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The Supply Chain Management and Its Importance in an Organization

I have heard the term supply chain management many times before and
thought it was a technical jargon only for people woring in certain industries that
now or understand it! "owever# after doing some research and reading some boos
about it# I have come to understand that it is something that actually a$ects almost
everyone in the world!
%ccording to &illiam '! (tevenson# author of )perations *anagement# supply
chain management is the strategic coordination of business functions within a
business organi+ation and throughout its supply chain for the purpose of integrating
supply and demand management! It plays a crucial part in organi+ation activities
and an important element to enhance the e,ciency of business- operations!
(upply chains are typically comprised of separate business organi+ations and
it has two components. a supply component and a demand component! /hrough
supply chain management# these components are lined together so that maret
demand is met as e,ciently as possible across the entire chain! It is therefore safe
to assume that (0* represents the conscious e$ort of all the 1rms or business
organi+ations in the supply chain in order to run it in the most e$ective and e,cient
way possible!
(o what will happen if 1rms won-t pay much attention to their supply chain
and instead just concentrate on their own operations2 If this would happen# certain
critical problems may arise such as inventory stocouts# late deliveries# and 3uality
problems! /hese problems and other issues such as increasing transportation costs#
increasing globali+ation# increasing importance of e-business# and the need to
manage inventories mae it clear that management of supply chains is essential to
business success! )ther signi1cant bene1ts that an e,cient and e$ective supply
chain management would result to are the following. reduced inventory costs#
better medium for information sharing between partners# improved customer
satisfaction as well as service# better trust between partners# e,cient
manufacturing strategy# improved process integration# increase in cash 4ow#
improved 3uality and higher pro1t margin!
/he times when businesses could be successful just by operating
independently were already a part of the past and are now considered an obsolete
strategy! /he present is much more di$erent# and companies must collaborate with
each organi+ation involved and lined in the supply chain! 5usiness organi+ations
must ensure that supply chain activities are actively managed to ma6imi+e
customer value and achieve a sustainable competitive advantage! Implementing
the comprehensive management of a supply chain is no easy tas# but once it has
been successfully done# everyone and every organi+ation within the chain would
bene1t greatly!