Concepts of SCM and the evolution to its present day form
Critical factors that affect SCM
Information sharing and Knowledge management
Culture and Belief -- impact on SCM
Global environment and Supply Chain management
"Social" and "soft" parameter required for SCM
This chapter aims to give an outline and scope of the study that will be undertaken in this work. The study lays out the issues faced by manufacturing organizations when it comes to the management of supplies, inventory, operations and distribution. Any study that can help organizations understand the factors that impact the management of these resources in an organization is beneficial. This chapter also contains the purpose and the hypothesis of this study.
Purpose of this study organization, big or small, is driven by the need to generate profits for its stakeholders. As a result, these organizations are constantly looking for new ways to increase their profitability. While management concepts have been around for centuries, their progression and evolution have never been as rapid as that in the 19th and 20th century. E new management style introduced in recent times has been declared as the "best" and most effective. Companies that "created" these styles as a result of their companies' own internal factors defined many of the management styles, as we know them today.
The need to constantly generate profits for any organization if forcing management within the organization to evaluate and understand the internal and external factors that have the potential to create the most variance.
Management of organizations is a complex process. In turn, organizations constantly seek methods and use tools that will help them understand their operations and optimize their operating processes for higher profits. Attempts to run organization in a "lean" manner with awareness of the criticality of continuous improvement is growing among manufacturing-based organizations. Creating a constancy of purpose towards improvement and strategy planning based on long-term goals of the organization can help enlighten those involved with the organization to problems that they face or might face.
Supply chain management (SCM) has been used with varying effectiveness in organizations all over the world. This study initially hoped to identify the concepts and ideologies of SCM in two countries: the U.S. And Malaysia. In the proposal it was anticipated that extensive surveys and data collection would be undertaken to collect the necessary real data with respect to improved financial advantages in implementing SCM. Most of companies approached by this researcher however, were not forthcoming with their information as to their operating processes. Consequently they refused to divulge key, necessary information. Rather, they provided only generalized "verbal" information of the improvements or the losses experienced in the process of implementing SCM. (Details are provide in Chapter 3) The focus of the study therefore had to be changed. This study was revised and undertaken based on existing information available on SCM implementation and effects on companies in two locations only. Extensive reviews of printed material available of various companies that admitted to implementing SCM in the two countries over the past three years was studied. Suitable, verifiable and extensible conclusions were inferred. This study will undertake a critical evaluation of all the literature published in this field and the impact of SCM on different organization obtained as a result of the review of literature done in this field.
It is important to note that SCM is not entirely a new concept. It has been used in countries like Japan for years. SCM models used in Japan however, were conceptually and ethically implemented for different reasons. The Asia-Pacific region is strongly influenced by local cultures and values. These factors play an important role in the ability of any organization to conduct business in the region. In Japan for example, the Keiretsu play an important role in the manufacturing and production industry. By integrating the supply chain horizontally as well as vertically, the Japanese industry has been able to keep out foreign competition in the region. (Selig, 2004) In the horizontal system, cross-ownership and high coordination is encouraged within the alliance. Horizontal keiretsu was initially implemented when Japan first opened its market to foreign competitors in 1968. "Vertical" keiretsu represents a single company, which runs its suppliers, the suppliers of its suppliers, and its retailers. Vertical keiretsu are generally a part of a horizontal keiretsu. This tactic makes it difficult even today for foreign companies to operate in the Japanese market.
Due to the failure (explicated above) to collect data in two attempts (over a range of industries in Malaysia and the United States) forced the change of the research strategy for this paper. As a consequence, three new hypotheses were identified. These were focused on the study of supply chains in organizations and the management needs for ensuring the optimization of these supply chains. The questions that the hypotheses hoped to raise are:
H1: Does trust help in the development of good supply chains? What are the best conditions for fostering trust between organizations?
H2: Does data and information collection aid in the SCM? Is the conversion of data and information into knowledge beneficial to all companies in the supply chain
H3: What are the effects of culture and belief on the success of SCM models in organizations?
H4: What effects do global conditions play on the supply chain? Are company transaction across geographical boundaries in the supply chain impacted by company's goals and mission?
H5: Do the soft issues of management such as worker motivation, team working, and leadership significantly impact the supply chain?
H6: What uncertainties does SCM face for the future? And what are the options available to companies for handling these uncertainties?
Importance of this study
Many American companies are increasingly outsourcing their lower level manufacturing operations to companies and countries not geographically close. In an effort to improve cash flow and working capital, companies have been in recent times relying more on Just-in-time (JIT) management principles and lower inventory levels. Quality improvement and performance are also becoming important factors by which organizations hope to differentiate their products in the market.
Technology innovation in the past years has changed the way business is conducted drastically. This change has impacted life in a manner similar to the effects of the invention of the steam engine and its impact on the Industrial Revolution. Well-established shipping and air transportation routes between the major countries of the world have also help to reduce the time of movement of goods. Communication mediums have matured. High levels of connectivity can be obtained at relatively low costs. In such an environment, a new concept of management arose. Organizations became more global. Some had multiple operations in different continents. Therefore, scheduling and planning for material flow became important. Instead of managing discrete and individual companies involved in the process, it was deemed better to control the flow of the product. This also affects an organization's relationship with other organizations. These associated organizations often are suppliers or buyers of the products manufactured by any organization. Many changes have occurred in the manufacturing industry in the past two centuries. Some of these were passing changes; others had the ability to strongly impact the way manufacturing was undertaken, all the while taking into account the competitive nature of the business.
This study, though purely theoretical, can help organizations understand the issues that they face in managing the supply chain. It is beyond the scope of any one study to completely investigate and study the impact of e variable on the supply chain. An effort has been made to investigate the most salient factors. With this in mind, this study aims to identify the relationship between a few variables and answer some of the questions that typically arise, associated with these variables. This study will also lend credence to the role that management might play in the enforcement of these variables.
Concepts of SCM and the evolution to its present day form
Managers and decision makers are constantly searching for the best and most effective management tools that they can use to control their organization. (Drucker, 1997) These tools have ranged from inventory management tools such as EOQ (economic order quantity) to management philosophies such as Just-in-Time (JIT), Total Quality Management (TQM), TOC (Theory of Constraints), Optimized Production Technology (OPT), Supply Chain Management (SCM) and Enterprise Resource Planning (ERP). Over the years, it has become clear that any one philosophy does not work in isolation. Applying principles in conjunction to suit the problem at end is the optimal approach.
Supply chain in any organization is generally identified as a group of organizations or individual departments, either upstream (suppliers to the company) or downstream (moving the product produced by the company to the market or the next user), linked together to help move any product from the source to the supplier. (Richey and Bachrach, 2004) SCM is therefore a tool that requires a well-defined methodology in order to achieve the desired results. (Stevenson, 2002) The…