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Supply Chain Management is greatly helpful for the business as it reduces entire cost across the complete trading process by successfully focusing on speed and certainty of response to the market. Due to globalization and ICT, SCM has developed into a great tool for companies to compete efficiently either at a local level or on a global scale.
SCM has become a necessity, particularly for the manufacturing industry when it is about delivering products at a competitive cost and at a greater quality than their competitors. Here are some of the reasons SCM has become significant to today’s business:-
Competitive Edge through Core Competencies-
Today’s business climate has quickly changed and has developed more competitive as ever in nature. Businesses now not only need to operate at a lesser cost to successfully compete, it must also develop its own core capabilities to distinguish itself from competitors and be noticeable in the market.
1. In generating the competitive edge, companies need to use its resources to the emphasis on what they do finest and successfully outsource the process and job that is not imperative to the overall objective of the enterprise..
2. SCM has significantly permitted a company to rethink their complete operation and effectively rearrange it so that they can focus on its fundamental competencies and outsource processes that are not within the fundamental competencies of the company.
3. Owing to the current competitive market, it is the only technique for a company to survive. The strategy for applying SCM will not only influence their market positioning but also planned decision on selecting the resources, right partners, and manpower.
4. By focusing on fundamental competencies also will permit the company to generate niches and specialization of fundamental areas.
In order to generate a niche for competitive advantage, companies should look at the larger picture of the entire process, and figuring out which process can be eliminated, raise, reduce, and create.
Value Advantage-
SCM has allowed business these days to not just have efficiency advantage alone but also on value advantage. Strategies for Dropping Cost and Improving Service’ states,
Productivity advantage provides a lower cost profile and the value advantage provides the product or offering a differential ‘plus’ over competitive offerings. Through make the most of the added value and also reduce the cost at the same time, more innovation can easily be added to the product and process.
Mass manufacturing gives a productivity advantage but through right supply chain management, mass customization can be attained. With mass customization, customers are offered the value advantage through agile manufacturing and customized adaptation.
Through effective use of SCM Product life cycles also can be improved. Value advantage also excellently changes the norm of traditional offerings. Through SCM, the more recognized offerings by the industry to the consumers would be a diversity of products provided to several market segments and consumers preferences.
SCM eliminate non added value activities like – .
- 1.Overproduction·
- 2. Waiting·
- 3. Unnecessary transport·
- 4. Over processing·
- 5. Excess inventory·
- 6. Unnecessary movement·
- 7. Defects·
- 8. Unused employee creativity
To push-pull production to successfully meet actual customer’s demands, Supply Chain Management is becoming a leaner supply chain system that is more flexible and agile about meeting the end users demands.
