Supply Chain Management Essential For a Business

Question: Discuss about the term for Supply Chain Management Essential For A Business ? Answer: Introduction: The activity of Supply Chain Management (SCM) plays a very important role and has the essential element for operational efficiency, which can be applied to the success of the company and customer satisfaction. This is the backbone for any type of organization to manage the critical issues with the global expansion, growth and concerns related to the environment, which affects the business strategy. There are two parts to supply chain management (Ayers 2012). The two supply chain management processes are global supply chain management and domestic supply chain management. In this report, a detailed discussion is made on both the topic. Global Supply Chain Management: The process of global supply chain management involves interrelated organizations, process and resources that help create and deliver the services and the products to the customers (Chopra and Meindl 2013). The supply is extended to the different parts around the world. The usefulness for the business organization to adopt this type of practices is: Providing the companies to compete around the world Expansion of business in different countries Meeting the needs of the customers of different countries through offering of new services This type of supply chain will offer a competitive edge for the business organization. The business organization are trying to engage into a more global supply chain as this leads to reliable and quick delivery of superior quality products at the minimum possible cost. The customer expectation is also met effectively (Bowersox 2013). The internet and changes in technology has affected the global supply chain. The use of the internet has added accessibility and speed which has made many of the companies to reduce the activities that were time consuming like the purchasing, ordering and transaction (Drake, 2012). The geographical barriers have been eliminated through the internet because it has given free access to the suppliers in the new market. The proliferations of the trade agreements have accelerated global trade (Cordon, Hald and Seifert 2012). An example of global supply chain management is seen to be followed by Coca Cola. The company is U.S based and produces in different locations around the world. This represents a wide network of logistics and supply. There are nations that have formed together in types of trading partners. There are trade barriers in this regard. The trade advantage within the group like the EU and NAFTA has reduced the cost of supply chain and time for the movement of the products. The non-developed and new markets have the potential but still need time to tap its resources. There are several advantages and disadvantages of global supply chain. The advantage of using a global supply chain in business is that it helps in diversifying the trading a business, lowers the cost, the cycle time gets reduced, untapped market is explored, increases efficiency and speed. The performance of the doing business globally is not always advantageous. There are trade agreements that benefits only the member nations while the non-member nations are face the obstacle of paying large amount of tariffs, which increases the cost of supply chain and the cost of cycles (Jacobs and Chase 2013). The disadvantage of operating a global supply chain is that there may be undersized distribution system and transportation in the new markets. The capacity of handling large supplies by business also gets difficult, as the reason for this is high uncertainty (Sodhi and Tang 2012). Domestic Supply Chain Management: When making the final product there is a need of different types of goods and services and these are the commodities that come different locations. The tracking and the coordination of the components is done through domestic supply chain management (Liu 2012). Unlike the global supply chain management, domestic supply chain involves transportation and production with the national borders. An example of the domestic supply chain is the Triumph Motorcycle Ltd, which has operation based in the United Kingdom, and caters to the domestic demand but has recently entered into the global market. There is a need for additional planning for crossing the borders and dealing with the customs (Myerson 2012). When using a domestic supply chain management there are lesser complexities faced by the entrepreneurs and the cost of operations will be much less. The delivery of the products will be much faster than predicted. In a domestic supply chain, there are economies of scale enjoyed by the firm. I t has advantages but it is getting difficult for the domestic companies to survive alone, as there will be entrants of competitors in the market who would take away the position (Lysons and Farrington 2012). Global Supply Chain Management versus the Domestic Supply Chain Management: Since the global supply chain consist of the performance of the worldwide suppliers and interest of the company rather than national and local direction so the global supply chain management is difficult and more complex to manage than the domestic supply chain. In the global scenario, the large geographical distances will enhance the cost of operation and complicate the decision making of logistics (Rachan 2012). The effectiveness of the supply chain gets reduced due to the presence of the dissimilar local cultures, law, languages and currency. The local supply chain also is hampered due to the lack of infrastructural resources. Flexibility and Visibility are essential for the success of any type of supply chain. There is lesser flexibility of the global supply chain in relation to domestic form of supply chain. When there is outsourcing by the companies to offshore due to the move for lower related costs there are risks of extending lead times that require more safety stock and thu s agility is reduced. The firms are seen to deal not only the local customers but also ships products to the different countries. Raw materials are sourced from international locations. The lead-time for the inbound and the outbound logistic has increased so this has created more uncertainty. In order to be successful globally there is a need for flexibility in the supply chain management. The flow of information must be adequate for making the global supply chain effective (Viswanadham and Kameshwaran 2013). Conclusion: The concept of supply chain management is essential for a business to expand. There is no ideal formula of supply chain that can be used for the company. The focus of supply chain is to respond to the necessities of the market and the manner it must be done that helps in supporting the business strategy. The supply chain varies with industries and also within industries. There is a need for an appropriate mix of the efficiency and responsiveness. If the size of the company is small, the domestic form of supply chain is better while for global expansion there is a need for global supply chain. The selection of the global and the domestic supply chain is aligned with the strategy adopted in business. References: Ayers, J. (2012).Encyclopedia of supply chain management. Boca Raton, FL: CRC Press. Bowersox, D. (2013).Supply chain logistics management. New York: McGraw-Hill. Chopra, S. and Meindl, P. (2013).Supply chain management. Boston: Pearson. Cordon, C., Hald, K. and Seifert, R. (2012).Strategic supply chain management. Abingdon, Oxon: Routledge. Drake, M. (2012).Global supply chain management. [New York, N.Y.]: Business Expert Press. Jacobs, F. and Chase, R. (2013).Operations and supply chain management. New York: McGraw-Hill Irwin. Liu, J. (2012).Supply chain management and transport logistics. Milton Park, Abingdon, Oxon: Routledge. Lysons, K. and Farrington, B. (2012).Purchasing and supply chain management. Harlow, Essex: Pearson Financial Times. Myerson, P. (2012).Lean supply chain and logistics management. New York: McGraw-Hill. Rachan, W. (2012).The effects of collaborative supply chain solutions on strategic performance management. [Amsterdam?]: Leiden University Press. Sodhi, M. and Tang, C. (2012).Managing supply chain risk. New York: Springer. Viswanadham, N. and Kameshwaran, S. (2013).Ecosystem-Aware global supply chain management. New Jersey: World Scientific Publishing Company.