Principles Of Effective Supply Chain Management: Theoretical Aspects And Practical Implementation

Supply Chain Management Principles

Theoretical Foundations of Supply Chain Management

Question:

What are the supply chain management principles? Explain.

Supply chain management is one of the most important aspects in the present day market. Companies highly emphasise on effective supply chain management which would help them to reach its customer base effectively. In the recent past there has been significant research on supply chain management which has come out with several outcomes. In this highly competitive market supply chain management is an extremely important aspect. Effective supply chain management will help a company to distribute its products effectively and hence will be able to maintain a good relationship with the consumers. Supply chain management is a multi faceted concept and needs to be handled effectively by the companies. The theoretical and practical aspects of supply chain management will have to be utilised properly in order to make the supply chain management implementation successful (Wu & Pagell, 2011). It is important to mention for the successful Implementation of successful supply chain management different aspects needs to be considered. Proper implementation of supply chain management could be done with the help of 7 different principles that acts as the mainstay of supply chain management study. Efficient managers keep two things in mind the supply chain as a whole and all the different links that end up helping the manager to effectively implement the supply chain. With time passing by and markets becoming competitive it becomes extremely important for companies to identify the key aspects of supply chain management (Ross, 2013). The present study will take an opportunity to assess and criticise the different principles of supply chain management their theoretical aspects as well as practical implementation. The study will try to highlight the importance of these principles to be used effectively while practical implementation and does they become feasible while the supply chain implementation. All around the world the leading manufacturers have taken up the concept of supply chain management and researchers have come across seven fundamental principles that stand to be important for the effective application of supply chain within the business (Monczka et al., 2015).

The seven different principles of supply chain management are theoretically effective and it is important to mention that their applicability in the practical field will have to be tested and hence the present critique would be effective to justify their usage. The principles are theoretically effective for the implementation of the supply chain management. It is said that the seven principles of the supply chain management are important for the supply chain management but it is important understand their role in the practical implementation of this concept in a business. It is important to have a holistic view on the supply chain management and understand the criticality in a business (Pettit et al., 2010).

The first principle of the supply chain management is based on consumer segmentation. Consumer segmentation is extremely important for the business since it helps companies to effectively place their products according to the taste and preference of the consumers. Different consumers have different perspectives and hence having a clear segmentation of the consumers helps to apply the supply chain effectively. The first principle of supply chain management focuses on segmenting groups according to the service needs and hence it is important that companies do a proper research which would help them to understand the service needs of the different consumers and this will help the company to understand the taste and preference of a given group of people that in return will help to manage their supply chains effectively (Pagell & Wu, 2009). From a theoretical aspect managing the supply chain through this principle is effective as it gives the companies insights about the service needs of the consumers. The need based segmentation helps the companies to effectively develop a strong bond which would which helps in segment specific delivery system that helps to gain and maximize profitability. Value consistent delivery is extremely important in need based segmentation. The present article takes an opportunity to elaborate on the concept of managing the supply chain based on the service needs of the consumers (Hugos, 2011). 

Practical Implementation of Supply Chain Management

Adaptation of supply chain based on segmenting consumers according to their services needs is theoretically an effective approach since it clearly specifies the service needs of the consumers based in a particular segment. It could be said that practical implementation of the principle is much tougher as the wide service needs of the consumers and requirements could be a problem to contemplate on.  In this scenario implementing need based supply chain management would be tougher to implement. Mass merchants like Wal-Mart have been effective in implementing this form of supply chain. Since the company has wide product mix it could offer products based on the service needs of the consumers. In the recent past there have been a lot of challenges in need based principle. Practice of need based supply chain management is best done through product differentiation theories. The product differentiation is an effective procedure to implement need based supply chain management. The perceived value of the market segmentation is high and Wal-Mart understands the importance of need based segmentation as it has a wide product mix and can offer many options (Ashby et al., 2012). Hence it could be said that practically this principle has been implemented. The article has highlighted the theoretical part of the concept very effectively discussing on the points of handling the supply chain based on the service needs of the consumers. The principle has a strong theoretical hold which helps to understand the importance of the impact of service needs. It could be said that the principle is placed effectively theoretically but practically to see it becomes tough to implement need based supply chain management. Since over the years the taste and preference of the consumers have changed it becomes tough to manage supply chain in this scenario. The shortcoming of this literature that it perfectly provides a theoretical platform for the study but practical implementation of the principles are not that effectively highlighted. It was natural since the term Supply chain management was comparatively new the article served effectively but with time passing by slowly and steadily there has been issues which have come up and hence it has to be said that the article does not provide ample practical application (Waters, 2011).

Customising the logistics network to service the consumer requirements and profitability of customer segments is another principle to implement supply chain management. It is important that most of the companies try to customize their networks effectively so that consumers’ requirements are properly fulfilled. This principle is highly consumers’ service oriented. Theoretically this principle sets up a standard that helps to keep their network design effective, organise their inventory a transport facilities that conforms to the standards set. It is important to mention that the key idea is to develop effective network design which will lubricate the process of getting in touch with the customers effectively. This principle mainly emphasises on the control of inventory and its related costs and effective development of transportation procedures which would help to distribute products and services effectively to the consumers. This clearly asks for support from the external stakeholders especially suppliers to keep the process lubricated which would help to receive and release products and services faster and smoother (Pfohl et al., 2010). Theoretically customising of logistics network tends to bring about positive outcomes for the implementation of the supply chain management. The logistics management is mainly focused on supporting the provision of the consumers’ requirements. The key idea that this particular principle provides a clear insight about reaching the different consumers segments effectively. The logistics discussion is clearly effective theoretically but again it has to be said that the practical application is not effective since the study doesn’t practically give any instances where the impact of logistics chain management has been successful in getting profitability out of different consumer segments. Practically customising the logistics network is a tough job and the article doesn’t provide any viable solutions for the implementation of this principle in business (Coyle et al., 2012).

