Supply Chain Management Essay Example | Topics and Well Written Essays - 1500 words - 5

Supply Chain Management - Essay Example Supply chain management also helps to improve customer service, thus increasing effectiveness. Supply chain management is an important aspect of operation management as it has profound effects on the successful functioning of an organization. Proper supply chain management can be used to eliminate redundancy and remove barriers arising from poor communication, by monitoring, controlling and coordinating the various processes within an organization. "Identifying the components of the supply chain, facilitating better decision-making, creating improved communication, and identifying weak links in the chain causing bottlenecks in an organization are crucial to supply chain integration. There are three principle elements of supply chain integration: management of information and financial flows, inventory management, and management of relationships of trading partners." (Power, 2005) According to Czinkota, Ronkainen and Moffett, supply chain management is the integration of three concepts; they are the systems concept, the total cost concept and the trade off concept. These concepts are also important to the business logistics. The system concept is based on the notion that materials- flow activities within and outside of the firm are so extensive and complex that they can be considered only in the context of their interaction. The system concept intends to provide the firm, its suppliers and its customers both domestic and foreign, with the benefits of synergism expected from the coordinated application of size. To get the system concept works, information flows and partnership trust are instrumental. Logistics capability is highly information dependent, since information availability is key in planning and to process implementation. (http://www.oppapers.com/topics/supply-chain-concepts/0) This paper discusses how the benefits reducing cost and profits can be achieved by utilizing information systems and information technology. I will also examine the supply chain processes between sellers and buyers. Due to continuous advancement in the field of information systems technology, it is possible for supply chain partners to coordinate more effectively to optimize the performance of their various organisations. Also, information sharing is a requisite in this coordination, and information sharing has been facilitated quite a lot by these advances in the field of information technology.According to Banavar et al, "Modern businesses are dynamic in nature and to stay competitive (organizations) need to optimize their business processes by understanding and reacting to the rapid changes in their environment" (Banavar, Black, Caceres, Ebling, et al, 2005) Serious use of supply chain management started in the 1980s. "It is to describe the range of activities coordinated by an organisation in order to procure and manage their supplies." (Oliver and Webber, 1982)Inventory control is a very essential part of the supply chain process of any organization, because inventory control has to do with reducing the cost of inventory. There are 3 major factors involved in the inventory control decision-making process. These are: The cost of shortage, i.e., what is lost if the stock is insufficient to meet all demand The cost of holding the stock The