Explain the purpose of the author or the article, ‘The 7 Principles of SCM’.
Identify the key question that the author is trying to address, and the information that the author has used or presupposed to support his arguments.
Evaluate the inferences, or the conclusions that the author comes to, and presents in the article. Essentially, find out what is the author’s line of reasoning, and the main assumptions underlying the author’s thinking.
Pursue the logical implications of the author’s position, and state the usefulness of the article to topic, for both theory and practice.
The article is entirely based on analyzing supply chain management based on seven principles. The article was written by David Anderson, Donavon Favre and Frank Britt who are considered to be the experts of Anderson consulting from the respected Logistics practice. In the ten year history of supply chain management, it is considered to be the most requested article that appeared in 1997 (Anderson, 1997). The article based on supply chain management is determined to be a compelling and clear case that presents excellence in supply chain management. The study provided with an understanding of the importance of supply chain management for the managers within an organization. It helps the managers to gather information on how to satisfy the needs of the customers effectively. It also presents the fact that if the company is capable of fulfilling the demand of the customers than it helps the organization to increase profitability and growth. It has been observed from the article that most of the companies have achieved profitable growth by considering supply chain management as a strategic variable. To enhance supply chain management, the managers within the organization identifies two significant factors they are determining supply chain as a whole and gaining tangible results. The first factor that considers supply chain as a whole includes managing the flow of information, services, and products from their distributors to their customers. Whereas, the second factor that is to gain tangible results focuses upon cost, utilization of asset and revenue growth. The managers realized that rejecting a company's traditional view along with its elements as distinct functional entities is an actual measure of success (Genovese et al., 2017). It helps in executing the organizational activities effectively that generates significant value for customers by maximizing profitability based on each chain of management.
The key aspects of this particular article are to provide with an analysis to enhance supply chain management by more than 100 retailers, distributors, and manufacturers. It shows that by making use of some of the principles of supply chain management, most of the companies have gained profit. Whereas, few of the companies have failed by utilizing the techniques given in the principles. Several themes have been shared by the organizations that have contributed to profitable growth. The organizations have gained profitable growth due to broad efforts by combining both tactical and strategic change (Martínez-Jurado and Moyano-Fuentes, 2014). They present a holistic approach by observing supply chin from orchestrating an end to end effort. It is done to achieve the whole improvement in asset utilization, costs, and revenue which is considered to be greater as compared to the sum of parts. Uncoordinated change activity could take place in every function and department that puts the organization in great risk. Seldom management fails in identifying the needs of fixing. Such an issue helps in executing and developing the plan for supply chain transformation that could move different complex operating entities. The seven fundamental principles of supply chain management undertaken by most successful manufacturers help the managers to make relevant decisions. It helps the managers to take note from their experiences to better execute their work. The article is significant as it provides with the strategies that are helpful for the managers to gather knowledge about how to develop supply chain management (Gattorna, 2017). The article presents seven principles of supply chain management along with practical examples. As per the author, managers have found that they could achieve the objective of the company by maintaining an ideal situation by considering supply chain management as a strategic factor. Therefore, the article provides with an analysis to improve supply chain management that proves to be effective for the modern organizations.
The methodology of this particular article is entirely based on analysis to enhance supply chain management by suppliers, dealers, and builders. With the help of practical examples and theoretical frameworks, the overall practical observations have been executed. By comparing the differences and similarities related to the information provided the author has effectively presented the assuming designs in the seven principles based on supply chain management (Meixell and Luoma, 2015). It has been observed that the study has been conducted at the time when broadband service was not developed else it might have been included in the article. It can be seen from the examples provided that some of the principles did not benefit a few of the organizations in enhancing their supply chain management. Therefore, it is noticed that the methodology of the article fails to meet the needs of the manufacturers due to the occurrence of undependable sample size. Hence, the research which will be conducted in the future must focus upon providing a dependable sample size that will provide appropriate information based on the seven principles of supply chain management (Kamalahmadi and Parast, 2016). Also, the researchers must make use of modern technologies within the seven principles that could be beneficial for modern companies if used efficiently.Principle 1: Segment customers based on the service needs of distinct groups and adapt the supply chain to serve these segments profitably
The customers are traditionally grouped by trade channel, product or industry due to segmentation. This principle provides with a typical result where the managers admit that they do not understand the relative value placed by customers on their offered services. It demonstrates the fact that the organizations must implement a cross-functional and disciplined process that helps in creating a service package of particular segments and develop a menu for supply chain programs. According to the author, it is not known that which customers gain more profit that will create long-term profitability (Touboulic and Walker, 2015). The article reveals an example of a food manufacturer who is successful in boosting sales and managing customer segments. The article also states that the organizations must analyze the benefits and costs of the service packages and analyze the profitability of segments to make sure that there is a profitable allocation of resources and reasonable return on the investment (Turker and Altuntas, 2014).
