The Importance of Supply Chain Management: A Detailed Essay

This essay explores the significance of supply chain management (SCM) in achieving company success and customer satisfaction. It highlights the increasing importance of SCM in competitive markets, citing examples like Wal-Mart's strategies to minimize costs and improve services. The essay discusses key aspects of SCM, including its role in maximizing customer value, achieving a sustainable competitive advantage, and facilitating better information sharing among partners. It covers various activities within SCM, from product development to logistics and sourcing. Furthermore, the essay addresses challenges and opportunities in SCM, such as optimization, inventory management, and the use of technology like EDI and CRM, using the case study of Levi Strauss to illustrate the impact of effective SCM implementation. The essay emphasizes the importance of adapting to customer demands, reducing lead times, and leveraging technology to improve efficiency and responsiveness within the supply chain.

Supply chain management is important to company success and
customer satisfaction. Supply chain Management and demand management
within and across companies (Council of Logistics Management). The role of
SCM is increasing in firm because market is mature and competitive. The
organization like Wal-Mart they have to minimize and improve their
operation at lower cost and provide better service to their customers and
supplier or you can say supply chain management activities maximize
customer value and reach a sustainable competitive advantage and planning
being done in consultation rather than in isolation and better information
sharing among the partners. Supply chain manages every single activity and
covers all aspect from product development, production, logistics, sourcing
and information system needed to support these activities.
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Why Supply Chain Management Is
Important Management Essay
✅ Paper Type: Free Essay ✅ Subject: Management
✅ Wordcount: 2008 words ✅ Published: 1st Jan 2015
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Supply chain management is important to company success and customer
satisfaction. Supply chain Management and demand management within and
across companies (Council of Logistics Management). The role of SCM is
increasing in firm because market is mature and competitive. The
organization like Wal-Mart they have to minimize and improve their
operation at lower cost and provide better service to their customers and
supplier or you can say supply chain management activities maximize
customer value and reach a sustainable competitive advantage and planning
being done in consultation rather than in isolation and better information
sharing among the partners. Supply chain manages every single activity and

covers all aspect from product development, production, logistics, sourcing
and information system needed to support these activities.
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Wal-Mart is going to use supply chain to cut cost in 2010.The world biggest
retailer estimates that saving of between 5-15% or $4bn-$12bn will be
possible by globalising its purchasing. Now Wal-Mart is buying goods direct
from manufactures which is currently 20% and it long term plan is to buy
80% of its stock direct and it has already recognized four global
merchandising centres for common goods and clothing, with a centre in the
UK for the George brand.
(John Ryan-Retail Week)
Why is supply chain management so important?
To gain efficiencies from procurement, distribution and logistics.
To make outsourcing more efficient.
To reduce transportation costs of inventories.
To meet competitive pressures from shorter development times, more new.
Products, and demand for more customization.
To manage the complexities of supply chains.
To manage the inventories needed across the supply chain.
In the below you can see the Wal-Mart is on top in retail supply chains.
Astounding 95.6% of manufacture respondents and increasing that number
by 3.5% point in 2009.
(Top Retail Supply Chains)
Challenges and Opportunities of SCM;
In every company and Organization the SCM big challenges is work properly
and achieve the goal. Many manufacturers and distributors are waking up to
the possible for the major cost reduction and service expansions offered by
implementing best practices in their supply chain. Supply Chain Management
is now recognized as a critical business process for companies

manufacturing or distributing products. This is because customer demands
for most products are ever more demanding – in response time, in choice
(e.g. customization) and in seeking more competitive prices – and thanks to
globalization. The main challenge of SCM is optimization reducing the
overproduction, good transportation system between warehouses and end
user; by reducing lead times can results in both financial and efficiency
benefits, ensuring that the right level of stock is available to meet the
requirements, reducing process steps to a minimum is required to reduce
over processing and finally removing the defects by using technique like six
sigma.
Wal-Mart is the first company to tell their suppliers what price they want and
If you see this really it’s a bring big pressure on their suppler to meet this
price, it describer their relationship as tough, but fair because suppliers still
they are getting generating profit. Wal-Mart purchase good directly from the
company, and there is no middle man include and also Wal-mart computer
system allow to suppliers to know when exactly they need more products.
This possible by swiftly communication and excellent part of Wal-mart SCM.
(Wal-mart)
The technology like EDI, Warehouse management system, CRM, CPFR, EDI
etc allow SCM to work more in more efficient way.
In a case study of Levis Strauss company in year 1996 Levi’s sale
dramatically goes down from $7.1 billion to $4.1 billion (Girard, 2003). Then
company recognized the problem and take action. The new product also
required a change in distribution and easy to access to target market shop
then they patch with Wal-mart, who provide them easy access to the and
volume of customers. But again a issue a rise with levis the company unable
to control the distribution process, Levi’s executives cannot track where is
product was moving and in which factory manufacturing and how many
product still in distribution centres.Chief Information officer ,David Bergen
addressed these problem and implementing information technology. These
systems allowed executives to see at a glance how the products are selling
in comparison to competing products, how products are moving in the
distribution chain, how many products are available for sale, what the
demand is at the stores, and whether the supply of products is meeting
demand (Girard2003).