Supply chain management is the process of maximizing added value and reducing the total cost across the entire trading process. It focuses on speed and certainty of response to the existing market. Because of ICT and globalization, this concept is increasingly becoming a powerful tool for most companies to compete at the local and international level.
The concept of supply chain management has become an important necessity for the manufacturing sector when it comes to delivering goods at a competitive cost and at a higher quality. The business environment today has changed quite significantly and it is becoming more competitive, perhaps due to the unsettling economic environment as of recent.
Enterprises these days need to operate at a reduced cost to compete. They must also develop their own core competencies that will distinguish them from their competitors and help them to stand out in the industry. In developing this competitive edge, businesses will be required to divert their resources to focus on what they do best. They will also need to outsource the processes and tasks that are not important to the overall objective of the business.
This concept has allowed most businesses to go back to the drawing board and rethink the whole operation. They must restructure the plans so that they can focus on core competencies and outsource those that are not within this scope. Because of the current competition in the market, this is the only way the businesses will survive the tides.
This tactic of applying supply chain management will have a positive effect on market positioning and on the strategic decisions of selecting the appropriate manpower, resources, and partners. Placing focus on key strengths will enable a business to build a niche for themselves and specialization of key areas within an industry. In order for this to happen, the businesses must look at the bigger picture of the entire process and figure out which one can be reduced, eliminated, raised, or created.
Companies are increasingly looking at foreign markets for growth prospects and suppliers from the same markets for improved opportunities. These are opportunities that present in many different ways. As they enhance their participation in this international economy, it becomes more important to develop and understand this concept and the opportunities that come with it.
Supply Chain Management is widely viewed as among the most crucial pushers for trade and industry. Many factors have resulted to increased world industrialization. The result of this is the competitive atmosphere which has changed drastically. These movers are decreased tariffs, improved transportation and communications, IT, globalization of goods, markets and services, and economic regionalism, among others.
The supply chain management techniques and tools are believed to be the main instruments that will enable a company to counter the environmental changes faced within today’s economy. A company that works closely with chain partners will better understand the changes the customers want and understand how to respond to them. It is also important to share risks so that they can derive ways through which they can enhance their own performance in this increasingly volatile business market.
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