Principles of Supply Chain Management, Essay Example

Supply chain management has been playing a crucial role in business success as it focus on effectiveness in business operations. The cost effectiveness that is associated with SCM is substantial as most business spends as high as 80% of their budgets in purchases. SCM has been perceived to offer both strategic and operational importance to a business. A perfect understanding of this concept is based on acknowledgement of two important dimensions of SCM namely operational supply chain and entrepreneurial supply chain. Majority of business enterprises view supply chain management as a crucial aspect of business because it translates to the achievement of quality assurance, planning, control as well as improvement in its service delivery (Wisner, Keong Leong & Keah-Choon, 2005). Consequently, SCM entails a holistic approach to organizational structures that involve the way in which businesses conducts their operations. Integration of entire functions of a business is also facilitated by supply chain management.

Adoption of SCM means that the management of the business is broadened in focus to incorporate all companies that participate for the success of the business in terms of facilitating its production. These include the suppliers, the manufacturers, the wholesalers, retailers as well as the clients (Wisner, Keong Leong & Keah-Choon, 2005). The businesses that embrace SCM have witnessed significant reductions in cycle time as well as cost. The Wal-Mart for instance reported improvements in their inventory returns, reduced occurrences of out-of-stock and swifter cycles of replenishment. All the companies in this regard function harmoniously as they form a network that is refered to as a supply chain. Therefore, the greatest benefits to the business is high efficiency that ultimately translates to minimal wastage of time and other resources, therefore increased profitability.

Reference

Wisner, J. D., Keong Leong, G. & Keah-Choon, T., (2005). Principles of Supply Chain Management: A Balanced Approach. Mason, OH: Thomson South-Western.