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Example research essay topic: Supply Chain Management Supply Chains - 1,753 words

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Supply chain management Supply chain management (SCM) is the process of organizing, operating, and controlling supply chains. The concept of supply chain management began in the early sixties; however, it has changed greatly since that time. The first stage in the development of supply chain management was called physical distribution management. (Handfield 47) This process integrated the warehousing and transportation functions of companies. By combining these two functions, physical distribution management allowed for the reduction of inventory by providing faster, more frequent, and more reliable transportation.

The second phase in the development of supply chain management was called the logistics stage. (Cox 122) In addition to the integration warehousing and transportation provided by the first stage, the logistics stage integrated the manufacturing, procurement, and order management functions. The third, and current, stage is known as the integrated supply chain management stage. (Cox 123) Aided by the development of technology and computers to help keep track of massive amounts of information, integrated supply chain management has been lengthened to integrate everything from the supplier at one end of the chain to the customers at the other end. The next phase, and future, of supply chain management is called super-supply chain management and will incorporate even more functions of the business into the supply chain such as product development, marketing, and customer service. (Cox 131) It will be enabled by even more advanced communications, better and more user-friendly decision support systems, and increased training. There are five important factors involved in supply chain management that, if applied correctly, enable companies to operate more effectively. 1. An overriding customer focus: At every stage in the supply chain, the ultimate customers needs are understood and factored into the decision making process. 2. Quantitatively based performance management: Measurements of multiple performance factors occur at each stage in the supply chain.

Time and cost are key measures, but others are used as appropriate to the specific supply chain. All measures relate to the ultimate supply chain goals. 3. Use of cross-functional teams: Teams of people from the interrelated functional operations working closely together can cut through the normal organizational barriers to find local and distributed improvements that benefit the overall supply chain performance. 4. Attention to human factors and organization dynamics: Use of the best human and organization coordination / cooperation /measurement / reward techniques facilitates supply chain innovation and implementation. This level of attention is used to offset the tendency of individual accountability and work-unit accountability to create barriers to supply chain cooperation. 5.

Advanced use of Information: Data and information flow readily to all parts of the supply chain, allowing for faster corrections and more informed decisions. (Handfield 111 - 113) What are the Benefits to Companies who implement Supply Chain Management? The benefits to companies who have actively applied supply chain management to their operations have been clearly demonstrated over the years. Some of the rewards experienced by firms who have used supply chain management include: Inventory reductions Increase in on-time deliveries Inventory turnover up Out-of-stock incidents down Cumulative cycle times reduced Reduction in finished-goods inventory because of the ability to postpone packaging until receipt of orders Increased revenues Reduced planning, production, delivery, and tracking costs. (Cox 159) These improvements were all made possible by better decision-making processes created through supply chain management. In addition to providing these benefits independently, supply chain management can provide them simultaneously to every company that implements it properly. No other factor has had as much to do with the development of supply chain management as the advance in key technologies, especially information and telecommunications technologies. The first main technologies for supply chain management are refereed to as Legacy systems. (Cox 180) Legacy systems can range from computer-aided design and engineering packages to the basic Microsoft Office or Lotus Notes suites at desktop workstations.

Legacy systems evolved as departmental solutions using mainframe or minicomputers, which were accessed through dumb terminals. The PCs were initially used apart from a companys main systems for special applications such as word processing or spreadsheets. Eventually the PCs in an office were connected across companies with local area networks (LANs). This allowed users to share files, e-mail, and other applications.

These networks were then extended across companies with wide area networks (WANs) that connected the dispersed offices of a company. Finally, new systems were developed to take advantage of the PCs computing power and friendly graphical interface. In these systems, the PC is typically called the client and the main processor is the server. Client / server computing is a form of distributed processing whereby some processes are performed centrally for many users while others are performed locally on a users PC. The Internet is an example of client / server where the local PC browser processes the HTML pages and Java applets that are retrieved from servers. This allowed the direct selling and service to customers.

Today you can easily go to an online store and browse a wide variety of merchandise, negotiate the price, and find out if it is even in stock before you order. Currently businesses are turning toward Collaborative Planning, Forecasting and Replenishment (CPFR), a web-based standard that enhances vendor managed inventory and continuous replenishment by incorporating joint forecasting. (Handfield 180) With CPFR, parties exchange electronically a series of written comments and supporting data, which includes past sales trends, scheduled promotions, and forecasts. This allows the participants to coordinate joint forecasts by concentrating on differences in forecast numbers. The parties try to find the cause of the differences and come up with joint and improved figures. CPFR has allowed the supply chain to run at the speed of the Internet.

