Supply Chain Management or SCM as it’s popularly known seems to have become the all important focal point for business success. It has gained enormous importance and continues to be a buzzword in the Industry as well as in the IT & the student community. Today, people are increasingly realizing that in the intensely competitive world, one has to keep the chain lean and responsive. Is it just something made popular by the consultants and a few people or is it really significant for the industry? And, what really does supply chain mean and why has it been in the limelight? Is it something new that was non-existent earlier or is it just another buzzword which will fade away giving way to something new. In my view, supply chain as a concept is definitely here to stay and it implies a new way of looking at things by questioning the existing boundaries.

What exactly is Supply Chain? 

There are various ways to look at supply chain. One can say that it starts from the raw material vendor and ends with the consumer; thus, it includes purchasing, marketing and even consumer buying the product. Therefore all the processes involved in the entire spectrum from demand generation to demand satisfaction can be called as supply chain management. Today, in some advanced companies supply chain\extend^ right from the vendor procuring his raw material to the point of sale where the last sale of the product takes place. This implies that there is transparency and information flow in the entire chain resulting in appropriate action at each point. This action by each entity contributes to the smooth functioning of supply chain. In some companies supply chain could only be internal i.e. across the manufacturing facilities to company owned depots. One can always choose a part of the supply chain that is most relevant and focus resources to achieve increased productivity. The benefits of supply chain could vary from organization to organization. Key benefits could be achieving higher channel partner satisfaction by reducing inventory, reducing inventory levels, reducing stock out situations by balancing inventory, reducing transportation, storage and damage/expiry costs, meeting delivery lead times and achieving greater accuracy in the planning process through automation.

Why is Supply Chain in the Limelight?

This recent popularity of supply chain is a simple result of advances in technology and competition. In today’s world barriers across countries have become almost invisible as far as trade and technology are concerned. Today, the industry is facing immense competition and also has access to the advanced world-class technology. This coupled with the sky-high expectations of the company stakeholders’ calls for a new way of doing old things. The emergence of the concept of supply chain is a result of this external pressure.

Earlier one would took at supply chain in parts, i.e. marketing, manufacturing, logistics, purchase, distribution, transportation and so on. Each function had a different set of people working with a particular objective in their minds. This objective was not necessarily common across people and led to very little interaction across functions. People were encouraged to be experts in their own functions and this helped in achieving functional excellence. You could hear somebody say that company X excels in manufacturing where as company Y excels in distribution or purchasing. Being excellent in even one of these functions could give a company an edge over competition. However, a further improvement in any of these functions wilt no longer yield substantial business benefits.

Therefore, a time has come to integrate all functions with a view to achieve overall excellence. Probably this is why supply chain has suddenly become an all-important arena where all the action is. Simultaneously, advances in technology have fuelled the growth of supply chain solutions. Thus, one can look at overall supply chain by eliminating/simplifying many mundane activities. In fact, if you observe the emergence of supply chain… it has come only after ERP has become a ‘must have’ from a ‘can have’ for the corporate world.

Is a supply chain focus possible without technology

The data that was available earlier say only say once in a month is available online today. And not only that, all those complex calculations done using paper and pencil are just a matter of seconds. One no longer needs to spend energy on getting and correcting data but correct information is available online as per requirements. Also, by just one click one can do calculations that would probably have taken say a day earlier. The results could also be far superior due to the sheer number of permutations that a human mind may not be able to comprehend and also eliminates possibility of human error at various instances. Also, the system facilitates usage of advanced pianning or optimization aigorithms to achieve a very high quality output.

However, this can be made possible only if one begins to appreciate the huge implications of a supply chain project and invites the change by working towards building a system that fulfills the organizational needs. Even though it may sound cliched, the concept of supply chain comes as a tool or rather a weapon to fight out all the inefficiencies and give real business benefits in measurable numbers. One can rise above the mundane activities as they can be easily left to the system and give a higher share of mind to more productive activities that include modeling and using the system inteiiioentiy to add value to the company.

What does a Supply Chain journey imply?

The above holistic perspective is extremely essential when any organization wants to move towards a supply chain approach. Supply chain is after all a way of thinking…. Just doing the same old things in a new way.

However, having said the above, I would also like to add that supply chain is not as rosy or as simple as it appears. Supply chain implies everything right from re-looking at the organization structure to changing people’s mindsets across levels. It could also need an advanced technology like an APO or an i2 but this in itself can help an organization only a small way. It also includes empowering people with new skills on aH fronts, technological inputs, analytical inputs etc. Various training sessions could be required along with change management inputs as this not only calls for learning, mastering and LIKING a new complex system but it also means changing attitudes for which beliefs need to be changed! Over the years, people have formed and arrived at a set way of working which is considered to be the best. Thus, working with a new system which is complex initially and which calls for new learning can face a lot of resistance. A tot of drive and commitment from the top management witi be required in the initial phase if the entire organization has to succeed on this supply chain journey. And believe me, it will not be easy at all… it will be really tough as one not only has to cope with the day to day business performance pressures but also the pressures of the new way of working. Thus, till everyone becomes comfortable with this new way of working… the support wif! be required across ieveis. Along with this, it could also call for a change in the Key Performance Indicators across the organization.

A lot of questions may be raised about whether the system was required at all and also about the credibility of the system. These questions/doubts need to be addressed in order to ensure that a lot of positive energy is generated. It could also lead to some undercurrents that need to be managed tactfully. If issues are not managed well, this could shake the confidence of the entire organization in the system benefits and derail the supply chain journey.

In order to avoid any jolts midway, a proper homework is absolutely essential on the functional as well as the people front. Once the organization has very thoroughly and logically decided on commencing a supply chain journey and achieved a true consensus within the organization, the likelihood of any stumbling blocks on the way is highly unlikely. The benefits as well as the steps should be clearly shared and agreed among all involved or impacted by the journey. This will give a strong foundation to the project that will go a long way in ensuring success. Needless to say, along with good homework, constant moral boosting and appropriate support at every step will be required.

Questions to be answered before emerging on a Supply Chain Journey:

In order to avoid anyjoits midway, a proper homework is absoiutefy- essential on the functional front as well as on the people front.

There are various questions that need to be answered before one starts on a supply chain journey. What is the benefit that the organization is seeking from improvement of the supply chain? Has it been sufficiently debated and is it unanimously agreed among all functions? Is it clearly defined and measurable? Another very important question- is the supply chain strategy clear and is it aligned with corporate strategy? Will an improvement in supply chain really help achieve the targeted sales or profits? Unless one is very very clear about all this, a supply chain journey either may not go anywhere as it will not get the desired focus and also it could come to a halt.

Once the organization has very thoroughly and logically decided on commencing a supply chain journey and achieved a true consensus within the organization, the likelihood of any stumbling blocks on the way is highly unlikely. The benefits as well as the steps should be clearly shared and agreed among all involved or impacted by the journey. This will give a strong foundation to the project that will go a long way in ensuring success. Needless to say, along with good homework, constant moral boosting and appropriate support at every step will be required as people are the key to this project and they should not only be retained but kept at there best enthusiasm levels.

If all the above homework has been done in the true sense, an organization can start planning a supply chain journey with a detailed project plan. It wilt definitely result in new learning at every stage that the organization will benefit from.