The Supply Chain Management (SCM) framework is based on a functional model of the SCM system. It is a development tool that assists in the development of a well-integrated SCM system in an organization. The framework consists of several components that define key functions, processes, and best practices. Organizational behaviors like SCM enablers support the organization’s overall performance.
The Seven SCM Components: SCM components represent business processes and practices. Following are the seven SCM components.
• SCM Leadership – This component provides a direction to the SCM system. It is constituted by managers from the different functional areas. The overall performance of the SCM system depends on the interaction between these functional heads and the senior management.
• SCM Strategy – The SCM strategy forms an outline for supply chain operations that support and are consistent with the manufacturing and marketing objectives of the organization.
• Operational Planning – This component defines the operational requirements for maintaining a supply chain which are specified in terms of tasks, resource requirements, and measurements.
• Business relationship management – Organizations and supply chain partners are dependent on each other. It is imperative to have a favorable environment that facilitates communication and negotiation between the organization and its supply chain partners. The relationship can be improved by having long-term contracts, and by using inputs from different levels of management and supply chain partners in the communication and decision making processes.
• Order-to-delivery process – The order-to-delivery process defines how effectively an organization can direct the flow of products from the suppliers to the company. It includes processes like order releases, receiving, inspection of incoming material, accounts payable, and materials handling.
• Quality and performance management – This component is concerned with the initiatives that organizations and suppliers take to improve and maintain quality standards. The quality and performance component helps identify the quality defects in suppliers’ products, and facilitates cooperation between suppliers and the manufacturer to improve the quality.
• Human resources management – This component deals with the training of personnel to improve their skills, Knowledge, and attitudes to enhance the supply chain performance.
The Six SCM Enablers: The SCM enablers are a group of carefully conceived and defined behaviors and approaches that allow, encourage, and reinforce a firm’s commitment to high performance SCM practices. The following are the SCM enablers:
1. Alignment – Alignment refers to matching the corporate and business unit goals. It is a key organizational behavior within the SCM system and includes consistency in processes, actions, and decisions across the business units to support the SCM processes. For better alignment, the company leadership should set goals, objectives, and strategies that support successful supplier relationships.
2. Customer – Supplier focus – The customer-supplier focus aims to plan the organization’s processes in such a way that they are able to understand and react to customer requirements quickly. To improve suppliers’ satisfaction, organizations should have clear and mutually understood and agreed rules of relationship and should show commitment for their suppliers’ long-term profitability and success.
3. Design – Design is the feature of products, processes, systems, and services that ensures their successful functioning. It is a comprehensive process, which, after considering feedback from customers and suppliers, defines the overall external and internal requirements to the organization.
4. Measurement – Measurement is a tool that organizations use to quantify information about inputs, outputs, and the performance dimensions of products, processes, and services and to evaluate the performance of different business processes and supplier activities.
5. Participation/involvement – Stakeholders must be involved in the decision-making process to ensure the success of products, processes, systems, and services. Organizational efficiency and performance can be improved by utilizing the available resources in terms of talents and energies of employees and external stakeholders.
6. Periodic review – Continuous improvement is based on the periodic review of all the business processes, programs, and systems. These reviews indicate the difference between the expected performance and the actual performance and the reasons for the deviations.
