Seven misunderstandings of Supply Chain Management

Seven misunderstandings of Supply Chain Management

Compiled by amt liu Yu

Supply chain management is a very broad term and is often misunderstood. It has not yet been fully explained in many different opinions.

What is supply chain management? supply chain management is defined as a coordination strategy with the goal of integrating upstream and downstream operations to eliminate non-value-added costs, infrastructure, time and behavior, provide better services to end customers in a competitive manner.

To demonstrate what SCM is and is not, the following will clarify some of the most common misunderstandings;

Misunderstanding 1: supply chain is a scam

That is, they are all new packaging of old concepts. Due to the impact of IT technology, the practical development of SCM has increased rapidly in the past 10 years. The rapid increase in PC computing speed, the ability and variability of communication and data management software have all improved new practices, strategies, strategies, and applications. In fact, the warehousing departments and collaborative planning, prediction, and replenishment (CPFR) Strategies of various industries, such as VMI (supplier management inventory), all work together with the potential of collaborative supply chain management.

Misunderstanding 2: SCM is synonymous with Logistics Management

The essence of supply chain management is the integrated planning of operations, strategies and strategies. Such planning requires all activities and processes, such as customer order implementation, procurement behavior, integration of manufacturing resource optimal planning and logistics enterprise scope, end-to-end integration. In the end, SCM should integrate key business operations and operational relationships in the supply chain.

Logistics, however, is part of the supply chain process, planning, implementing, and controlling the flow and storage of goods, services, and information from the source to the delivery according to customer needs.

Misunderstanding 3: SCM is the only requirement for companies to gain competitiveness

This is obviously wrong. In order to be truly competitive, the company needs a strong business vision, clearly defined mission, product marketing plan, well-planned strategies (such as supply chain strategy and "waterfall" operation strategy ).

Misunderstanding 4: SCM is about Supply Management

Supply management is only about procurement and supplier management. SCM refers to the entire end-to-end flow from raw materials to final consumption, as well as the integration of supply and demand.

Misunderstanding 5: There is no value chain management (VCM) important in the supply chain

Value Chain Management examines the supply chain from the perspective of increasing value. Obviously, this is a very important aspect. However, without SCM's focus on integration collaboration, value chain analysis may lack the necessary structure and fail to achieve the final goal. In terms of effect, SCM and VCM complement each other.

Misunderstanding 6: SCM is a cluster of suppliers.

This opinion is only true at a certain point. If "one cluster" refers to a group of enterprises working together toward a common goal, supply chain partners are of course the horizontal clusters of Value-Added suppliers. However, SCM exceeds the traditional definition of clusters, and traditional ideas limit enterprises to the same industry or physical location. If each supplier in the chain adds the value of the overall network cluster, further development of the Supply Chain cluster will lead to more profit for the end customer.

Misunderstanding 7: SCM is equivalent to implementing ERP

The supply chain focuses on end-to-end integration. However, ERP focuses on integrating all application system transactions and becoming an enterprise-wide system. Therefore, ERP focuses on internal channel integration and management information required to provide enterprise scope decision-making support. Many ERP implementations do not actually support supply chains that point to processes and integration, because they lack well-defined operational improvement plans from the very beginning.