The Basic Concepts and Definition of Supply Management
As earlier stated, the use of supply management has been quite popular in terms of using this particular tool in order to ensure the stability of the prices of commodities in most developing countries (Lines, 2007). Moreover, the definitions presented in the introduction to this study has revealed that supply management becomes an integral part of corporations who wish to control the supply of their commodity, relative to its demand in order to influence its price (Lines, 2007).
In the same manner, there are also researchers who view the importance of the concept in terms of its ability to reduce inventory, essential in such a way that producers are ensured of the availability of their products when demanded by the customers (SearchCIO. com, 2008). Simply put, as repeatedly mentioned, supply management is generally concerned with the proper handling of the supply chain which is composed of the products itself, money and finally, the flow of information.
More clearly, the supply chain is basically a framework for the movement of raw materials through manufacturing and distribution to the customer (Swafford, Ghosh and Murthy, 2000). Without a doubt, the twenty-first century have witnessed major changes in the business environment which then led to the call for the development of better supply chain networks (Barnes, 2007).
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These changes are often brought about by first, as an outcome of globalization as multinational companies, joint ventures, strategic alliances and business partnerships begin to begin to appear which are then found to follow earlier practices of management such as Just-In-Time, Lean Management and Agile Manufacturing (Barnes, 2007). Swafford, Ghosh and Murthy (2000) also attributes this growing importance of supply chain management to the increasing global competition, as rooted from the development of recent trade agreements and the removal of trade barriers.
Secondly, these changes are also brought about by the numerous advancements in technology which eventually lowered the costs of communication, resulting to the improvements in the interaction between the members of the supply chain network, most especially the increase in the accessibility of the internet (Barnes, 2007; Swafford, Ghosh and Murthy, 2000). It is then because of the aforementioned that the concept of supply chain management has continued to grow in prominence within the field of operations management as its practitioners have recognized the importance of such in improving the performance of a certain firm.
This eventually led to most organizations’ recognition of supply management’s pivotal role in ensuring the success of their businesses (Cousins, 2006). This is also highly supported by the work of Baziotopoulos (2004) which mentioned that organizations in the modern times have the tendency to rely on effective supply chains and networks so as to ensure their success in competing in the global market and inside a so-called networked economy.
Therefore, one can say that the adoption of practices related with the efficient management of the supply chain is considered to be a step towards the organizations’ shift to new paradigms wherein their businesses are now going beyond the traditional boundaries of enterprises whilst organizing the latter in a value chain of multiple companies (Drucker, 1998).
Barnes (2007) then defines supply chain management or SCM as the process by which organizations plan, implement and control how their supply chain operates in order to efficiently meet the requirements set by their customers. Basically, Barnes (2007) also states that SCM involves the entire movement and storage of raw materials, the work-in-process inventory, and the finished goods from their point-of-origin (manufacturers) to the point-of-consumption (end consumers).
Halldorsson and his colleagues (2007) concurs with the aforementioned concepts pertaining to supply management and the definition of Barnes, also defining this concept as a cross-functional approach to manage the movement of raw materials into an organization. According to the work of these researchers, just like that of Barnes, the movement that they were referring to covers different aspects of the entire transaction such as the internal processing of materials into finished products and then finally, the shipment of such to the consumers.
Halldorsson and his colleagues (2007) also concur with the claims of researchers such as Cousins (2006), Baziotopolous (2004), Drucker (1998), Singh (2007), Rao (2007), Swafford, Ghosh and Murthy (2000), Lines (2007) in saying that supply management have continued to gain importance amongst organizations due to its ability to let the latter focus on their core competencies without having to worry so much on the ownership of raw materials sources and distribution channels.
It is also because of this that supply management has been usually related with outsourcing strategies that companies make use of in order to efficiently manage their resources. In the same manner, the easy access to global markets has caused organizations to expand their operations beyond the territorial boundaries of the country to which they are citizens of (Swafford, Ghosh and Murthy, 2000).
Meanwhile, Barnes (2007) also noted that the supply chain networks developed by most organization have indeed been integrated into organizations, even perceived to be a new organization form, being often referred to as Keiretsu, Extended Enterprise, Virtual Corporation, Global Production Network, and Next Generation Manufacturing System. Because of this, he perceived this structure as a collaboration of semi-independent organizations, each possessing their own capabilities that serve one or more markets in order to reach a certain business goal that solely belongs to their alliance (Barnes, 2007).