Study Supply Chain Management, Supply Chain Management Schools
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Perhaps, the open secret of the success of McDonalds, Wendy’s Hamburgers, and Walter Mart to name a few businesses that operate on a national to global scale is in their efficient supply chain management. Because of highly efficient supply chain management procedures, these companies have achieved unprecedented earnings as they have decreased operational costs vastly at the same time creating more value for their brands. Naturally, it would follow, the lower the cost of doing business, the larger the profit margins.
Basically, supply chain management refers to movement and storage of raw materials internally (within an organization) and movement of finished products to various channels which could be company-owned, retailers or third party distributors.
In managing supply chain operations, usually, supply chain managers can employ three kinds of approaches on how to bring about efficacy and optimality. The three approaches are the Strategic Approach, Tactical Approach and Operational Approach. More or less, sometimes, these three cross paths as a strategic approach could also be considered a tactical one or an operational one but theoretically, they should be different in terms of objective.
The strategic approach generally pertains to the optimization of network resources. If looking at it in strategic terms, location and size of warehouses, number and what type of vehicles or equipments and number of distribution centers are the main consideration. The logistics manager, usually the one responsible for supply chain management activities needs to determine if a warehouse is of the right size or under capacity given the volume of goods arriving and leaving. Same with the delivery vans, however, an added twist to vehicle optimization are if they are efficiently utilized like, if a single distribution area could be effectively serviced by one van or perhaps by two or more vans. Outsourcing to third party distributors would also be a big question for supply chain managers. Like for example, an independent company gave interests to McDonald’s to provide for the delivery trucks that will deliver supplies to all McDonald’s branches in the city of Los Angeles and would charge by the weight of its cargo. When the logistics manager made some computation, they found out that it would actually appear cheaper in terms of cost as they would not have to maintain the vehicles and pay additional wages for the drivers. So anything that would lessen cost without sacrificing mobility of goods would be what supply chain managers look out for and proudly report on their boardroom meetings.
The tactical approach is a bit trickier as this approach would usually consider what the competitors are doing. Like for example, a third party distributor or supplier is offering a mobile tracking system that would allow for the logistics manager to know the progress of each shipment arriving and leaving on a real time basis. Knowing that the competitors have not yet made use of this technology and would surely give them an edge over their competitors, the logistics manager would present his case to the CEO that they need this technology to dominate the industry. Even what route to take would be a tactical decision as sometimes although toll fees may be higher in one route but cuts the delivery time by 3 or 4 hours and keeps them ahead from other companies. So anything that would give the company an advantage over other companies is considered tactical in nature.
The last approach to supply chain management is the operational approach. Operational approach would lean more towards on production issues. Operational approach would give emphasis on hiring new employees, what equipments are needed, inventory control procedures, monitoring, scheduling and demand forecasting.
Although, there is not one successful company that employs a purely strategic, tactical or operational approach, but rather always a mix of these said approaches. The course of Supply Chain Management will teach students of this course how these successful companies have become more successful because of the application of supply chain management concepts. Basically, students of this course will encounter the following concepts more or less: Resource-Based View (RBV), Transaction Cost Analysis (TCA), Knowledge-Based View (KBV), Strategic Choice Theory (SCT), Agency Theory (AT), Institutional theory (InT), Systems Theory (ST), Network Perspective (NP).