Issues in Supply Chain Management

Amit Kumar Giri

PGDM-III(SEM)

Issues of S.C.M.

The supply chain management issues concern activities of the firm at various levels of decision making, ranging from operational level to strategic level via tactical level.

The strategic level :

The decision making at this level is made with long term objectives and with long lasting effects. These include decisions regarding location of various facilities, including the manufacturing plant, distribution warehouses and the structure of the distribution channel.

The tactical level: 

Decision making at this level is concerned with purchasing and production functions, inventory policies and transportation strategies. These decisions will be usually updated on an annual basis.

The operational level:

  Decision making at operational level will concern day to day management of activities such as scheduling, routing and vehicle loading etc.

The key issues in contemporary supply chain management are :--

Configuration of distribution network : This issue deals with the design of a

distribution network to serve a specific market. This will consist of a set of warehouses and retail outlets, together with the manufacturing plant and supply sources, based on consideration of location and capacity of each of these elements. This will also determine the level of service available to the customers. 

Inventory control:

 This is concerned with the levels of inventory to be held at various points in the supply chain. As inventory represents costs, the sensible approach is to hold as low an inventory as possible but businesses are forced to hold inventories as a buffer to counter the affects of an uncertain demand. This is one of the key issues in supply chain management. 

Distribution strategy:

 The distribution strategy is concerned with the distribution of the firm's products. There are several strategies available such as the classical distribution strategy or direct shipping. Which one is the best suitable for the firm to achieve its supply chain and corporate goals?

Supply chain integration and strategic partnering:  This is concerned with the complex issue of

strategic inter organizational partnership for achieving competitive advantage. This is about sharing of information and efficient use of the information for coordinating business processes to deliver a superior value to the customers. How to achieve this and what are the challenges? This is one of the emerging issues in supply chain management. 

Product design: 

This is concerned with the design of the product and its impact on total cost of the product. It is possible that the design determines the strategies to be followed regarding inventory or transportation. The design may also determine the length of the product life cycle and the extent of uncertainty associated with demand for this product.

Customer value: 

The key issue is the definition of customer value in an age of increasing consumer power. How will supply chains will be designed to provide value to the customers and how will firms define value?