Supply chain management, dictates success

With the advances in technology and intense competition, supply chain management (SCM) seems to have become the all -important focal point for the success of businesses.

The ever-increasing customer demand and heightened global economic challenges have forced organisations to invent new sources of competitive advantages and SCM is one such opportunity to improve efficiency and have an edge over competitors.

The increasing need and relevance of supply chain management encouraged the Indian Institute of Material Management-Bangalore (IIMM-B) organise a seminar on 'Supply Chain and Logistic Exposition'.

Speaking on the occasion K S Viswanathan, vice president, Wipro Infotech said that new information technologies are impacting the future SCM strategies. Citing the example of Shell, which has introduced global positioning system (GPS) and 'radio frequency identification devices' to improve its customer service, he said that the main role of the SCM is to reduce information uncertainty and define a matrix to communicate with the suppliers and implement the decisions.

SCM includes all the processes involved from demand generation to demand satisfaction. In developed countries, supply chain extends from vendor procurement of raw materials to the point of sale. "There is an increasing need for transparency and information flow in the entire chain," added Viswanathan.

The key benefits of a good SCM is reduction in inventories and inventory levels, reducing stock out situation by balancing inventories, meeting delivery lead times and achieve greater accuracy in the planning process through automation.

"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," said V R S Natarajan, chairman and managing director, BEML.

He added that now-a-days companies are increasingly making use of internet platforms as a part of SCM and about 25 per cent of the corporate budget is spent on SCM. He asserted that to improve the quality of service and reduce the cost of operation 'we need SCM'.

The SCM is the key driver of revenue growth and it implies everything right from re-looking at the organisational structure to changing people's mindset across levels.