Question

SCM and Its Critical Success Factors

For a supply chain management project to be successful, a company must achieve certain key factors. The Advisory Council at Information Week has put together a list of those key factors:

● Business-driven strategy: The information system for managing the supply chain must focus on the customer, allowing the customer greater efficiencies in the process. The customer should find that ordering material from the vendor is now more efficient with the new system. The system is based on a complex business process model. When a vendor fulfills a customer’s order, many different business processes are at work to ensure quality products, timely deliveries, and good prices.

● Management commitment: As with any IT project, top management must be committed to supporting the project; otherwise, the project is doomed to fail.

● Supplier and partner expectation management: An SCM implementation requires a change from all parties. A company implementing an SCM project must be prepared to work closely with both vendors and customers and manage that change from all angles.

● Internal expectation management: Change management is especially important within a company. Personnel involved in a new system must be informed and trained to manage any anxiety they might experience in their job changes.

● Learning period acceptance: Companies implementing SCM must accept that it takes a long time to fully realize the benefits of the system. SCM has the further benefit of driving business value. Simply put, SCM will help your company’s bottom line by making it more efficient for customers to buy your product and for you to buy your suppliers’ products. In this way, your entire company will benefit and become more efficient. Implementing an SCM system without paying attention to the critical factors listed above will result in poor performance. In fact, a large percentage of companies that implement SCM are not satisfied. Forty-five percent of respondents to a Booz Allen Hamilton supply chain management survey report that their IT solutions are failing to meet expectations. SCM consultants often find that companies have unrealistic expectations of the technology. However, companies dealing in the service parts business (for example, Caterpillar Logistics and Ford Motor Company) are finding that SCM allows them to decrease inventory by between 10 and 30 percent, according to AMR Research Inc. Companies

must decide how their supply chains should be designed and run, and then use technology to implement those goals.

Questions:

1. Assume you were recently hired in an IT role at a large manufacturing company. Your first job is to convince the manufacturing manager that the implementation of an SCM system is feasible. Write a memo to that manager, highlighting advice on how to ensure the smooth implementation of such a system.

2. Outline the potential pitfalls that your company may encounter when implementing SCM.

Answer 1

To: Sharon High, Manufacturing Manager

From: Tina Scott

Date: Mar 24, 2019

Subject: Benefits of SCM system and its integration in current business model at ABC Ltd.

Dear Sharon,

Last quarter had been quite profitable for us and has open up opportunities for expansion plans. I feel now is the correct time to integrate SCM and ERP in the business model of the company. The primary reason being that with expansion, the company’s core business processes will get spread out and managing the same through SCM and ERP system will be quite accurate and easy.

Supply chain management or SCM is the management of the supply chain facilitating the production line of a company. Supply chain governs the various processes, procedures and interactions involved in the production as well as the distribution of the business’ product.

The primary activities of SCM are:

• Inventory management
• Logistics management
• Customer relationship management

ERP is enterprise resource planning. It is basically the management of core business processes of a company. ERP works with the objective of enhancing and streamlining the internal business operations of a company.

1. ERP helps in managing the network traffic of the organization effectively
2. ERP facilitates the overall company’s data organization, collection, processing and retrieval as it uses a structured format.
3. Access management controls are used to manage the data retrieval operations.

The integration of ERP and SCM in the business model of the company will facilitate the growth and development of the company. The company can integrate its SCM with various information systems like customer relationship management system (CRM) and enterprise resource planning (ERP). This strategy will facilitate the overall operational efficiency and consumer responsiveness at the company. The company would be able to exert its competitive advantage on its competitors, because of the same. Comprehensive management of the company’s network traffic will get facilitated by the SCM system. Any kind of data retrieval would be possible to be done in minutes.

To integrate the SCM system in the business model of the company, following steps can be used:

• Requirement analysis from the various stakeholders
• Selection of the SCM system to fulfill all requirements
• Integration of selected SCM system in the business model using phase-wise strategy
• Evaluation and monitoring of the integrated system

Do let me know your valuable perspective about the same. If found feasible, we should forward the discussion with the stakeholders and trigger start the project. It will be quite beneficial for the overall company

Sincerely,

Tina Scott

2. The potential pitfalls in integrating SCM in the business model of the company can be:

• A single SCM system may not be successful in fulfilling all company requirements
• Budget and time constraints in the integration process
• Risk of data leakage
• Employee resistance to embrace the integrated system due to lack of transparency