The users of SCM applications today can send e-mails and collaborate with vendors and suppliers via the Internet without having to exit a desktop application. (Berger 140) Recently, IBM has developed a new software concept called ASW Virtual Enterprise. This concept offers a broad range of possibilities for handling new and evolving business models and supply chain set-ups. This will allow for the integration of an unlimited number of companies, customers, and suppliers via the Internet. ASW Virtual Enterprise software, which is developed in Java, can be completely integrated with business software.

The new software allows direct integration with all kinds of data sources, software, business portals and mobile devices such as WAP phones and Palm Pilots. This type of collaborative commerce is the next phase in global e-business operations. Such digital communication, directly between computers will become a natural element in business operation. Enterprise Resource Planning is defined as any software system that is designed to support and automate the business processes of medium and large businesses. ERP covers almost every application area of business including: financial functions, fixed asset management, purchasing and inventory control, company payroll, and customer order management and billing. Once, solely used by manufacturing industries, ERP systems are now being used by many other different industries, such as e-businesses and service industries. (Berger 155) Value Chain Initiative is not a technology but an industry standards philosophy sponsored by Microsoft for developing applications to create and travel a high-level, uninterrupted data stream, in real time, from raw materials to the consumer's hands.

This will help companies utilize their supply chains more efficiently and less expensively by making it easier to exchange business documents, regardless of the format or communications method, and to integrate these communications with operational systems. In addition, with the continued development of satellite communication using Low Earth Orbit Satellites (LEOs), there is the opportunity for worldwide communications at a lower cost than current wire / fiber optic networks Examples of SCM Technologies in Businesses Today. A major manufacturer of vehicles in the U. S. , Chrysler Corporation faced many problems in communicating standards and sharing critical software applications with its tens of thousands of suppliers of parts, packaging, and technology. The company also faced issues when it came to giving access to its mainframe systems servers for downloading information and applications. With the help of IBM, Chrysler developed and implemented the Chrysler Corporation Supply Partner Information Network (SPIN), an intranet-based supply chain management and support environment for distributing files over the Internet. (Berger 170) The SPIN application allows Chrysler to distribute important applications and information over the Internet to its many suppliers, giving them real-time access to the data.

According to John Kay, Chrysler's manager of electronic commerce, Being able to get critical information to our external suppliers as soon as it becomes available internally is a definite competitive advantage for all concerned. (Berger 173) SPIN reduces supplier response times greatly, allowing for fewer mistakes and more flexibility along the supply chain. Since its introduction, SPIN has increased productivity along Chrysler's entire chain of suppliers by 20 % and significantly reduced operating costs for the company. (Berger 177) With more and more stores increasing worldwide, PETsMART, one of the worlds leaders in pet supplies, has been looking for a quick and efficient way to communicate with their vendors. PETsMART decided to link its supply chain of vendors by purchasing software from QCS and Lotus. QCS allows all vendors, from any part of the world, to be linked to their buyers through a secure extranet. Petsmart's extranet is a virtual private network, that is extended beyond PETsMART to its supply chain partners. Secure sockets layer technology and user passwords help make the network extra secure, and IBMs Global Network and the Internet are used for classified business communications. (Harrison 135 - 138) PETsMART is now able to communicate in real time, adding efficiency to its buying process, speeding new products to market, and eliminating unnecessary costs.

The buying process is more efficient now because ideas can be shared with quality graphics, proposals can be requested and received, prices can be negotiated, and deals can be closed, all done through QCS right on the Internet. Buyers can also communicate with vendors on products and packaging and can manufacture and deliver the product at a much faster pace. QCS also does away with the use of letters, faxes, and phone calls, and even eliminates a person having to travel to close out a deal. Thus, saving PETsMART a numerous amount of money. (Harrison 155) Bibliography Berger, J. and Gattorna, J. (2001) Supply Chain Cybermastry. London: Sage.

Cox, A. (2003) Supply Chain Management. New York: Harper Collins. Handfield, R. and Nichols, E. (2002) Supply Chain Re-Design: Transforming the Supply Chain into Integrated Value Systems. New York: Rutledge.

Harrison, A. (2002) Logistics Management and Strategy. Oxford: Oxford University Press.


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Research essay sample on Supply Chain Management Supply Chains

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