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IMPLEMENTING SUPPLY CHAIN MANAGEMENT*
In today's global market managers are realizing that their suppliers have a major influence on customers' satisfaction level. A quality product is not enough by itself. A company must get the product to its customers when, where, and how they want it, and in the quantity they want at minimal cost [6].
Although the power of supply chain management in the global market has been described in magazines and newspapers and in seminars [7], managers are not being shown how to implement it in their companies. This article explains what the advantages of supply chain management are, how it can be implemented into the company, and what role technology plays in the process.
ADVANTAGES OF SUPPLY CHAIN MANAGEMENT
"Supply chain management is a collaborative-based strategy to link cross-enterprise business operations to achieve a shared vision of market opportunity. It is a comprehensive arrangement that can span from rawmaterial sourcing to end-consumer purchase," explains John McConnell, professor at Michigan State University [7]. This definition incorporates two important ideas. First, supply chain management is a collaborative effort that combines many parties or processes in the product cycle. Second, it shows that supply chain management can cover the entire product cycle [2], from the introduction of raw materials to the point at which the consumer purchases the product.
A company should implement supply chain management because of its powerful impact on short- and long-term goals like profit, market share, and customer satisfaction [1]. To put the advantages in numeric terms, companies that have implemented supply chain management have a 45% supply chain cost advantage over their competitors [4]. A study by Pittiglio, Rabin, Todd, & McGrath showed companies that had implemented supply chain management had an order-cycle time and an inventory days of supply that were 50% lower than their competition. Finally, these companies met their promised delivery dates 17%ff faster than their competition [7].
IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENT
Before beginning the implementation, a company must know what a supply chain looks like. A simplified integrated supply chain model is shown in figure 1. The thick arrows show how the product and its materials move through the supply chain; the thin arrows show the flow of informational and financial data [7]. The...