What is supply chain management and why is it an important issue for a company's international competitiveness?

Question

What will be an ideal response?

Answer 1

Answers may vary but could have elements such as the following: Supply chain refers to the activities that are involved in producing a company's products and services and how these activities are linked together. The concept of supply chain management involves the applications of a total systems approach to managing the overall flow of materials, information, finances, and services within and among companies in the value chain-from raw materials and components suppliers through manufacturing facilities and warehouses and on to the ultimate customer. Supply chains are an integral part of global quality and cost management initiatives, because a typical company's supply chain costs can represent more than 50 percent of assets and more than 80 percent of revenues. The activities and linkages involved in transforming initial designs into the finished goods and support services delivered to the consumer can include product design, suppliers that provide the various inputs, assembly and testing activities, warehousing and distribution of finished goods, and the sales and technical support operations. Because inventory is carried at each stage in the supply chain, and because inventory ties up money, it has been argued that the ultimate goal of effective supply chain management systems is to reduce inventory, consistent with the prerequisites that the company's products be available when needed and at the desired level of quality and quantity. For that reason, it is critical that the operations at each stage in the supply chain are synchronized in order to minimize the size of these buffer inventories. Shorter, less predictable product life cycles, as well as the impact of unplanned economic, political, and social events, have placed further emphasis on the achievement of effective supply chain performance. New technologies, including Web-enabled tools for supply chain planning, execution, and optimization, have enhanced the availability of data and integration with suppliers and customers, helping to enhance the international competitiveness of companies that have adopted and mastered these technologies. Global supply chain management has been receiving increasing attention because many companies have achieved significant international competitive advantage as a result of the manner in which they have configured and managed their global supply chain activities. Effective supply chain management can also enhance a company's ability to manage regulatory, social, and other environmental pressures, both nationally and globally.