The paper 'Supply Chain Management in Developing Countries, New Trends in Global SCM" is a perfect example of a management case study. Supply Chain Management (SCM) has become one of the essential business processes of modern organisations. SCM increases the efficiency of complex business organisations to access resources and markets spread over wide geographies. This paper analyses various factors of SCM and provides an understanding of how organisations have implemented SCM. Cox (Cox et al, 1995) defined SCM as “ the processes from the initial raw materials to the ultimate consumption of the finished product linking across supplier user companies and the functions within and outside a company that enable the value chain to make products and provide services to the customer” . Part I – SCM Overview This section provides a brief history of SCM, explains the important features and phases and also gives an insight into the latest trends in SCM implementation. History of SCM Lummus (Lummus, 1999) has suggested that the history of the supply chain management can be traced to 1980 in the textile industry with the quick response program and later to efficient consumer response in the grocery industry.
There was intense pressure to control costs in the textile and apparel industry so the leaders in the US apparel industry formed the ‘ Crafted With Pride in the USA Council’ in 1984. In 1985, Kurt Salmon Associates were commissioned to conduct a supply chain analysis of the supply chain. The results of the study showed the delivery time for the apparel supply chain, from raw material to consumer, was 66 weeks long, 40 weeks of which were spent in warehouses or in transit. The long supply chain resulted in major losses to the industry due to financing the inventory and lack of the right product in the right place at the right time. The result of this study was the development of the quick response (QR) strategy.
QR is a partnership where retailers and suppliers work together to respond more quickly to consumer needs by sharing information. Significant change as a result of the study was the industry adoption of the UPC code used by the grocery industry and a set of standards for electronic data interchange (EDI) between companies.
Retailers began installing point of sale (POS) scanning systems to transfer sales information rapidly to distributors and manufacturers. The study indicated that little change in technology was required to improve performance, other than further development of EDI and POS systems. A set of best practices was suggested that would substantially improve overall performance by expediting the quick and accurate flow of information up the supply chain. ECR enabled distributors and suppliers to anticipate future demand far more accurately than the existing system. Through the implementation of best practices, the projected overall reduction in supply chain inventory was 37 percent, and overall cost reductions in the industry were in the range of $24 to $30 billion.
A number of further refinements were done such as continuous replenishment (CRP), just in time, customer relationship management and so on. New (New, 1997) has shown that a number of organisations embraced the concept of SCM. Some of the companies that started early were Hewlett-Packard in 1993, Whirlpool in 1992 with 20 percent reduction in inventory, lead time of 5 days and product availability up to 95 %; Wal-Mart in 1995, West Co. , Becton Dickinson in 1990, Georgia-Pacific Corp.
in 1994 with $ 20 million savings per year from freight handling and others.