Supply Chain Management Report


The concept of supply chain management (SCM) has been receiving attention from entrepreneurs and organizations due to significant impacts of incorporating effective SCM for the competitive advantage of the firm to compete in the domestic as well as global competitive economy (Naslund and Williamson 2010). Concerning the concept of SCM, various authors and scholars have given different definitions. According to Janvier-James (2012), supply chain management is systematic process of managing manufacturing activities within any organization. Additionally, supply chain management has been defined as the management of complex system of organized and interrelated businesses involved in the provision of product and service demanded by customers (Gihson, Mentzer and Cook 2005).

Advantages of Supply Chain Management

Different advantages are offered by the implementation of supply chain management within the organization. Organizations are keen to adapt and implement different supply chain management software with the pledge to provide the organizational process with number of advantages. By the implementation of the supply chain management software, organization can increase value and reliability of their production process. Supply chain management ensures the organization’s value chain management to become smooth to operate long term profitability for the organization while sustaining competitive edge in the industry. Considering the significant advantages offered by supply chain management, organizations are increasingly recognizing the importance of implementign the supply chain management system in the organization. According to Mentzer, et al. (2001), supply chain management benefits organization by improving the network of supply chain, minimizing the delays, enhancing the collaboration and reducing the cost.

Improved Supply Chain Network

It is observed that supply chain management enables the organizations to have visibility across the supply chain  system. In this way, effective supply chain management is signified for permitting the users to monitor the status of the all activities across the vendors, production process, storage and inventories and distribution centers (Lambert 2000).   

Minimizing the Delays

Minimizing the delays in production process and final supply is the core purpose of adapting and implementing the effective supply chain management in the organization. In this context, supply chain management enables the organization to minimize the delays by ensuring every process finishing on time. It is observed that supply chain management applications help in identifying the logistics errors, hold-ups on the line o production and late shipment from the suppliers (Lummus and Vokurka 1999).  

Enhancing the Collaboration

The significant advantage of adapting and implementing the supply chain management is that it helps in bridging the gaps between suppliers and organization. Effective supply chain management system by creating collaboration amongst the vendors, production plant and inventories reduce the gaps, which significantly increases the hold up on the production and distribution line (Lambert 2000).

Reducing the Cost 

The significant advantage of supply chain management is that all together it reduces the total cost of the production. It is identified that effective supply chain management applications aids in reducing the overheads expenses in number of ways. The variety of cost saving may be related to improved inventory management, effective use of financial resource, efficient business planning process. Moreover, by bridging the gaps between vendors and distributors, supply chain management saves the cost of delays and hold-ups (Lambert 2000).

Disadvantages of Supply Chain Management

Concerning the disadvantages of supply chain management, most critics have pointed out that adapting and implementing supply chain management reduces the cost of production activities and hold–ups. On the other hand, it increases the cost of the organization in the form of cost of software, management team for supply chain management and maintenance of supply chain management (Lummus and Vokurka 1999). Supply chain management benefits the organization in many ways. Its significant drawback is that it requires heavy investment by the organization (Lambert 2000). Other disadvantages of supply chain management appear in the form of reaction of stakeholders involved in the process. Other disadvantages are also involved in the incorporation of supply chain management (Naslund and Williamson 2010).

Heavy Investment

It is observed that implementation and incorporation of supply chain management in the organization leads to heavy investment, which is less likely to promise returns on the investment (Lummus and Vokurka 1999). The cost of the supply chain management starts with the inception of idea and formation of supply chain management. This cost is due to the fact, prior to implement the supply chain management organization is required to conduct thorough research on the market requirements, customers’ needs, suppliers’ choices and competition. In order to conduct research for all these purposes, organizations are required to make heavy investment regardless of concern about return (Gihson, Mentzer and Cook 2005).

Reaction of Stakeholders

Organizations have stakeholders, which affect the decisions of organization. In the same way, organizations affect the stakeholders by their decisions, to which they react or respond. Major stakeholders within any organization are customers, employees and investors, who directly influence the decisions of any organization (Naslund and Williamson 2010). Concerning the adaptation and implementation of supply chain management, it is found that suppliers are likely to put resistance when organization plans to implement supply chain management within organization. Resistance of important suppliers and vendors majorly cause the organization to bear the loss of important suppliers (Janvier-James 2012).

Selection of Correct SCM Software

Another disadvantage of supply chain management appears on account of selecting inappropriate SCM software. Organization to have effective and efficient SCM prefers implementing software application related to supply chain management (Gihson, Mentzer and Cook 2005). The appropriate selection of the software assures the organization for gaining the advantage from the supply chain management. On the other hand, wrong or inappropriate selection of the supply chain management causes huge loss to organization in terms of lack of consistency in the system.


This paper identified the concept and definition of supply chain management, which helped in determining that supply chain management is the systematic process of managing the business activity of organization from the consignment of supplier until distribution to end customer. The paper further evaluated the advantages and disadvantages of supply chain management. After the assessment of advantages and disadvantages of supply chain management, it is concluded that supply chain management offers certain advantages to organizations if it is implemented considering particular conditions. However, dark side of the supply chain management is that it is rather costly to implement and it imposes resistance from employees and managers. Therefore, organizations, before implementing supply chain management, must consider the advantages and disadvantages of this management system.


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