The changes of overall business environment and heightened competitions in the global market place greatly contribute to the continuous development of supply chain and supply chain management. It is however partly influenced by the new understanding of the supply chain that they participate. There are a number of early development trends that can be observed evidently.
- Functional to process perspective
Business management used to be able to view and act on the business’s functional silos. It seemed understandable that the function would be associated with the delivery side of the firm. However, with the supply chain management idea, managers can now approach their problems from a process perspective, realizing that functions can only make sense when viewed through the lens of the supply chain process.
- Operational to strategic viewpoint
Managers prefer to view supply chain management as another operational approach that will assist to cut operational costs, such as improving the purchasing function and optimizing logistics operations, in the early years of implementing the concept. However, as time went on, more and more managers realized that significant adjustments could only be made if operational challenges were handled from a supply chain-wide strategic perspective. Only through a strategic fit can operational excellence be realized.
- Single enterprise to extended enterprise
Enterprise management has arguably been supplanted by supply chain management, with the supply chain being the expanded enterprise by definition. Long-held enterprise-centered management philosophy was predicated on the assumption that competition was raging between organizations; however, this is no longer the case, since competition is now mostly between supply chains. Management looking about the whole company generates a lot of ideas that a single company can’t.
- Transactional to relationship-based engagement
In the past, most business interactions between companies were transactional and cost-driven. Transactional criteria such as price, volume, and delivery terms were used to evaluate the merit of any acquisition and procurement of externally obtained items and services. However, so-called relationship-based engagement is becoming more common in interacting with external organizations inside the supply chain. This relationship-based strategy does not ignore transactional actions, but it bases its decisions on a much broader evaluation of knowledge exchange, long-term commitment, incentives, and reward.
- From local to regional, and then to the global.
Over the previous two decades, supply network connections have progressed from local to regional to global. Almost every big corporation and supply chain is linked to the rest of the world in some way. Before you can stand up, you need to get out. The lower cost of labor and materials in many regions of the world, as well as first-mover benefits in establishing worldwide market presence, are driving this trend.
The supply chain development patterns aren’t always bright and upbeat. There is now sufficient information to show that supply chain risks are increasing at a faster rate than ever before, and supply chain integration remains a key management deficiency across all industrial sectors. Managing and enhancing supply chain performance across all industries is becoming more difficult, not easier. This necessitates a more in-depth and comprehensive awareness of the difficulties that supply networks face. For more in-depth knowledge on supply chain and supply chain management, register for our Procurement & Supply Chain Management course
