SCM building blocks of today’s dynamic businesses

One of the previous articles shed light on the importance of Supply Chain Management (SCM) in the e-commerce industry. Furthermore, SCM is the management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers (Christopher, 2016). The network of interconnected businesses comprises of the following SCM building blocks.

  • Customer Relationship Management (CRM),
  • customer service management,
  • demand management,
  • order fulfilment,
  • management procurement and,
  • manufacturing procurement (Wu, et. al., 2016).

These SCM building blocks remain the same for business to business (B2B) and business to customer (B2C) types of business models.

SCM building blocks (Wu, et. al., 2016)
SCM building blocks (Wu, et. al., 2016)

Customer relationship management (CRM)

CRM plays an important role in the business process as it helps understand how to provide tailor-made products and services to the customers to satisfy their needs and demands (Wu, et. al., 2016). CRM through supply chain network and through the delivery of products builds competitive advantages. This boosts the competitive edge of the company against the competitors.

Customer relationship management provides insights regarding the size of the supply chain that should address the needs of the customers properly. It familiarises the concept of one size does not fit well for all customers. Furthermore, the geographic locations of the customers, their preferences in terms of delivery are considered by the supply chain network (Logistics Bureau, 2013). Segmentation of supply chain is done by the analysis of customer needs in the process of CRM.

Segmentation offers several advantages that help in efficiently and responsively cater to the demands of the customers (Christopher, 2016). It also tackles the issues of demand variability effectively. Better information about the customers buying behaviour can be obtained. These benefits make the supply chain more effective to cater to the needs of customers. This information helps in order processing and extending knowledge about the customers (Laudon and Traver, 2016).

Customer service management

Customer service management in the SCM building blocks effectively manages customer service on the basis of customer’s preferences, tastes, and perceptions to deliver best of products and services (Laudon and Traver, 2016). The customer service management main responsibility lies in refining the relationship with the customers. Customer’s service management considers supply chain management ability to deliver products or services in a limited frame of time and it does not welcome any negligence in this respect. The customer service remains deliberated due to the factors such as changed occurring in the supply chain and requirements to gain higher efficiency (Christopher, 2016).

Demand management

Demand management helps in the productivity and delivering of products and services at the right quantity and at the right time (Christopher, 2016). It provides agility to a supply chain network that makes it more responsive to customers’ needs. Furthermore, demand management assists the organization to gather valuable insights into how to manage demands and meet the customers’ requirement. It enhances the ability of an organization to plan and forecast as well as increases visibility regarding the demands of the customers (Wu, et. al., 2016).

The demand management also assists to manage and improve inventory levels, enhance customers’ service, enhance inventory planning and optimize promotion and trade planning (Wu, et. al., 2016). The demand management assists in developed sales or demand forecasts. It is found that if demand forecasting is not considered by an organization, the more costs to supply chain management can incur as well as the organization may suffer from a low margin. Thus, the demand management assists supply chain in manufacturing, procurement and distribution functions (Gligor, 2014).

Order fulfilment

Order fulfilment is a key block of the SCM building blocks that effectively helps in the fulfilment of customers orders (Wu, et. al., 2016). The order fulfilment considers network designing and process designing that assists an organization to fulfil customers requests while minimizing the delivery costs. Therefore, the order fulfilment considers cross-functionality of the organization and builds coordination of main suppliers and customers.

Order fulfilment also takes into consideration of networking strategies such as allocating inventories in the physical buildings, transportation strategies such as trying new processes and carriers and making changes in the distribution centres (Christopher, 2016). Order fulfilment function consideration provides various benefits such as faster fulfilment, faster order processing, and frequent fulfilment of products (Monczka, et. al., 2015).

Managing procurements

Management procurement tasks comprise of:

  • financial purchases,
  • development of quality standards,
  • price negotiation,
  • purchase of goods and services,
  • aligning purchase to the company ethics and policies,
  • control of inventory and,
  • disposal of waste (Christopher, 2016).

Furthermore, the management of procurement assists the organization to formulate strategies regarding criteria to choose suppliers for the company (Monczka, et. al., 2015). The company can benefit from waste reduction and preservation of environmental assets, biodiversity and other finite assets. In manufacturing, the focus is on to obtain cheaper and better raw materials in terms of quality and delivery (Monczka, et. al., 2015). Manufacturing procurement efficiently manages the suppliers for the raw material (Christopher, 2016).

References

  • Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
  • Gligor, MD. 2014. The role of demand management in achieving supply chain agility. Supply Chain Management: An International Journal19(5/6), 577-591.
  • Logistic Bureau. 2013. How CROM makes supply chain more efficient through segmentation. Retrieved from: https://www.logisticsbureau.com/crm-and-the-supply-chain/ (accessed on 4-2-2019).
  • Laudon, K.C. and Traver, C.G., 2016. E-commerce: business, technology, society.
  • Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and supply chain management. Cengage Learning.
  • Wu, L., Yue, X., Jin, A. and Yen, D.C., 2016. Smart supply chain management: a review and implications for future research. The International Journal of Logistics Management27(2), pp.395-417.

Avishek Majumder

Research Analyst at Project Guru
Avishek is a Master in Biotechnology and has previously worked with Lifecell International Private Limited. Apart from data analysis and biological research, he loves photography and reading. He loves to play football and basketball in his spare time with an avid interest in adventure and nature. He was also a member of the Scouts in his school and has attended Military training.
Avishek Majumder

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