Supply chain management is becoming a vital part of an organization’s strategic plan. Many factors are responsible for supply chain management’s increased importance. These include the desire to quickly adapt to changes in customers’ demands, globalization of the market place creating longer supply chains, shorter product life cycles, and new technologies. Additionally, organizations are looking to create long-term partnerships with fewer suppliers to improve supply chain performance.
1. Supply chain management is a relatively new concept in business. The evolution from materials management or purchasing reflects its new strategic role.
2. Companies have changed from isolating their technical core with raw materials and finished goods inventory to working more closely with suppliers and customers. This has allowed organizations to react more quickly to changing customers’ demands.
3. Several factors have impacted the supply chain including reduced number of suppliers, increased competition, shorter product life cycles, technology, quick response programs, and shared or reduced risk.
4. A successful supply chain requires trust, long-term relationships, information sharing, individual strengths of organizations, and choosing the right type of supply chain.
5. Supplier managed inventories, and consignment inventories are becoming more common.
6. ERP systems are a new generation of software that is providing a single, uniform software platform and database to facilitate transactions among the functional areas within a firm, and between firms and their customers and vendors.
7. ERP systems are an outgrowth of MRP.
8. ERP systems reduce the number of errors through the use of a common database, speed customer response times, speed order fulfillment times, and improve overall communication within the organization.
9. Reasons for ERP failure include lack of top management commitment, lack of adequate resources, lack of proper training, and lack of communication.