Supply Chain Management: The Importance Of Supply Chain Management

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1. Introduction With the development of market economy as well as the shorter and shorter product life cycle, supply chain management is supposed to be more flexible to meet diversified demands of customers. However, increasing variables in supply chain management makes it more challenging to administer the market environment, product quality, quantity and information transferring. While supply chain flexibility is regarded as one of the most effective ways to deal with uncertainty. Therefore, building an open, dynamic and flexible supply chain, for retail chain enterprises, is a good way to reconfigure in accordance with customer demand and be outstand in the field. Supply chain flexibility, as an indicator to measure performance of supply…show more content…
For retail chain enterprises, the basic goal of their production and sale is to meet the customer demand and emphasize the balance of logistics during the operation (Lummus, 2003). On the one hand, retail enterprises purchase enough amount of goods from suppliers means that there would be certain quantity of surplus, which would increase stock cost or suffer a loss due to discount sale. Less inventory, on the other hand, would make retail enterprises loss potential customers and sale opportunity. Therefore, retail chain enterprises are eager to pursue a lean-oriented supply chain model to avoid goods surplus or deficiency by cooperation among suppliers, subcontract carrier, inventory suppliers. According to lean supply chain model, keep reasonable, safe quantity of goods decrease the inventory cost significantly. However, it also means that retail enterprises transfer the pressure on inventory to supply chain, increasing the vulnerability of supply chain system. Meanwhile, users of every link in supply chain are dependent on each other, leading to the lack of flexibility when adapt to external changes. 3.2 Bullwhip effects Bullwhip effect is a high risk commonly existed in retail chain business. It is a distribution channel phenomenon in which forecasts yield supply chain inefficiencies (Wikipedia, 2017). There are various factors attribute to the bullwhip effect. Such as suppliers, retailers…show more content…
Market uncertainty in retail chain business mainly includes quantity of raw materials supply, price fluctuations, customers’ requirements towards products etc. Varied uncertainties intensify the operational difficulty and increase vulnerability of supply chain. Meanwhile, diversification and differentiation of customers’ requirements lead to the frequent change of producing procedure and supply procedure, which makes supply chain system more complicated and challenging to design, construct. Therefore, retail enterprises are not able to guarantee supply chain system can be operated in a safe environment. 4. Building a flexible supply chain in retail chain business As mentioned above, the vulnerability of retail supply chain system leads to various operational risks. Based on the fact, the paper analyzes the supply chain networks from the perspectives of supply chain flexibility, and provides several supply chain flexibility indicators according to vulnerability risks discussed above to build a multi-layer supply chain flexibility system by combining supply flexibility, output flexibility, capital flexibility, organizational flexibility, information system flexibility and risk management flexibility. 4.1 Supply/er

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