Supply Chain Management Essay
Today’s unstable economic environment has created more challenges for companies to survive in the market. As there exits intense competition between organizations, therefore all organizations aim at achieving maximum performance and profits. This can only be achieved by gaining competitive advantage over competitors and thus facing economical and political challenges successfully. To become competitive in today’s highly unstable environment, organizations should concentrate upon their business process and mainly the management of supply chains.
Supply chain is a key root of an organization that determines its position in the competitive market and ability to compete successfully. There are several ways by which a company can make its supply chain management more effective and efficient. The problems of organizations today are mainly by the uncertainty and instability of the economic environment; hence E-commerce also plays a major role by providing e- intermediation roles that can enhance the supply chain of the business.
Moreover, the effective planning, hard work, coordination and continuous improvement can help an organization to make an effective supply chain and face the alarming challenges of the economic environment successfully. Hence, there are always some issues that make organizations face critical risks and failures. There are major key issues that organizations must
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Supply chain management is defined as managing the systematic process of transferring of goods and services from supplier to the different intermediaries such as wholesales and distributors and ultimately reaching the final customer as a finished product (Venkatasamy, 2007). Every organization needs to emphasis upon the management of its supply chain in order to make an effective flow of information and raw materials from the suppliers to the owners and finally to the customer through retailers (Venkatasamy, 2007).
Supply chain plays a vital role in business transactions to makes it successful. The management of supply chain is one of the most important tool that primarily focus upon reducing the costs of business in a critical situation that is of operating in unstable economic environment and it provides a competitive advantage over competitors to compete in the market, Analysis of Unstable Economic Environment Today, organizations operate in a highly unstable and challenging economic environment. It is influenced by several factors such as globalization and economic growth.
To survive in this challenging economic environment, organizations need to greatly focus upon improvising their processes and systems to gain competitive advantage. This can be achieved through effective management of supply chain. Moreover, the introduction of internet technology provides a better and enhanced framework to conduct these activities via computer networks. This leads to better understanding of the present and future market changes, also helps in analyzing the opportunities and threat and providing effective solutions.
The E-commerce applications have led to major benefits to gain competitive advantage in today’s highly unstable and competitive environment (Scott and Comer, 1999). Even though, if businesses do not wish to apply these E-commerce applications, they can still gain competitive advantage by making their supply chain more effective and efficient. Unstable economic environment forces businesses to become more competitive and it sometimes leads to intense rivalry between competitors and hence becoming negative for the society.
Therefore, governments should also take their part of regulating business activities to ensure that businesses do not indulge in negative activities. In order to make the economy environment stable, business activities should also be monitored. Key factors that Influence the Economic Environment These factors lead to critical challenges for the organizations and make it highly difficult for them to compete successfully in the economic environment. Globalization
Globalization is the expansion of business markets all over the world and the free trade taking place between countries (Scott and Comer, 1999). It allows major advantages to businesses as well the countries. But this economic environment has brought dramatic changes in the way the business operates today. It is mainly due to the increased customers expectations and knowledge that forces businesses to develop hoods and services that can meet their demand in terms of quality and prices mainly (Scott and Comer, 1999).
Hence, the global market keeps on fluctuating and one country’s economy affects another country’s economy and thus impacting upon all businesses. Therefore, it is very difficult to compete in such challenging economic environment where consumer behavior, expectations, government policies and political issues keeps changing. Economic Growth The economic growth of a country is the increase in the over all productivity by and Gross Domestic Product. The growth rate of a country’s economy keeps fluctuating due to many reasons that are explained in the Macro economics of a country.
Therefore, this increase unstable economic environment for organizations as when there is high inflation prevailing in the country, it will lead to higher costs for the company and hence reduce demand for its goods and services (Scott and Comer, 1999). Price level Stability Price level stability is to maintain a stable or slowly rising piece levels. This is one of the most important factors that determine a business’s success. Because if prices rises dramatically, it will lead to high costs for the business and expensive final goods and services with low demand and sales.
Hence, businesses face these challenges when there are unstable price levels in the economy. Impact of Effective Supply Chain Management on A Company’s Competitiveness in an Unstable Economic Environment Supply chain should be managed according to the unstable economic environment in which a business operates. The effective management of supply chain proves many benefits to the business especially by reducing uncertainty and increasing the flow of information without barriers. This approach towards the management of supply chain provides efficient coordination between different people in the flow of information, goods and services.
Hence, intermediaries involved in the process should have coordination and mutual understanding between them so that the final product that reaches the customer is high quality product providing maximum satisfaction to the customer (Venkatasamy, 2007). Moreover, rapid technological changes also force businesses to change and improve their business processes to survive in the highly competitive market. Therefore, to make supply chain management more effective and efficient, organizations should adopt new practices and strategies to be successful in today’s highly unstable environment.
For this reason, information technology and Electronic commerce plays a major role to make supply chain effective when business faces high risks and instability issues (Boyle, Humphrey, and McIvor, 2008). Businesses can measure the efficiency and effectiveness of supply chain by satisfaction level of the customers and by the use of minimum inputs to produce maximum outputs. Moreover, the effective management of intermediaries working at different stages of the process determines the overall high performance of the company’s supply chain.
To have maximum effectiveness and efficient results at all levels in the supply chain, it is necessary to focus upon each level where the flow of information is taking place in the supply chain (Venkatasamy, 2007). This way the company can achieve economic of scale which are the cost benefits and decrease in average unit costs if goods and services produced. When the business system is efficient, it makes the company stronger and profitable and therefore, it can cope up in unstable economic environment.
