems designed to manage operational activities, was associated with all the strategic value of SCM difficult to quantify.
Present: Leading-edge manufacturers report SCM costs between 4 percent and 5 percent of sales, compared successfully with the industry average of 7 percent to 10 percentSCM can improve the delivery of his performance by 25%, increase inventory levels by as much as half, and overall productivity by at least 15 percent.
In conclusion, in this dynamic market, the equations always changing very fast with the leaders of yesterday, replaced by the fast and agile new entrants. Intense competition, demanding customers, shrinking product life cycles, rapid advances in technology, all these factors is rapidly changing the competitive dynamics inin the global environment. In this uncertain environment makes it harder than ever for marketers to enforce the competition. The traditional approaches are too slow to keep pace with the changing global complexity. These developments will be pressure on companies to each of the components of the business look like procurement, logistics, marketing, etc. Effective combination of features makes these processes in strategic position. Each member of SCM can be up to one Competitive advantage. Time was when companies looked at their supply chains as a means of focusing on core competencies, which uses the supplier, the lower their costs and the ever closer to customers. These objectives will not be absorbed by the supply chain in the new millennium. But it will be replaced by a super-simple goal: compete on the basis of how well companies manage their supply --> Chain.
References:
1 On Introduction to Supply Chain Management by Ram Ganeshan and Terry P Harrison accessed at http://lcm.csa.iisc.ernet.in/scm/ Supply Chain _ _intro.html
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