Figure: Needs-Based Segmentation
(Source: Ellram and Cooper, 2014)Principle 6: Develop a supply chain-wide technology strategy that supports multiple levels of decision making and gives a clear view of the flow of products, services, and information
According to the author, most of the organizations have been replacing poorly integrated and inflexible systems with wide enterprise systems. However, some of the companies found it harmful in using such powerful transactional systems which do not provide information on how to execute business (Giannakis and Papadopoulos, 2016). Thus, the article states the fact that to integrate the capabilities it becomes necessary for the managers to build information technology systems. The systems must have the capacity to handle electronic commerce and transactions across the supply chain. It must facilitate decision making and planning that would support shipment planning and demand to allocate the resources efficiently (Dubey et al., 2017). The systems must provide tools such as, an integrated network model that will enable strategic analysis. It is observed from the article that few of the companies fail to make appropriate use of the systems to enhance supply chain management. However, electronic connectivity provides with an opportunity to modify supply chain from various factors through vendor-managed inventory program.
Seven Principles of Supply Chain Management
Figure: Key aspects of supply chain technology strategy
(Source: Govindan, Soleimani and Kannan, 2015)
The second principle provides with a logistics network that makes use of a monolithic approach that is significant for the company to organize their transportation, warehouse and inventory activities. The logistics network helps in fulfilling the service needs of the customers. The third principle is important as it facilitates self-centered forecasting that manages supply chain management effectively. This process helps in identifying the objectives and needs of the functional group along with overall financial, operational decisions (Subramanian and Gunasekaran, 2015). The fourth principle is helpful for the manufacturers as it provides with a different product closer to speed closer and customer. The fifth principle ensures that the decision made by the manufacturers must be relevant to achieve the goals. The seventh principle is helpful as it provides the manufacturers with various measures to enhance supply chain management. It states the fact that most of the companies are developing common report cards that improve performance.
The article is significant as it is entirely based on supply chain management that helps in enhancing organizational activities. As the article was written in 1997 which does not make use of modern technologies and techniques that are beneficial for modern organizations (Formentini and Taticchi, 2016). According to my opinion, the article must include modern tools and technologies that will prove to be advantageous for most of the organizations to enhance supply chain management. I believe that the manufacturers must learn how to make relevant decisions from the article. Most of the companies do not adopt such principles hence it is suggested to utilize the principles to enhance supply chain management. Therefore, I think that the methodology utilized by the article uses small size samples which is not relevant.
The article is significant as it provides with the knowledge of the implementation of various functional entities within an organization. It also helps in translating principles into practice that helps the company to achieve excellence in managing the supply chain. The article provides with seven principles of supply chain management that helps the managers to manage supply chain effectively within the organization. Despite investing much in the information technology systems, most of the companies could not make efficient use of it to gain profit and achieve the target. The companies make use of change programs that help in developing new operating technology tools and processes instead of fostering relevant behaviors and attitudes (Taticchi et al., 2015). Especially in the organization's people encounter various changes that are necessary for the change program to execute its work. It has been noticed from the first principle that for most of the manufacturer's supply chain management creates an issue that restricts the company to gain profit. Thus, some of the manufacturers would become a victim of making use of techniques and tools. Hence, the first principle is considered to be undependable for most of the organizations. The second principle stated the fact that the company makes use of the monolithic approach to design transportation activities. The fourth principle is proved to be significant for some of the organizations to maintain versatility that could be translated into any standardization as well as customized needs of the products to fulfill the regulatory requirements in different countries. The issue faced by most of the organization is that this particular principle disregarded the essential cost savings that could be achieved through proper standardization of products. The companies implement the seven principles of supply chain management which means that there is a significant change in the organizational activities. A change in organizational activities makes it difficult for the company to manage its activities.
