Supply Chain Management Essay

1158 words - 5 pages

Supply chain management (SCM) can best be described as link or connection between suppliers, manufacturers, distributors, and customers. Supply chain doesn't only apply to materials being moved but also applies to information being moved. In practice, it's moving items from supplier to manufacture to distributer to retailer and finally reaching the customers. The Supply chain method of shipment or way of business hasn't all ways been around in fact it rose to prominence during the late stage of the 20th century. The introduction of trucks, airplanes, computers and the internet has changed everything. The Supply chain's goals are too reduce cost, save money and make forecast by determining the demand so that supply is matched. If the supply doesn't match the demand then there is waste and waste is synonymous with money lost. The importance of reducing cost through well planned strategies shouldn't be glossed over because lower costs and saved money leads to lower prices.

A good Supply chain management leads to cost reduction and cost reduction leads to money saved and the money saved leads to lower prices for the consumer and lower prices are attract new customers. Before Wal-Mart, Kmart and Sears were the giants in their respective category. Wal-Mart’s electronic mindset to data collection can be attributed to the company's rise. In 1975 Wal-Mart brought in IBM 370/135 computer system to control inventory in store and delivery of items electronically (Waligum, 2007). Wal-Mart focused on the "hub and spoke" system where the hub was the distribution centers and the "spoke" was the local stores (Waligum, 2007). By putting multiple distribution centers in close proximities, Wal-Mart was able to reduce the distance of shipments and eliminated intermediaries and the time and money saved translated to lower prices. Fast forward to 1980 and Wal-Mart becomes the fastest company to reach a billion dollar sales in a span of 17 years.
Supply chain is greatly affected by supply and demand but this can only be done through sound communication. For example, in the 90s Volvo originally made too many green cars and eventually the cars were sold well below original prices through great deals. The manufacturing saw the rise in sales and made even more cars because of a lack of communication between sales group and manufacturing group (Michael, 2010). This is the bull whip affect in action and more specifically shortage gaming or making more than that's needed. The problem with this picture is that the sales groups try to slow the bleeding and accept their losses and move on but sadly the manufacturing groups misinterpret the situation and make more green cars. Communication in supply chain doesn't stop at sales and manufacturing people but extends to other roles. Communication is pretty standard for most companies but that wasn't always the case and this can be seen as a case of advancement in information technology.

The supply chain path can be...

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