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Q2. Explain with an example the concept of supply chain management? Q2. Explain with an example the concept of supply chain management?


Answer:
A supply chain can be defined as a network of facilities and distribution options that performs the function of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Both in service and manufacturing organisations supply chains system exist. However, the complexity of the chain may vary greatly from industry to industry and firm to firm.
Traditionally, the departments like the marketing, distribution, planning, manufacturing, and purchasing of an organisation operated independently along the supply chain. This kind of traditional organisation’s each departments had their own objectives, which often conflict with other department’s objectives. For example, Marketing's objective of high customer service and maximum sales revenue conflicts with manufacturing and distribution goals. Many manufacturing operations are designed to maximise throughput and lower costs, but very little concern was given for the impact of this on inventory levels and distribution capabilities. With the very little information and based on the historical buying patterns purchasing contracts were often negotiated. This resulted in chaos and there was not a single, integrated plan for the organisation there were plans as many as services the company offered. This clearly demanded a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved.
If the SCM has to be successful their must be a change from managing individual functions to integrating activities into key supply chain processes.
For example, the purchasing department places orders as requirements become known. In case of marketing department, it has to respond to customer demand, communicate with several distributors and retailers as it attempts to determine ways to satisfy this demand. Information shared between supply chain’s partners can only be fully leveraged through process integration.

The integration process of Supply chain business process involves collaborative work between buyers and suppliers, joint product development, common systems, and shared information. But one has to understand that continues information flow is required to operate an integrated supply chain. Top management of many companies have reached the conclusion that optimising the product flows cannot be accomplished without implementing a process approach to the business.

An organisation’s supply chain or logistics network is affected because of supply chain sustainability. This is a major business issue and is frequently quantified by comparison with SECH ratings like social, ethical, cultural and health records. Today consumers have become aware of the environmental impact of their purchases and company’s SECH ratings. Along with this nongovernmental organisations ([NGO]s), are setting the agendas for focusing on transitions to organically-grown foods, anti-sweatshop labor codes, and locally-produced goods that will support independent and small business groups. Because supply chains frequently account for over 75% of a company’s carbon footprint many organisations are exploring how they can reduce this and thus improve their SECH rating.
Companies can improve their overall competencies with the help of supply chain specialisation, in the same way that outsourced manufacturing and distribution has done. It allows them to focus on their core competencies and assemble networks of specific, best-in-class partners to contribute to the overall value chain itself, thereby increasing overall performance and efficiency. The leading reason why supply chain specialisation is gaining popularity is just because of the company’s ability to quickly obtain and deploy this domain-specific supply chain expertise without developing and maintaining an entirely unique and complex competency in house.

Oracle Supply Chain Management Applications simplify supply-chain processes by providing a single, integrated environment for managing the extended enterprise. Oracle enables effective trading partner collaboration and supply-chain optimisation capabilities that are essential to gain and sustain competitive advantage. Oracle Supply Chain Management Applications help in increasing market share while improving customer service. It also helps the company in minimising the costs across the networked supply chain system.

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