Challenges faced by Organizations
Due to such issues there occurs various challenges for the article as it presents such principles that are that restricts the organization from gaining profitability. It creates a challenge for the article to make use of modern tools and technologies within the principles as it will be helpful for the modern company to enhance supply chain management. Another challenge is that the companies would not be able to develop a supply chain technology strategy. It puts an impact on making a relevant decision that will affect the flow of information, services, and products. Therefore, it is essential for companies to adopt supply chain technologies to have efficient use of modern technologies. The current practices used by the companies based on supply chain management helps the organizations to consider the size of the cost and benefit (Heckmann, Comes and Nickel, 2015). Through an analysis of benefits and costs, the organizations would establish people and capital requirements. The practice helps the company to set explicit outcome target for cost reduction, asset utilization, and revenue growth. It is challenging for the article as it helps in improving the utilization of asset and cutting the costs of the product that limits successful structuring of sustainable growth. It emphasizes revenue growth that increases strategy for supply chain instead of destroying the value of the products. Therefore, this particular plan helps in realizing the benefits that focused upon the management of the supply chain.
Anderson, D. B. F. &. F. D., 1997. The 7 Principles of Supply Chain Management. Supply Chain Management Review, pp. 4-10.
Dubey, R., Gunasekaran, A., Papadopoulos, T., Childe, S.J., Shibin, K.T. and Wamba, S.F., 2017. Sustainable supply chain management: framework and further research directions. Journal of Cleaner Production, 142, pp.1119-1130.
Ellram, L.M. and Cooper, M.C., 2014. Supply chain management: It's all about the journey, not the destination. Journal of Supply Chain Management, 50(1), pp.8-20.
Formentini, M. and Taticchi, P., 2016. Corporate sustainability approaches and governance mechanisms in sustainable supply chain management. Journal of Cleaner Production, 112, pp.1920-1933.
Gattorna, J., 2017. Introduction. In Strategic supply chain alignment (pp. 15-21). Routledge.
Genovese, A., Acquaye, A.A., Figueroa, A. and Koh, S.L., 2017. Sustainable supply chain management and the transition towards a circular economy: Evidence and some applications. Omega, 66, pp.344-357.
Giannakis, M. and Papadopoulos, T., 2016. Supply chain sustainability: A risk management approach. International Journal of Production Economics, 171, pp.455-470.
Govindan, K., Soleimani, H. and Kannan, D., 2015. Reverse logistics and closed-loop supply chain: A comprehensive review to explore the future. European Journal of Operational Research, 240(3), pp.603-626.
Heckmann, I., Comes, T. and Nickel, S., 2015. A critical review on supply chain risk–Definition, measure and modeling. Omega, 52, pp.119-132.
Kamalahmadi, M. and Parast, M.M., 2016. A review of the literature on the principles of enterprise and supply chain resilience: Major findings and directions for future research. International Journal of Production Economics, 171, pp.116-133.
Martínez-Jurado, P.J. and Moyano-Fuentes, J., 2014. Lean management, supply chain management and sustainability: a literature review. Journal of Cleaner Production, 85, pp.134-150.
Meixell, M.J. and Luoma, P., 2015. Stakeholder pressure in sustainable supply chain management: a systematic review. International Journal of Physical Distribution & Logistics Management, 45(1/2), pp.69-89.
Subramanian, N. and Gunasekaran, A., 2015. Cleaner supply-chain management practices for twenty-first-century organizational competitiveness: Practice-performance framework and research propositions. International Journal of Production Economics, 164, pp.216-233.
Taticchi, P., Garengo, P., Nudurupati, S.S., Tonelli, F. and Pasqualino, R., 2015. A review of decision-support tools and performance measurement and sustainable supply chain management. International Journal of Production Research, 53(21), pp.6473-6494.
Touboulic, A. and Walker, H., 2015. Theories in sustainable supply chain management: a structured literature review. International Journal of Physical Distribution & Logistics Management, 45(1/2), pp.16-42.
Turker, D. and Altuntas, C., 2014. Sustainable supply chain management in the fast fashion industry: An analysis of corporate reports. European Management Journal, 32(5), pp.837-849.
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