Strategic Supply Chain Managemnt - Essay Example

As any student of management accounting is aware of, the quantum of capital employed in plant and machinery is more or less uniform across an industry as all players generally opt for the latest technology so as to enjoy maximum levels of operating efficiency. So, there is not much to differentiate between the competitors in that regard. But the area where the leaders leave the stragglers behind is supply chain management and inventory control. If a proper and taut control over inventory is not maintained, the level of capital employed can never be brought down while keeping the operational efficiency intact.

(Cox, Sanderson and Watson 2001) These days the management gurus are looking beyond the narrow and immediate confines of inventory management and are looking at managing the supply chain as a whole. Supply chain attempts to view the whole production process as a seamless entity that begins with market research for correctly evaluating consumer demand and follows the flow of inputs and services through the production process right till the time when the finished product reaches the final consumer.

Thus this is a wider concept that includes all the stakeholders; right from the supplier that supplies raw materials to the final consumer that buys the product to satisfy a particular need. In between of course lie the producer, the labour and the service inputs from the tertiary sector of the economy. A supply chain in its most basic form has four components, and they are: Supply chain management, as is clear from the above diagram, is basically akin to running a relay race and just as in a relay race the entire team is as good as its weakest link, so also in supply chain management the entire operation is as efficient as its least efficient sections.

That is to say, a super efficient manufacturer is not enough to make the entire supply chain effective – all the components must be