Business Operation and Strategy

From the above analysis, the supply chain management is a new management model, which will fundamentally change the traditional conception of enterprise business and operation and bring significant consequences to the enterprises. The supply chain management changes the traditional conception of operation, so that the enterprises could obtain the new customer relationships. The information technology makes the manager of SC set up new client relationship between its customers and suppliers through information flow and knowledge flow.

It makes the enterprises realize that it is not enough to take part in the market competition just relying on their resources (Gunasekaran, 2001). In view of improving the operation efficiency, it still needs to depend on the cooperation relationship that sets up mutual interests with each part of SC. SC could eliminates the barriers between different enterprises, and then carry out the cross-sector or cross-function or cross-enterprises cooperation. Therefore, the mutual interests between the enterprises and the suppliers and the customers could be achieved in a win-win condition that is stable, good and coexisting.

According to Blanchard (2007), the supply chain management changes the traditional mode of operation, and the enterprises need to develop new models. For a long time, the enterprises follow the market forecast, and then make the production plans and organize the operation. However, the market forecast did not always accord with the real market demands. As a matter of fact, it had more risks and led to the product waste or product backlog. In the supply chain management, the enterprises produce the products following the real market demands from the customers. The production of SC is really based on the actual demands of the consumers. Therefore, the actual operation model of the enterprises transfers from the past speculation operation model to the real-demand operation model.

The SCM changes the traditional conception on inventory, and puts forward the new concept (Blanchard, 2007; Mentzer, 2001). Under the influence of the traditional inventory concept, the enterprises firstly produced the products, and then put them into the market for promotions and sales. The inventory is the connection that connects each production aspect. Both the production enterprises and marketing enterprises must maintain a certain amount of inventory, which refers to safety stock.

Such safety stock often accounts for one-third of the total retail inventory. Too much inventory that traditional trading practice leads will increase unnecessary and excess inventory, leading to the increase of the costs for the enterprises. Such added costs will transfer to the consumers with higher price. This could reduce the customer satisfaction. However, the SC integrates the enterprises in the chain as the strategic alliance. They not only exchange and share the information, and manage the inventory through QR and ECP, but also greatly reduce the total inventory, and at the same time reduce the cash occupation and the costs of maintaining the inventory. The occurrence of stock-out could be avoided as well.

The SCM changes the operation that traditional model did, and the enterprises could achieve paperless transaction operations and automation (Blanchard, 2007). The SC abandons the traditional model, and applies the modern information technology, such as product bar code technology, logistics bar code, and Electronic Ordering System (EOS), POS, ASN and EFT, etc, so that SC improves the accuracy and speed of the transaction, reduces the number of staffs, and simplifies the operation process with higher efficiency (Schultz, 2005).

Positioning in the SC, the enterprises have to change their business strategies, and focus on its core business and then transfer their other business to other enterprises in the SC. The SC requires the enterprises select their core business that possess the strongest competitiveness, and outsource other business to some professional enterprises in the worldwide area. The enterprises need to keep close relationship with these professional enterprises, and rely on the SC to establish the chain with great competition between the enterprises in the chain (Gunasekaran, 2001). In this way, such business strategy is beneficial to improve the core competition and save costs and investigation.

Future Trend of Supply Chain to Operations Management and Wider Business Strategy Under the circumstance of information age and consuming times, the consumers need more personalized products, more quickly product delivery and more convenient product and service. These requirements ask the enterprises to rely on the external professional strength. Therefore, the informationization and managing and coordinating could be reflected in the SC.

It will be the new type of competition of the utilization of the SC to compete and maintain the consumers’ satisfaction (Jung, and Chen at, al, 2007). In order to improve the customer loyalty, the competition between the SC will be fiercer. Many enterprises have been the major the competitors in the market such as Haier Group have create their own market shares and competitiveness relying on the logistics supply chain.

In order to adapt the rapid market need, the market has put forward the requirements to the SC to be more quickly, accurate, and professional. The SC has become the most important aspect in responding speed of the market. Its status has been put in front of the market from the behind. And its functions have developed from the pure logistics to the expansion of the market and maintaining the customer loyalty.

It is not enough to manage the SC in the Marco level to satisfy the market and the customers. It needs more investment in the operation of the supply chain and the hardware instruction. Every aspect in the SC needs the improvement in the management level of the inventory and the transportation system as well as the integration of storage, packaging and operation. According to Holweg and Pil (2008), the enterprises need to integrate the outsourcing supply chain through the cooperation mechanism, and strive to reduce the conflicts in the coordination and to delivery the customer value in order to ensure the market status.

Conclusion

At present, the supply chain has taken place of the individual enterprise business to be the unit of competition based on the characteristics and advantages of the supply chain, and many enterprises have taken the advantages of the SC to be successful in their business. The supply chain management could better understand the customers, and then provide the personalized products and service. It could make the flow of various resources more reasonably, reduce the logistics cycle and the inventory with higher efficiency. Therefore, it could enhance the business competitiveness. The supply chain has influenced the business model for the enterprises and the enterprises need to realize the effects of SC and its trend as the key for their success.

References:

Basu.R and Wright.J.N, (2007), Total Management Chain Management, Berlin: Elsevier

Blanchard.D, (2007), Supply chain management: best practices, NY: John Wiley and Sons

Christopher.M, (2005), Logistics and supply chain management: creating value-added networks, M�nchen: Financial Times Prentice Hall