Efficient and effective Supply Chain Management (SCM) is integral to business su

Question

Efficient and effective Supply Chain Management (SCM) is integral to business success. SCM functions to integrate all of the business processes required to deliver products to the customer. Regardless of the size or type of business, SCM can increase a company’s ability to compete through aggregate planning and management of operational processes required to turn raw materials into a finished product.

In what ways does business process integration contribute to the efficiency and effectiveness of supply chain management?

What is Supplier Relationship Management (SRM)? How is it used to select and manage suppliers?

What is the strategic benefit of SRM to the organization? To the supplier?

Explanation / Answer

Q1) Below is how business process integration contribute to the efficiency and effectiveness of supply chain management -

1. Business process integration involves integration and information sharing of various business processes and functions in the supply chain ensuring a real-time flow of information thus reducing the variations in demand and supply, reducing lead time of the processes, reducing the costs and increasing the efficiency of the supply chain.

2. It also helps in lowering inventory levels, reducing dependencies etc. thus ensuring smooth suppy chain processes.

3. Any issue in upstream operations will immediately be communicated downstream based on which a work around and resolution is done to ensure the process continues.

Q2) Supplier Relationship Management(SRM) is the effective management of suppliers to ensure long-term relationships with them that would help the firm in negotiating for lower prices, receiving better quality products, increasing the service levels and receiving orders when placed within a short notice in high demand periods.

SRM considers all aspects that would help the firm with efficient and cost-effective procurement in the long-term. Hence, supplier selection and management can be done considering these aspects/parameters which include -

1. Optimum material costs

2. High quality materials

3. Timely delivery and lower lead times

4. High service level

Management of suppliers includes -

1. Interacting with suppliers on a regular basis.

2. Helping the suppliers in process and operational improvements, better inventory management etc.

3. Including suppliers as a part of the manufacturer's process improvement and quality processes.

Q3) The strategic benefit of SRM to the organization is that

1. It provides the firm with reliable suppliers who can provide supplies considering the requirement of the manufacturer as per the spikes in demand.

2. The manufacturer can benefit from supplies with better quality at relatively lesser prices.

The strategic benefit of SRM to the suppliers is that -

1. The manufacturer can act as a big-brother helping the suppliers in process improvements, providing access to new technologies etc.

2. Suppliers can have a long-term customer accounts on which they can rely for demand.

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