Evolution of supply chains – part 1
Evolution of supply chains – part 3
The growing importance of SCM as an integrating element in business processes, extending beyond functional areas and company boundaries, requires a certain general understanding of the nature of these relationships at the corporate management level. For supply chain managers, this means high requirements regarding the understanding of how value creation chains function. The range of issues spans from managing partnerships with suppliers in the procurement sphere to distribution and customer care in sales channels.
Today, there is no shortage of specialists in companies managing individual functional areas of chains, but there is a lack of managers who understand the nature of complex relationships and the types of potentials that can be effectively unlocked through the consistent implementation of supply chain management principles. To meet new market challenges, leading companies use new skills and apply solutions in supply chain management that allow them to actively transform these chains to adapt to increasing complexity while simultaneously increasing their efficiency and effectiveness. This is possible thanks to the use of the three-lever effect, resulting from the consistent application of three principles in business practice:
• the principle of cooperation, understood as the distribution of shares and benefits from acquired information along the entire supply chain, in order to reduce unnecessary or excessive expenditures and focus primarily on customer needs rather than on one’s own organization. Research shows that companies that decisively focus on cooperation achieve higher supply chain quality and lower costs than other enterprises
• the principle of value creation chain management, consisting of dominant entities taking over the organization of the entire supply chain – from product design to sales, from suppliers to final customers. To achieve a holistic point of view, a full picture of processes and all aspects in terms of physical dimensions. One of the key aspects in value creation chain management is integrating chain partners according to their qualifications and efficiency levels, enabling the achievement of optimal chain performance. While outsourcing decisions are made much more carefully today, logistics service providers have significantly increased their qualifications and operational efficiency levels in chains
• the principle of supply chain differentiation to meet the specific, defined requirements of different customer groups. Observation of business practice shows that the times of shaping supply chains according to the “one-size-fits-all” motto have ceased to apply. To effectively manage growing complexity, leading companies use structures, processes, and methods that meet customer requirements, taking into account changes in sales and product structures, regional conditions, and other features determining the differentiation of solutions in business process planning.
Applying the mentioned principles allows for the improvement of corporate profitability through cost reduction, reduction of invested capital, and an increase in sales revenue. In particular, the increase in sales revenue obtained through improved customer service levels is often underestimated in practice. Meanwhile, in a market environment with high competitive sensitivity, an insufficient level of customer service most often means a decrease in turnover and a deterioration of basic profitability indicators. Therefore, in the business strategy of enterprises distinguished by competitive advantage, the level of customer service is one of the prominent differentiators determining this advantage. The beginning of the development of the SCM idea can be traced back to the early 1980s. Over the following years, the focus on significant problems to be solved changed in an obvious way. In the first period, the focus was on determining and comparing logistics costs. In the mid-80s, a trend aimed at optimizing processes in the area of procurement logistics was observed. Such solutions were primarily reached for in the automotive industry, in the form of the well-known Kanban and Just-In-Time solutions. In the 90s, these concepts were expanded to include effective purchasing and the commercialization of products, and the area of application for these solutions became primarily the consumer goods industry and retail trade.
The article comes from the magazine “Logistyka” 6/2008.