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Home : Articles : Supply Chain : Supply Chain

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SUPPLY CHAIN

During the last three decades, supply chain management has been both an important and a productive aim of corporations. By working to coordinate the production, shipment, and delivery of the goods required to meet their business needs, companies have been able to more easily meet the demands of their customers. However as the 21st century unfolds, supply chain management is evolving into what many experts refer to as synchronized supply chains.

With synchronized supply chains, the overall goal is the same as with traditional supply chain management. There are three key differences, however. One is that companies work with their vendors in order to coordinate their processes and to achieve simultaneous production. Another difference is that the Internet and other types of technology are incorporated into the process to make those processes run smoother and more efficiently. Finally, the buying organization will need to hire, train, and restructure their workforce in order to be able to accommodate this type of supply chain management.

Even though most companies do realize that better supply chain management can benefit their bottom line, too many of them are leery about pursing modernization and efficiency fully. However, the value exists for companies who wish to make the changes necessary to achieve it. Some companies that have pursued supply chain modernization and upgrades have been able to lower costs and boost profits by tens or hundreds of millions of dollars.

One way to achieve this increased value is the compression strategy. Compression allows the processes between the buyers and vendors to be streamlined. There are a number of ways this can be accomplished, and the businesses involved must do their research to determine which are most effective for their needs. Two of the possibilities are: allowing assemblers to be responsible for maintaining the inventory so distributors only focus on making sales, and the second is eliminating the distributor channel altogether so that the assembler would be responsible for putting together the product and for making the sales.

In addition to compression strategies, there are other steps to securing productive supply chain management (SCM). First, the business must determine the strategy it wishes to use as the SCM's guiding force. Once the company determines this, the company needs to decide which supply chain configuration will work best for it. There is a wide array of possible configurations available, so the company must again do its research.

Following those decisions, the companies must also begin to forge supplier relationships. Because the supply chain is only as strong as those relationships that bind the vendors, buyers, and other participants together, this step is crucial. Viewing these other companies and suppliers as partners in the success of the supply chain is important and should be a top priority within the buying organization.

Once all of these components are in place, the business needs to take the next step and choose the proper technology architecture to make the supply chain work well. Some large businesses opt for the full implementation of an ERP system, which can effectively automate and coordinate many of the supply chain elements. The Internet is an important productivity tool that should also be incorporated fully into the supply chain because it streamlines many of the processes involved in procurement.

Effective supply chain management solves many of the problems encountered by businesses today. First, the vendors involved in the chain will actually have a clearer idea of what the buyer needs and can then adequately provide for these needs. Slow response times and delays in project start dates also become less frequent because the automated supply chain helps shave the time off of the order placement and fulfillment process. Furthermore, Internet-enabled supply chains generally result in lower costs for all parties involved because when secure relationships are established and when the supply and demand for products is in alignment, the total prices paid by organizations are generally much lower.

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