Supply chain management Goal and challenges
Supply Chain Management Goal and Challenges
The ultimate goal of supply chain management is to completely “synchronize” every supply chain cycle with the customer’s final demands. In reality, however, the goal is difficult to meet. Most customers face two business environment challenges, the “globalization” of the world economy and the emergence of the “customer economy".
Globalization of the world economy has resulted in extending supply chains, as customers seek comparative advantage and access to new markets. The emergence of the Customer Economy has changed the way businesses respond to demand. Product life cycles are shrinking, R&D timelines are shortening and the demand for a greater variety of product choices is growing.
The efficient management of the flow of goods, services and information along a supply chain - from the procurement of raw materials, through suppliers, manufacturers, and distributors, to consumers and end-users - is becoming increasingly criticalFocus is on order-fulfillment and demand satisfaction allowing to deliver value through service excellence.
SCM Challenge: Emergence of the Customer Economy
Increasingly more demanding Customers- Decreasing product life cycles and time for Research and Development - Increase in variety of products demanded - from mass production of small items, to small production runs of many items- More important to produce what customers want, when they want, as much as they want, and in the proper locations.- Effective coordination among supply chain partners is increasingly important.
Customer Economy presents SCM challenges
Customers increasingly want to work with a single provider who can manage the flow of product and information throughout their entire demand/supply chain - Difficulty in forecasting Customer demand- Coordination is required throughout supply chain- Communication among multiple partners with varying technologies- Local optimization at different stages within the supply chain- Reacting to changes and problems in an extended supply chain- Information distortion and variability within supply chain- Effective communication and cooperation among supply chain partners
Other challenges
- Further distances and longer lead times to manage - More complicated transportation routes and distribution patterns - Increasingly larger number of participants in supply chain - Increased risk of the Bullwhip effect due to number of additional of trading partners - More difficult to respond to Consumer demand in a timely fashion - Greater chance for weather or natural disasters to impact plans - Communication and coordination problems increase
The ultimate goal of supply chain management is to completely “synchronize” every supply chain cycle with the customer’s final demands. In reality, however, the goal is difficult to meet. Most customers face two business environment challenges, the “globalization” of the world economy and the emergence of the “customer economy".
Globalization of the world economy has resulted in extending supply chains, as customers seek comparative advantage and access to new markets. The emergence of the Customer Economy has changed the way businesses respond to demand. Product life cycles are shrinking, R&D timelines are shortening and the demand for a greater variety of product choices is growing.
The efficient management of the flow of goods, services and information along a supply chain - from the procurement of raw materials, through suppliers, manufacturers, and distributors, to consumers and end-users - is becoming increasingly criticalFocus is on order-fulfillment and demand satisfaction allowing to deliver value through service excellence.
SCM Challenge: Emergence of the Customer Economy
Increasingly more demanding Customers- Decreasing product life cycles and time for Research and Development - Increase in variety of products demanded - from mass production of small items, to small production runs of many items- More important to produce what customers want, when they want, as much as they want, and in the proper locations.- Effective coordination among supply chain partners is increasingly important.
Customer Economy presents SCM challenges
Customers increasingly want to work with a single provider who can manage the flow of product and information throughout their entire demand/supply chain - Difficulty in forecasting Customer demand- Coordination is required throughout supply chain- Communication among multiple partners with varying technologies- Local optimization at different stages within the supply chain- Reacting to changes and problems in an extended supply chain- Information distortion and variability within supply chain- Effective communication and cooperation among supply chain partners
Other challenges
- Further distances and longer lead times to manage - More complicated transportation routes and distribution patterns - Increasingly larger number of participants in supply chain - Increased risk of the Bullwhip effect due to number of additional of trading partners - More difficult to respond to Consumer demand in a timely fashion - Greater chance for weather or natural disasters to impact plans - Communication and coordination problems increase
posted by Ogle @ 7:41 AM
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