Essence of Supply Chain Management - How Essential Is the Role of Supply Chain Management in Organization's Corporate Strategy?

Essence of Supply Chain Management

"How essential is the role of Supply Chain Management in organization's corporate strategy?"

With increasing opportunities for businesses to expand their markets throughout the world, globalization has forced countries and companies to become more efficient and create a competitive advantage which is necessary to survive. Demands for goods and services come across borders which made companies put up branches and production sites in different countries to lessen cost for raw materials, labor and transportation. In this competitive environment, companies should manage their flow of goods from the supplier to manufacturer to wholesalers to retailers, and at the end, the consumers.

Supply Chain Management includes all the activities in managing supply and demand. It contributes to business performance by finding out ways to get goods to the customer better, faster and cheaper. It does not only define business boundaries but helps build relationship between the supplier and buyer. Getting products to customers faster than the competition will improve a company's competitive position which means that if there is faster product availability, there will be increase in sales. Through supply chain management, they can choose the right partners, resources and manpower and figure out what to reduce and improve. Companies would be able to reach their target market through effective planning and implementation of distribution networks. Resources will be utilized effectively; costs in acquiring raw materials, manufacturing and labor will be reduced if strategic locations are implemented. Networks are designed to meet customer service goals at the least cost. For example, shipment of products is made based on customers' order instead of supplying products in different locations beforehand. SCM is directly responsible to help customers know, select, buy, pay for, and take away company's product. These products may be sold to the customers directly or through a distribution network. Sales play an important part in decision on design of the distribution and is directly involved in its day-to-day operations.