The principle of “survival of the fittest” is still valid in today’s global economy is characterized by the presence of a changing environment’ Every modern business needs to fight for existence and growth in this competitive environment’ A better way of doing this is to offer the best quality product at a reasonable price that suits the requirements of the target clientele’ To give a sense of joy in the minds of consumers and offer quality products at a reasonable price, the manufacturer should focus on the transition from simple observation of the costs of reducing costs in order to reduce production costs’ Therefore, cost reduction is the main manager mantra once quoted by the famous strategist Michael’E'Porter in his book “Competitive Strategy”‘ There are a number of techniques for strategic cost management in Supply Chain Management (SCM), Business Process Re-engineering (Value Re-Engineering), Total Productive Maintenance to reduce costs’ Between these supply chain management is an important tool to reduce costs’ In this context, this paper aims to highlight the conceptual framework of SCM, the mode of operation and its importance for the company in the new millennium’
Supply Chain Management has become a very powerful technique because it increases the responsiveness to changing business conditions and increasing the competitiveness of the organization’ In today’s highly competitive and increasingly globalized economy, to survive and grow, the organization should increase its responsiveness and profitability’ Part of the supply chain is one method of breaking the link of the value creation of the basic raw material / component supplier to supply the final product to the customer / consumer’
A supply chain is a business process which are manufacturers, retailers, customers and suppliers in the form of a chain, develop and deliver products in a single virtual organization and the sharing of knowledge resources’ The management of the supply chain is the process of synchronization of the physical flows of goods and information from the production line of component suppliers to consumers with low associated with the delivery of the first notice of demand fluctuations and synchronization of business processes of all organizations that cooperated in the supply chain’
Definition:
Definitions have changed the references in the last decade’ For example, the supply chain Yearbook 2000 SCM describes as, “A chain of processes that facilitate business activities between trading partners, buying raw materials and materials to manufacturing to delivery of a finished product to an end user’” APICS-The advantage of performance, a project of this definition in January 1999: “The global network to provide products and services from raw materials to end customers through an engineered flow of information, physical distribution and money ‘
A small change in the definition 1997 of Logistics Management SCM offers described as “The delivery of clients and greater economic value through managing the synchronization of the physical flows of goods and associated information, from the supply to consumption’ “The definition of the continuous evolution of logistics in 1995, the MSC has been suggested,” The organization, planning, implementing and monitoring the movement of product development and acquisition through production and distribution to end customers to meet market requirements at minimum cost and minimum capital of use’ ”
One of the first to identify a precise description of the SCM, International Journal of Logistics Management in 1990, called “A philosophy of integrating the management of the total flow of a distribution channel from supplier to end user’”
Several issues seem consistent with most definitions of SCM:
? The scope extends from the sources of supply to final customers
? In addition to products and services, information and financial flows are
? The goal is to satisfy customer demand at the lowest possible cost
? A comprehensive and integrated approach is needed to manage the process
Cost Reduction and SMC
There are a number of techniques to reduce management costs, to reduce costs from the reduction of labor, strict supervision, commitment to quality, working hours etc, but reducing costs at the expense The quality is just a waste strategy’ SCM aims to reduce costs without compromising quality’ SCM is a strategy to reduce costs through the elimination of all value added activities in the flow of goods from raw material supplier to final consumers’ The objective of SCM is to increase the competitive advantage of the chain as a whole’ The means to achieve this goal by creating superior customer value with the value of the offer competitot and improve customer satisfaction by improving efficiency (lower cost) or effectiveness (value added for the same price )’
The decisions in the management of the chain: 1
Management decisions in the supply chain can be classified into two broad categories – strategic and operational’ As the term implies, strategic decisions are taken on a longer time horizon’ These are closely related to the company’s strategy and policy direction of the supply chain, from a design perspective’ On the other hand, operational decisions in the short term, and focus on activities for today’ The effort in this type of decision is to manage effective and efficient flow of products into the “strategic” supply chain expected’
Four main areas of decision on management of the supply chain are:
(1) Location
(2) Production
(3) Inventory
(4) Transportation (Distribution)
And there are two strategic and operational elements in each of these areas of decision’
Location decisions: The geographic location of production facilities, storage, points and points of supply is the first step in creating a supply chain’ The location of facilities involves a commitment of resources for a long term plan’ Once the size, number and location of these are determined, and the paths by which the product flows through the end customer’ Although they are mainly strategic decisions also have implications at the operational level’
Production decisions Strategic decisions are the product to produce, and plants to produce in the distribution of suppliers of plants, plants in the distribution chain (DC) and the DC market to customers’ These decisions have a significant impact on revenues, costs and level of customer service company’ These decisions include the construction of the master production schedules, scheduling of production machinery and equipment maintenance’ Other considerations include the balance and quality control measures at a production facility’
