The concept of standardization applies to multiple industries, and the cost savings can be significant; estimates by governmental leaders and industry analysts project that the auto manufacturing industry alone could save as much as $1 Billion annually (6). With a focus upon cost savings, there are several ways in which standardization assists a company or industry in improving its SCM processes to achieve the desired end. These include the enhancement of SCM planning, the enabling of SCM transparency, as well as the increase of cooperation and efficiency between the components.
In terms of planning, the process of standardizing practices across the entirety of the supply chain requires management to consider each element in the system and how those elements interact. To standardize a process means that each component is reviewed with an eye toward streamlining the interactions so that the ultimate process works better; a concept that applies to virtually any supply chain. For example, in the healthcare industry, one author notes that considering all the criteria which directly link to “product selection, product use, product disposal, and environmental and community health impacts” should be incorporated into the SCM so that a “holistic perspective” is maintained (Eagan, Kaiser, and Shaner 207). It makes sense that a non-compartmentalized view of the supply chain would contribute to efficiency in planning, resulting in cost savings. Accordingly, the first improvement standardization brings to SCM is that of forcing management to understand the entire process so that it all works together in an organized fashion.
Another improvement gained through standardization is found in the principle of transparency. Published and recognized standards allow each component within the chain to understand the processes of the other elements and work in cooperation with them. As discussed in other research, the linear