managing SCM well require attention to both system details and to the broad external environment in which the firm served by a SCM operates (Provide examples).
To answer the question one needs to have a brief understanding of what supply chain management (SCM) involves.
SCM is a system of processes, systems, organizations, peoples, and technologies that are involved in moving a product from supplier to the customer in as organized and facile a manner as possible. It is designing, planning, executing and managing this system to ensure that all areas of the business are adequately addressed, from procuring the raw material to movement and storage of the material, conducting the actual work or service, to finishing the goods, polishing them, marketing them, and finally, delivering them to the consumer. An example in kind may be Colgate which starts off with the necessary research, procures the raw material, plans the steps of the serving of that raw material, has employees turn it into the desired finished product, market it, packages it, and delivers it to its client. All of this, of course, omits a whole lot of intervening steps. SCM focuses on customer interactions, all details of the product transaction, and intricacies of market procedures from aggregate demand to the fulfillment of the order.
Caglaino et al. (2006) show that supply chain organizations have not always been successful in their endeavor to reach their clients (or the clients of their customer) as fast as possible and in the most effective way since their focus has been on external integration strategies (i.e. integration along the chain; companies solidly anchoring onto one another in their endeavor to pass along supplies as seamlessly and as rapidly as possible) to the detriment of internal management (which may involve, for instance, communication between employees or different department and so forth). Efficacy of external integration strategies, however, depends also on the strength of their internal integration.
Caglaino et al. (2006) studied two different ways in which companies operate supply chain integration mechanisms and integration practices. Some companies focus on system details of the management process, i.e. On the design, packaging, testing and so forth of products as well as on relevant internal operation, whilst others focus on the external environment, namely on matters that can facilitate them to reach the client as soon as possible. The difference between these two methods lies in the fact that whereas the latter works on making itself thinner in order to reach customer as fast as possible, the former attempts to achieve its objectives by strengthening internal communications and operations management.
The research proposition of Caglaino et al. (2006) was that supply chain strategies and manufacturing strategies should be linked in order to be most effective. their study showed the existence of a link between the two dimensions of supply chin system (i.e. The integration of information flows with physical flows (of products itself) and their conclusion was that external integration strategies need to be supported by internal integration within the firm, for both together provide the whole with a coherent approach and potential successes of the project.
Attention to both internal and external details is also important since organizations increasingly find that they need to rely on effective networks in order to best compete in our networked economy.
Globalization, outsourcing, and information technology are scenarios that have compelled hyper industries such as Dell and Hewlett Packard (Cox, 1999) to realize that they have to merge close attention to both external and internal systems in order to successfully operate their huge network of international connections. Traditionally, companies, particularly small ones, have focused ion the input and output of the processes, most specially on external processes i.e. The raw material coming in and the end product being delivered to the client. Focus on internal systems and internal management has been ignored. Now key players have realized the importance of internal management too, and internal management, such as communication within the industry is also closely regulated. It is understood that all parts of the SCM model have to be closely seen to in order that an effective product emerge.
Reference
Cagliano, R., Caniato, F. & Spina, G. (2006). The linkage between supply chain integration and manufacturing improvement programmes. International Journal of Operations & Production Management, 26(3/4), 282-299.
Cox, A. (1999). Power, value and supply chain management, Supply Chain Management: An International Journal, 4, 4, 167 — 175.
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