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18.SCM - Business Process Integration

Successful SCM requires integrating activities across key supply chain processes rather than managing individual functions. This involves collaborative work between partners, shared information, and continuous information flow. The document outlines several critical supply chain business processes including customer relationship management, demand management, order fulfillment, supplier relationship management, product development, and returns management. It provides details on the customer service management process, procurement process, product development and commercialization process, manufacturing flow management process, physical distribution process, outsourcing/partnerships process, performance measurement process, and warehousing management process.

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Wah Khaing
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48 views2 pages

18.SCM - Business Process Integration

Successful SCM requires integrating activities across key supply chain processes rather than managing individual functions. This involves collaborative work between partners, shared information, and continuous information flow. The document outlines several critical supply chain business processes including customer relationship management, demand management, order fulfillment, supplier relationship management, product development, and returns management. It provides details on the customer service management process, procurement process, product development and commercialization process, manufacturing flow management process, physical distribution process, outsourcing/partnerships process, performance measurement process, and warehousing management process.

Uploaded by

Wah Khaing
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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SCM - Business process integration

Successful SCM requires a change from managing individual functions to integrating activities into key supply chain
processes. An example scenario: the purchasing department places orders as requirements become known. The marketing
department, responding to customer demand, communicates with several distributors and retailers as it attempts to
determine ways to satisfy this demand. Information shared between supply chains partners can only be fully leveraged
through process integration.
Supply chain business process integration involves collaborative work between buyers and suppliers, joint product
development, common systems and shared information. According to Lambert and Cooper (2000), operating an integrated
supply chain requires a continuous information flow. However, in many companies, management has reached the conclusion
that optimizing the product flows cannot be accomplished without implementing a process approach to the business. The
key supply chain processes stated by Lambert (2004)[13] are:
1) Customer relationship management
2) Customer service management
3) Demand management style
4) Order fulfillment
5) Manufacturing flow management
6) Supplier relationship management
7) Product development and commercialization
8) Returns management

Much has been written about demand management. Best-in-Class companies have similar characteristics, which include the
following: a) Internal and external collaboration
b) Lead time reduction initiatives
c) Tighter feedback from customer and market demand
d) Customer level forecasting

One could suggest other key critical supply business processes which combine these processes stated by Lambert such as:
a) Customer service management
b) Procurement
c) Product development and commercialization
d) Manufacturing flow management/support
e) Physical distribution
f) Outsourcing/partnerships
g) Performance measurement
h) Warehousing management

a) Customer service management process


Customer Relationship Management concerns the relationship between the organization and its customers. Customer
service is the source of customer information. It also provides the customer with real-time information on scheduling and
product availability through interfaces with the company's production and distribution operations. Successful organizations
use the following steps to build customer relationships:
 determine mutually satisfying goals for organization and customers
 establish and maintain customer rapport
 produce positive feelings in the organization and the customers
b) Procurement process
Strategic plans are drawn up with suppliers to support the manufacturing flow management process and the development
of new products. In firms where operations extend globally, sourcing should be managed on a global basis. The desired
outcome is a win-win relationship where both parties benefit, and a reduction in time required for
the design cycle and product development. Also, the purchasing function develops rapid communication systems, such as
electronic data interchange(EDI) and Internet linkage to convey possible requirements more rapidly. Activities related to
obtaining products and materials from outside suppliers involve resource planning, supply sourcing, negotiation, order
placement, inbound transportation, storage, handling and quality assurance, many of which include the responsibility to
coordinate with suppliers on matters of scheduling, supply continuity, hedging, and research into new sources or programs.

c) Product development and commercialization


Here, customers and suppliers must be integrated into the product development process in order to reduce time to market.
As product life cycles shorten, the appropriate products must be developed and successfully launched with ever shorter
time-schedules to remain competitive. According to Lambert and Cooper (2000), managers of the product development
and commercialization process must:
1. coordinate with customer relationship management to identify customer-articulated needs;
2. select materials and suppliers in conjunction with procurement, and
3. develop production technology in manufacturing flow to manufacture and integrate into the best supply chain
flow for the product/market combination.

d) Manufacturing flow management process


The manufacturing process produces and supplies products to the distribution channels based on past forecasts.
Manufacturing processes must be flexible to respond to market changes and must accommodate mass customization.
Orders are processes operating on a just-in-time (JIT) basis in minimum lot sizes. Also, changes in the manufacturing flow
process lead to shorter cycle times, meaning improved responsiveness and efficiency in meeting customer demand.
Activities related to planning, scheduling and supporting manufacturing operations, such as work-in-process storage,
handling, transportation, and time phasing of components, inventory at manufacturing sites and maximum flexibility in the
coordination of geographic and final assemblies postponement of physical distribution operations.

e) Physical distribution
This concerns movement of a finished product/service to customers. In physical distribution, the customer is the final
destination of a marketing channel, and the availability of the product/service is a vital part of each channel participant's
marketing effort. It is also through the physical distribution process that the time and space of customer service become
an integral part of marketing, thus it links a marketing channel with its customers (e.g., links manufacturers, wholesalers,
retailers).

f) Outsourcing/partnerships
This is not just outsourcing the procurement of materials and components, but also outsourcing of services that traditionally
have been provided in-house. The logic of this trend is that the company will increasingly focus on those activities in the
value chain where it has a distinctive advantage, and outsource everything else. This movement has been particularly
evident in logistics where the provision of transport, warehousing and inventory control is increasingly subcontracted to
specialists or logistics partners. Also, managing and controlling this network of partners and suppliers requires a blend of
both central and local involvement. Hence, strategic decisions need to be taken centrally, with the monitoring and control
of supplier performance and day-to-day liaison with logistics partners being best managed at a local level.

g) Performance measurement
Experts found a strong relationship from the largest arcs of supplier and customer integration to market share and
profitability. Taking advantage of supplier capabilities and emphasizing a long-term supply chain perspective in customer
relationships can both be correlated with firm performance. As logistics competency becomes a more critical factor in
creating and maintaining competitive advantage, logistics measurement becomes increasingly important because the
difference between profitable and unprofitable operations becomes more narrow. A.T.
Kearney Consultants (1985) noted that firms engaging in comprehensive performance measurement realized improvements
in overall productivity. According to experts, internal measures are generally collected and analyzed by the firm including
1. Cost
2. Customer Service
3. Productivity measures
4. Asset measurement, and
External performance measurement is examined through customer perception measures and "best practice" benchmarking,
and includes 1) customer perception measurement, and 2) best practice benchmarking.

h) Warehousing management
As a case of reducing company cost & expenses, warehousing management is carrying the valuable role against operations.
In case of perfect storing & office with all convenient facilities in company level, reducing manpower cost, dispatching
authority with on time delivery, loading & unloading facilities with proper area, area for service station, stock management
system etc.
Components of supply chain management are as follows:
1. Standardization
2. Postponement
3. Customization

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