Inventory decisions: these are ways in which the reserves are managed’ Inventories exist at every stage of the supply chain, including raw materials, semi-finished or finished’ They may also be in the process plant’ His prime minister, but a buffer against the uncertainties that exist in the supply chain’ Since the holding of inventories can cost anywhere between 20 to 40 percent of its value, its effective management is essential in the operations of the supply chain’ It is strategic in that it sets goals for management’
Transportation decision: The mode choice aspect of these decisions more strategic’ These are closely related to the inventory of decisions, from the best selection of mode is often found by trading off the cost of using the mode of transport with the indirect costs associated with inventory this way’ Customer Service, and geographical location play a vital role in such decisions’ Since the transport of more than 30 percent of the costs of logistics, the use of economically efficient’ Shipment sizes (consolidated bulk lot against a lot), routing and scheduling of equipment are key elements in the effective management of the company’s strategy for transport’
Why the supply chain’
The importance of SCM and the need will increase in the future’ Customer demand for faster delivery times for orders’ Manufacturing to a greater awareness of the need to better plan their operations and procurement’ Similar expectations apply to external entities’ This need for coordination between the customers return, suppliers and service providers need greater visibility and collaboration throughout the supply chain’
Dynamic business environment characterized by competition based on time synchronization with other corporate functions, customized services for specific markets and customers, further consolidation of suppliers and service providers as well as privatization and deregulation, the emphasis on continuation of outsourcing, the development of performance measures including the supply chain, the strengthening of collaboration between partners in the supply chain and e-commerce to enable communications in the entire supply chain will increase the need for the chain supply’
Evolution of Supply Chain Management:
Span of Responsibility
Actions: The components of the SMC have been traditionally regarded as “functional silos” and usually include working outgoing traffic (ie, delivery to the customer), warehouse management and field inventories of finished products’
Present: Today, SCM executive in general a broader range of responsibilities’ that most of these executives are responsible for transportation, storage, housing, inventory management, customer service, purchasing / sourcing, demand planning, production planning / scheduling and international logistics’
2′Organizational Position:
Previous: SCM has traditionally been considered a cost center, little or no value added to tangible financial results’ Those responsible for the SMC in the level of general manager, reporting to managers and vice presidents in charge of operations, marketing and other functional areas’
Present: SCM leaders are in good position’ Executives responsible for marketing / sales, manufacturing and other departments are now in general, the couples instead of the official reports’ In recent surveys, shows that companies in the U’S', 52 per cent of MTS compared to an Executive Vice President and COO and CEO’ In Asia, this percentage is slightly lower (48 percent), Europe, this percentage was only 31 percent’
3′ Education and Training
Before: the past, relatively few universities that offer education SCM’ In these institutions, scholars who have taught courses of MTS is usually in a large department, for example, or marketing’ Some schools offer training courses and seminars in the SMC, but these forums are usually focuses on one specific aspect of SCM, such as carrier negotiations, inventory management techniques, storage and handling systems and International Trade
Present: Today, many universities are known – in the United States and abroad – that offer degrees at all levels in the area of SCM’ A recent list of CLM identified nearly 50 institutions in the SMC with the curriculum’ Continuing education seminars and workshops with themes abound SCM’
4′ Contributions to business performance
Previous: Historically seen as a cost center, SCM corporate contributions were considered minimal’ Given that management systems focus on activities at the operational level, the strategic value associated with SMC is difficult to quantify’
Present: report SCM edge manufacturers cost between 4 percent and 5 percent of sales, compared with the industry average of 7 per cent to 10 per cent of successful SCM can improve the performance of 25% for reduce inventory levels by more than half and improve overall productivity by at least 15 per cent’
In conclusion, in this dynamic market equations are bound to change soon with the leaders of yesterday, was moved by the rapid development and agile new entrants’ Increased competition, demanding customers, the reduction of product life cycles, rapid advances in technology of all these factors are changing rapidly in the competitive dynamics of the global environment’ The unstable economic environment was more difficult than ever for retailers to compete effectively’ Traditional approaches are too slow to keep pace with the evolution of complexity’ These developments are putting pressure on firms to examine the components of each and every company as procurement, logistics, marketing, etc’ to link effectively the functions of these processes have been combined companies in a strategic position’ Every link in SCM can add up to a competitive advantage’ There was a time when companies looked at its supply chain as a means to focus on their core competencies, the influence of these suppliers, lowering costs and increasing response to customers’ These objectives will not be executed by the supply chain in the new millennium’ But will be replaced by a single super-objective: competing on the basis of how companies manage their supply chain’