Software Services, Supply Chain Management

The Management Components of SCM

The SCM components are the third element of the four-square circulation framework. The level of integration and management of a business process link is a function of the number and level, ranging from low to high, of components added to the link. Consequently, adding more management components or increasing the level of each component can increase the level of integration of the business process link. The literature on business process reengineering, buyer-supplier relationships and SCM suggests various possible components that must receive managerial attention when managing supply relationships. Lambert and Cooper identified the following components which are:

  1. Planning and control
  2. Work structure
  3. Organization structure
  4. Product flow facility structure
  5. Information flow facility structure
  6. Management methods
  7. Power and leadership structure
  8. Risk and reward structure
  9. Culture and attitude

However, a more careful examination of the existing literature will lead us to a more comprehensive structure of what should be the key critical supply chain components, the “branches” of the previous identified supply chain business processes, that is, what kind of relationship the components may have that are related with suppliers and customers accordingly. Bowersox and Closs states that the emphasis on cooperation represents the synergism leading to the highest level of joint achievement. A primary level channel participant is a business that is willing to participate in the inventory ownership responsibility or assume other aspects of financial risk, thus including primary level components.  A secondary level participant, is a business that participates in channel relationships by performing essential services for primary participants, thus including secondary level components, which are in support of primary participants. Third level channel participants and components that will support the primary level channel participants, and which are the fundamental branches of the secondary level components, may also be included.

Consequently, Lambert and Cooper’s framework of supply chain components does not lead us to the conclusion about what are the primary or secondary (specialized) level supply chain components. That is, what supply chain components should be viewed as primary or secondary, how these components should be structured in order to have a more comprehensive supply chain structure, and to examine the supply chain as an integrative one.

Baziotopoulos reviewed the literature to identify supply chain components. Based on this study, Baziotopoulos suggests the following supply chain components:

  1. For customer service management: Includes the primary level component of customer relationship management, and secondary level components such as benchmarking and order fulfillment.
  2. For product development and commercialization: Includes the primary level component of Product Data Management (PDM), and secondary level components such as market share, customer satisfaction, profit margins, and returns to stakeholders.
  3. For physical distribution, manufacturing support and procurement: Includes the primary level component of enterprise resource planning (ERP), with secondary level components such as warehouse management, material management, manufacturing planning, personnel management, and postponement (order management).
  4. For performance measurement: Includes the primary level component of logistics performance measurement, which is correlated with the information flow facility structure within the organization. Secondary level components may include four types of measurement such as: variation, direction, decision and policy measurements. More specifically, in accordance with these secondary level components, total cost analysis (TCA), customer profitability analysis (CPA), and asset management could be concerned as well.
  5. For outsourcing: Includes the primary level component of management methods, and the strategic objectives for particular initiatives in key areas of information technology, operations, manufacturing capabilities, and logistics (secondary level components).

One thought on “The Management Components of SCM

  1. asd says:

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