Consumer Segmentation

Market signals and aligned demand planning is important and that’s what the third principle of the supply chain management says. Understanding market signals and based on doing demand planning is not easy. With the time passing by the markets have become highly competitive and it becomes tough to effectively develop proper demand plan. In this scenario resource allocation is also tough. Having a supply chain management that focuses on market signals is practically tough. Theoretical elaboration on this principle has been effective but it becomes tough for practical application. The key strength of this principle is it helps in aligning processes with requirements which is highlighted by the literature effectively but it doesn’t suggest suitable ideas to go about the plan properly. The literature supports the different ideas of analysing market signals and accordingly do demand planning but practically it is a much more complex process and the article did not take significant steps to show the different procedures through which aligned demand planning could be done for effective resource allocation (Ou et al., 2010). Hence it could be said that the literature of the third principle is theoretically rich but it doesn’t provide rich practical evidence regarding its viability.

The fourth Principle is differentiating products closer to consumers and speed conversion across the supply chain. It is important to mention that the present principle clearly lays some of the key aspects through which cost reduction could be done especially through the distributions network. The key idea of principle is to identify the regular products that consumers use and accordingly manufacture them and distribute them through a smooth distribution network which will help to disseminate the products easily and will also reduce cost as it would definitely provide cost reduction options as it could be disseminated through a single supply chain in a particular area. The theoretical take on cost reduction through speed conversion supply and distribution of regularly bought products to the consumers will ensure that the distribution channel works perfectly (Melnyk et al., 2011). This focuses on customer requirements and developing similar products through Just in Time production which would help to keep inventory usage and stock pileup low as well as help to handle certain supply related aspects effectively. A proper example of Wal-Mart and related vendors have been brought into the discussion in order to practically show how it is effective for a business that makes this principle effectively handled both theoretically as well as practically.

Managing sources of supply is another key principle for effective supply chain management. More effectively the sources of supply will be managed it will lubricate the supply chain in a better way (Seuring, 2013).  This section of the article clearly highlights the need of managing the raw materials within the business and keeps an effective relationship with the suppliers. Managing the supply chain through this principle will help the managers to be aware about the different theories of handling suppliers and getting the best prices to purchase raw materials strategically.

Customizing Logistics Network

Information is extremely important within a chain and hence proper supply of information should be taken into account. The sixth principle emphasises on developing technology that would strategically handle products, services and information. The key idea of this principle is to keep in sync the production process, provision of services and relevant information. For managers it is important to build information systems in this highly competitive market. Hence it could be said that theoretically the principle is effective since in the present market conditions having a clear view of the products, services and information which is possible only with information system (Olhager, 2010).

The last part of the literature focuses on measurement of performance which is extremely important from the point of view of the company. The supply chain is one of the most important aspects for growth and profitability. The literature highlights the importance of measuring channel spanning performance as it will help the company to develop its accessibility towards its consumers. Even though the study highlights some of the key aspects to continue having a successful supply chain management but the study remains to be unsuccessful as it has not been able to provide with ample practical application procedures (Gosling & Naim, 2009).

The literature gathered is varied in nature. The author has been able to assess different secondary sources from journals, articles and other relevant books for developing this piece which is appreciable but it is important to mention that the research strategy is highly contextual in nature and too descriptive in terms of design. The design of the article could have been a bit explanatory which would have helped to describe the concepts brought up by the different principles as well as explain their core practice through a pragmatic approach. It is important to say that the study was mainly done on a qualitative basis by gathering a lot of secondary resources (Holt & Ghobadian, 2009). It is important to mention that supply chain management is multi faceted and should have been researched based on both primary and secondary processes. The study did not focus on meeting the practical aspects of the study and it has been seen that most of the principles have been able to theoretically support the views but practical application of the article is not substantial. The primary sources of research methods would have brought the numerical calculation into the picture which would have helped to understand the views of different managers in terms of the efficacy shown by these principles (Bozarth et al., 2009). The correlations and the survey done on this subject would have been effective in understanding the practical influence of the seven principles on the practice of supply chain management. Overall it is important to say that the study has been done based on logical and scientific reasoning and hence having a better idea about the practical application of these principles would have been effective. Hence it could be concluded that the methods for developing the articles have been partially effective and could have been used in a much better way (Lusch, 2011).

Further Principles of Supply Chain Management

Conclusion

The present article has set a very effective theoretical platform for managers and companies to follow these seven supply chain principles but it is very clear that the study has not been able to discuss the evidential prospects about the practical implementation of these seven principles in the business. The supply chain management is a vast process and it is very important to focus on each and every step successfully for effective practical implementation (Handfield et al., 2009). The present literature has not been able to develop a strong hypothesis which would help to implement this practically. There are numerous hurdles that come in the way of successful practical implementation of supply chain management for example change in the structure of the organisation which is a vast process and the study does not provide ample insights to handle supply chain management, on the other hand at time it becomes tough for organisations to identify the aspects that play spoilsport to change and hence the study should have given effective ideas and plans to identify the difficulties to change. The building of effective supply chain management cannot be done within a day and hence it is important that managers and the upper management of an organisation understands this and keep calm. Overall it could be concluded that the present study has been effective theoretically providing ample theoretical knowledge about supply chain and the seven principles but it was written in the late 90s and things have changed drastically in the last decade or so and for this change the article did not provide ample knowledge to implement these seven supply chain principles in supply chain management and this could be changed in the coming researches (Blanchard, 2010).

References

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