PRINCIPLES OF EFFECTIVE SUPPLY CHAIN MANAGEMENT

 

Principles of Effective Supply Chain Management:

As supply chain moves into the era of dynamic competitive environment it become necessary for the
companies to have effective and efficient supply chain management system for their company. The
formation of supply chain management system rests on four principles, which serves as a guide for
supply chain managers. These principles can also be summarized in the form of 4R’s responsiveness,
reliability, resilience, and relationships.
 Responsiveness:

In today’s globalized and competitive environment it has become difficult for the companies to
immediately satisfy the varied needs of consumers. Customer not only wants that their needs should be
fulfilled in shorter period but they also want flexibility and solution of their varied problems. In other
terms the supplier has to meet the needs of customers then the time required before in fulfilling these
needs. The most important concept in today’s fast changing environment is agility. Agility means the
ability to move quickly and to meet the customer demands as quickly as possible. Thus responsiveness
implies that the organization should maintain good relation with consumers and always remain in touch
with customers and also do intensive market research and manufacture the products according to the
requirements of consumer. Responsiveness also depicts that the company should supply the products to
consumers as and when demanded by the consumers.

 Reliability:

Today in uncertain times it has become essential for every company to carry safe stock because the time
is uncertain. Uncertainty can be of many types like unavailability of raw materials in near future,
supplier is not in a position to deliver the goods on time in near future, and changes in demand pattern
etc. Various improvements should be made by the companies so that they can become reliable firms in
the minds of consumers. Companies now days are also using six sigma techniques and tools for
improving the reliability of supply chain management system of their organization.

Resilience:

Today’s markets are becoming very volatile due to various changes in the economic, political, social and  technological environment in the economy. Due to these changes companies are facing business shocks and discontinuity in their business process. According to Oxford Dictionary “Resilience refers to the ability of the supply chain to cope with unexpected disturbances”. Those companies with robust supply chain management are resilient lines and in a position to fight with the uncertain and dynamic business environment.

 Relationships:

In today’s mobile environment the role of partnership is increasing rapidly. When partnership is there in the organization then it will bring innovation, quality of the products will improve, reduction in costs will occur, and delivery of scheduled products will happen at proper time in the company. Thus building relations with partners has become an essential criterion in supply chain management system. Partnerships also help in restriction of entry of new competitors in the organization. Companies should not only focus on relations with partners but companies should also lay emphasis on relations with consumers. This will help the companies to win the confidence of consumers and build a relation of mutual trust and confidence with consumers. Thus supply chain management system main emphasis is to be a market leader and establish an environment of mutual trust with consumers and other parties