In the past, purchasing for manufacturers was primarily done by lower level employees. A manager told a clerical worker what was needed, and the order was placed. However, strategic purchasing has made this process a relic of the past that will likely never return. Purchasing is now done by management personnel who have a great deal of authority and responsibility, and it is a major part of supply chain management.
Supply chain management is a controlled system where organizations along the entire supply chain work together to produce and deliver the best possible products at the lowest cost. Shared resources are used to assure purchasing, production, and distribution are effective and efficient while meeting established quality standards. This gives producers of products a competitive advantage in today’s lean manufacturing environment.
In the global marketplace, many manufacturers rely on outsourcing and suppliers to do some of their production. This works well for getting products made, but reliance on others brings about quality concerns. Those concerns are the reason that the modern era supply chain management came into play.
GOALS & OBJECTIVES
Supply chain management is, to say the least, a complex arrangement. Every organization in the chain must be successful in order for it to be effective. Money, time and human resources are required to establish relationships, define roles, implements new technology, and bring everything together for a smooth flowing system.
Sometimes the amount of work required to obtain successful SCM does not seem worth it. However, once the system is running, the benefits convince most people that their efforts were not in vain. in fact, those efforts usually pay off tenfold when goals and objectives are achieved. This raises a question. What exactly are the goals of supply chain management? The following lists SCM goals and describes their relationship to manufacturing:
Fill Customer Orders
This is the most basic goal of supply chain management if finished products are not in stock, then customer orders will not be filled. The entire supply chain must work together to achieve this objective, and a week or broken link can cause a breakdown that leads to failure. Fortunately, most organizations make order fulfilment a top priority, and they tend to do whatever is necessary to achieve this objective. For example, management at a furniture manufacturer understands that a customer with a chain of omni channel retail office supply stores puts leather desk chairs on sale every June for the entire month. Based on this, they make sure they have 1000 leather desk chairs in stock at the beginning of March every year so they can fill the orders they receive.
Improve Customer Service
Order fulfilment is only a portion of good customer service. The other part involves meeting customer needs and expectations. In additional to filling orders, customers also want products delivered on time to specified receiving points. In other words, manufacturers must be able to ship products in a timely manner to any location, or customer expectations will not be met. For example, a dental manufacturing company that produces cavity filling compounds has a customer with 35 mobile dental labs that travel around the nation to perform low cost dentistry on people who do not have dental Insurance. This manufacturer knows they must have the compound in stock and be able to ship anywhere in the nation, so they have worked out a deal with UPS to pick up products every day at their facility for overnight delivery. This assures products will be delivered on time anywhere in the country.
Add Customer Value
Filling customer orders and improving customer service are both important objectives for supply chain management, but manufacturers also have to keep in mind the need to create value for their customers. Value is created by understanding and exceeding the requirements that make up customer service. For example, management at an automotive supplier understands that their customers regard just-in-time (JIT) delivery as a top priority. Rather than scheduling deliveries with lowest cost carriers on a case-by-case basis, the supplier enters into an agreement with a specific carrier that makes sure delivery trucks are available 24/7. This creates value by assuring customers that they will receive the parts they need at the times they want them.
Change can be difficult because it often requires people to leave their comfort zones. They have to enter unfamiliar areas causing them to fear the unknown. A major goal of SCM is to help manufacturers embrace change as they modify and adjust their behaviour in different situations. Confidence is the key here, and that confidence is based on the fact that a variety of expertise is readily available with a simple email or phone call. At some point, change is going to happen to all manufacturers…so they might as well accept and embrace it for an easier transition.
At first glance, this might seem a bit strange. After all, why would managing risks be a goal of SCM? The answer lies in surviving workplace disruption. Over time, supply chains undergo changes…and some of those changes are catastrophic if they are not properly managed. Natural disasters, power failures, security problems, labour issues, and leadership changes are all events that can damage the flow of products and risk the survival of organizations. Risk management helps manufacturers identify, rectify, and move past disruption so they can redesign the supply chain and prevent future reoccurrences. Based on this, it makes sense that risk management is a goal of sup-ply chain management.
Add Stakeholder Value
Stakeholders are people or organizations who are affected by a manufacturer’s action. This Includes co-producers, suppliers, investors, communities, and government agencies. Value, similar to customer value, is created by understanding and exceeding stakeholder requirements. However, it differs from customer value because it can be driven by social requirements that are not necessarily financially beneficial to the manufacturer. For example, management at a meat processor understands the community they manufacture their products in wants a clean environment. Rather than monitoring the air quality for smoke exhaust that exits their smokehouses, they install “scrubbers” on the exhaust stacks to reduce the amount of smoke that enters the atmosphere. This creates value by assuring the community that the air they breathe will not be polluted or contaminated.
There are many different skills associated with supply chain management. Some organizations in the chain are great at production, others excel at inventory control, and still others are highly efficient at warehousing and distribution. Every organization has specialization and expertise that helps them identify the best methods for completing job related tasks while incorporating cutting edge technology. A goal of manufacturers is to tap into this expertise and use it for a competitive advantage.
In order for manufacturers to achieve a competitive advantage, organizations on the supply chain need to trust each other. This means trusting that information will be accurate, costs will be shared, and responsibilities will be fulfilled. Mutual trust bene-fits every organization on the supply chain, and this is why it is a goal. Unfortunately, this goal can be the most difficult to obtain because once trust is lost, it is difficult to regain.
Promote Financial Success
This is likely the most well-known and Important goals. needs to increase profitability or it is not operating as intended. Manufacturers strive to reduce inventory, labour, and freight costs while increasing order accuracy, investor return-on-Investment, and customer satisfaction. This leads to more efficient operations …and greater financial success. The major reason that most manufacturers are in business is to make money, and supply chain management helps them accomplish this objective.