Understanding the importance of supply chain management leads to the company’s survival and success in today’s highly competitive global environment that faces continuous changes and unstable environment. Improving the Supply chain to be Successful in an Unstable Economic Environment Most studies in the area of supply chain focus upon improvising the supply chain by making it efficient and effective but there should be emphasis give to the inventor y management by the businesses in their supply chains.
Therefore, in today high unstable economic environment effective management of inventory in supply chain can reduce the cost large inventory in the warehouses at different levels of the supply chain and hence improvise the business process by cutting costs and time at every stage. In order to survive in the unstable economic environment, businesses should concentrate upon the making of strategic plans that are effective in transferring goods and services as well as information at different stages of the supply chain and finally to the customer (Venkatasamy, 2007).
If the supply chain is efficient, it will lead to lower costs for the company and therefore provide goods and services at lower price to customers with high quality. Hence, the coordination of supply chain activities is critical to be successful in today’s unstable environment as every business is aiming towards maximum profits and this can only be achieved by being highly competitive and gain competitive advantage over competitor.
The supply chain management provides the company to gain competitive advantage over its competitors in terms of lower costs and ultimately by charging lower prices to customers to gain a larger market share and higher customer satisfaction. The problems of organizations today are mainly by the uncertainty and instability of the economic environment, hence one major revolution that has made business more competent is the electronic intermediation (Boyle, Humphrey, and McIvor, 2008). This is through the Electronic commerce where business transactions can be conducted online.
It provides greater benefits to businesses by making the supply chain more effective and efficient through E commerce applications. Moreover, the supply chain can become more effective by applying the concept of JIT which is just in time production (Venkatasamy, 2007). Here, minimum stock levels can ve achieved without causing dissatisfaction of consumers or inefficiency of providing goods and services on time. Just in time leads to minimum costs and competitive advantage for the company to compete successfully in such an unstable economic environment where demand and supply keeps on changing.
Also, policies should be made that satisfy both the suppliers and consumers and lead to profitable relationships in future (Venkatasamy, 2007). And most importantly, companies should carry out extensive market research continuously in order to evaluate and analyze the current and future market situations because today there are high risks of instability and issues in the economic environment. In unstable economic environment, giving major importance to the customers is very necessary as customers are the key factor towards the success of any organization.
Therefore, supply chain management can be made more effective for the company to compete successfully by integrating the values of customers in each business process and supply chains (Venkatasamy, 2007). Hence, achieving competitiveness in an unstable economic environment is a big challenge for organizations today. But through effective planning, hard work, coordination and continuous improvement, a business can become successful in every alarming situation (Scott and Comer, 1999).
Key Issues for the Effectiveness of Supply Chain Management In today’s highly competitive and unstable economic environment where organization face intense competition and need to develop strategic plans regarding their business activities to be successful hence, this can be achieved by having an effective supply chain and inventory management that can become a competitive advantage for the company. There are many issues that companies face today that hinders their performance and reduce their competitiveness in the market.
Mainly this is due to ineffective planning and management of the resources and business processes. Companies are unable to achieve an effective and efficient supply chain because of several issues. The first key issue is about the standards of quality of raw material suppliers (Venkatasamy, 2007). If there are high standards of quality, it will become one major key factor towards company’s success in terms of high customer satisfaction and demand for the goods and services.
Secondly, the quality of services provided by different intermediaries in the supply chain which means when there is efficient services being provided to each next level in the process of supply chain (Venkatasamy, 2007). Therefore, it will lead to minimum errors and saving of time. Moreover, the policies regarding transferring of information in the supply chain is very important. Today, businesses do not emphasis upon these aspects that can improve the supply chain and lead to reduced costs for the company and eventually facing heavy losses and failures.
Conclusion The emphasis of an organization upon the Management of Supply Chain leads to its successful competitiveness in an unstable economic environment. Organizations aim to achieve maximum growth and profits which has become a major challenge today. This is because of the highly competitive and global environment in which these organizations operate. Achievement of goals is the aim of every organization and there are different strategies that can help them achieve their goals successfully..
Hence, achieving success can become easier by gaining a competitive advantage over competitors. Competitive advantage provides a business a unique position and strength that makes it successful in the challenging and fluctuating economic environment. This competitive advantage can be achieved through effective planning and management of supply chain. Supply chain can become effective primarily by the use of E-Commerce applications and by integrating each level of the supply chain with effective planning.
Moreover, in unstable economic environment, organizations must give major importance to the customers as they are the key factor towards the success of any organization. Therefore, implementing these customers’ value and expectations in the supply chain will further improve the company’s performance and competitiveness, Analyzing and evaluating the current and future threats and opportunities to face the challenges of unstable economic environment leads to a company’s ability to compete successfully and achieve its objectives.
References Efron. A. J. and Brewer. A. M, 2006 “The Cross Cultural Supply Chain: Issues and Implications”. Journal of International Management, Vol. no. 3 . Pp2-4, 6, 9 Boyle. E, Humphrey. P, and McIvor . P, 2008 “Reducing supply chain environmental uncertainty through e-intermediation: An organization theory perspective”, Journal of Business Management. Pp. 1-2 Scott . M. A and Comer . P. G, 1999” The Strategic Importance of XML Applications” Fiala. P (2004)”Information Sharing in Supply Chains”, Journal of Business Management Available from http://www. sciencedirect. com/science?
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