Joseph Fonseka [1241704]
A system is defined as “a group of related parts that move or work together”
The theory of Supply Chain Management [SCM] is based on two basic ideas. The first is that virtually every product that reaches an end user symbolises the cumulative effort of numerous organisations [1]. These organisations, which collectively form a system are referred to as the supply chain [1]. The second is that while supply chain system [SC] has been there for a long time, most organizations have only noticed what happens within the company, much less tried to understand or manage, the entire chain of activities that eventually delivered products to the final customer, which often resulted in disjointed and ineffective …show more content…
Managing these relationships affect all facets of the SC and has a major impact on performance. In many instances, the information systems and technology required for the SCM effort are freely available and can be applied within a reasonably short time period, without major technical difficulties, inventory and transportation management systems are also quite well understood and can be applied readily. A number of SC initiatives fail, mainly due to poor communication of expectations and the subsequent conduct of personnel. Managers often assume that the personal relationships within and between organisations in a SC will fall into place once the systems are established. However, managing relationships among the various personalities in the organisations is often the most difficult part of the “SCM Initiative” [x]. Moreover, the single most important ingredient for successful SCM may well be trusting relationships among various links in the SC, where each link in the chain has confidence in the other member in the links capabilities and actions. Without positive interpersonal relationships, the other systems cannot function …show more content…
This often represents a major change in the way firms do business. In creating new value systems, firms must re-think how they view their customers and suppliers. They must concentrate not only on maximising their own profits, but also on how to increase the success of all organisations in the supply chain. Strategic priorities must consider other key alliance partners that contribute value for the end customer. Tactical and operational plans should be continuously be shared and co-ordinated. Instead of encouraging firms to hold their information close, trust building processes promote the sharing of all forms of information possible that will allow supply chain members to make better, aligned decisions. Whereas traditional methods such as accounting and payroll systems tend to focus on specific organisations, a combined set of performance measures should be used as well. Finally, instead of “pushing products” into the supply channel, thereby creating excess inventories and inefficient use of resources, consultative sales processes and “pull” systems should be used [x]. When organisations in the SC pursue these goals, they may discover the need to re-structure the entire