Taxation labour and material costs have been, for many multinationals, the initial driver of supply chain considerations in china. Increasing value in supply chain and procurement stretch of the function need for doing more realizing latent supply chain value applying structured approaches for sustainable value bringing it all together and ensuring the supply chain is a strategic enabler. Yet these low cost benefits are eroding through a combination of cost. Strategic cost management in a global supply chain 0 1. Strategic cost management free download as powerpoint presentation. Leading supplymanagement organizations also rely on their industrys experience curve to project and demand continuing cost reductions year after year. This is especially relevant for thirdparty logistics and transportation management service providers, whose service fee is based on reducing cost and streamlining the shippers supply chain. Information systems and supply chain management strategic cost, procurement, and supply chain finance 3. Substantial opportunities exist for sustainability in supply chain operations. It is important that every operations management professional understand how supply chain strategy underscores the. Pdf supply chain management for aviation mro industry. Dekker and van goors 2000 case study of an activitybased costing model to.
Strategic cost management in esupply chain revised version4 3 center for accounting studies of xiamen university in china strategic cost management in esupply chain yuanlue fu xiamen university, p. Scm also deals with the movement and storing of materials needed to create a product, as well as inventory management, and. Chapter 2 developing a sustainable supply chain strategy balkan cetinkaya learning goals. Most notably, a companys commitment to supply chain management impacts its strategic orientation, which in turn significantly influences the supply chain s stability and the firms independence. Reshaping the asset and cost base driving margins, cash and return on assets with specific programmes for each element of the cost base.
The fixed costs are usually allocated to units of output on the basis of direct labor hours, machine hours, or material costs. Executional cost management employs measurement and analysis tools e. Profits for your company can rocket upward if you achieve sufficient savings in supply chain costs. Analyzing and evaluating critically tescos current. The next generation of supply chain ideas how to better structure your supply chain strategy guidelines for making strategic sourcing and makebuy decisions how to integrate ebusiness thinking into supply chain strategy and management how the speed of industrial change is. Company leaders first need to embed sustainability as a core strategic component and capability of their supply chain strategy. Strategic cost management is the juncture between managing pure cost in the supply chain and recognizing that pure cost is not the only criteria for making strategic sourcing decisions. Learn more about geps supply chain risk management services. Strategic cost management or otherwise called as scm is the cost management technique that aims at reducing costs while strengthening the position of the business. Structural cost management strategic cost management is the deliberate alignment of a. At the strategic level, company management makes highlevel strategic supply chain decisions that are relevant to whole organizations. Logistics and supply chain management continue to transform the competitive landscape and have become one of todays key business issues. Management hierarchy as part of supply chain strategy supply chain strategy does not exist in isolation but rather throughout an organization in a management responsibility hierarchy, because it serves all levels of operations.
We recommend the definition of supply chain management developed and used by the global supply chain forum. It is a process of combining the decisionmaking structure with the cost information, in order to reinforce the business strategy as a whole. Wall street business magnate stephen chu, winner of the strathmores whos who registry honoring the most successful business tycoons in the world, says the demolisher betting system lived up exactly to its billing. Coordinated actions between companies of the same chain, in order to reduce costs and end consumer price, offer opportunities for. This is why exchange rates have little to do with multinational company decisions between low cost country sourcing. What are the objectives of supply chain management.
Practitioners and educators need a common definition of supply chain management, and a shared understanding of the processes. Supply chain management is the integration of key business processes from end user through. For those looking to get more effective transportation management. Strategic cost management of the esupply chain is one new concept which. Scm is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage, according to robert handfield, ph. Emphasizing cost, quality, time, and flexibility is an effective strategic approach for operations management. And then, based on the customercentric conception, it will discuss the low price policy, cost control, loyalty card strategy, supply chain management, delivery system management and inventory management at the business unit strategy level and functional strategy level.
But in setting supply chain strategy, youll need to look at three layers of cost. Responsiveness versus efficiency sourcing role in the supply chain role in the competitive strategy components of sourcing decisions sourcing. Strategic cost management and the value chain 2097 words. Strategic management use these strategic management tips to learn every aspect of your supply chain, from forecasting to scheduling and cost cutting. One executive suggested that her supply chain organization is now focused on giving customers the innovation they want and need and not simply delivering on a generic cost reduction goal. Gep makes supply chain risk management an integral part of your supply chain strategy to help you identify and mitigate risks quickly. Structural cost management employs tools of organizational design, product design and process design to create a supply chain cost structure that is coherent with firm strategy. Supply chain management definition and importance of its strategies definition of supply chain management if you go to a supermarket and pick up a few items off the shelf from electronics and white goods or even clothes and look at the labels, the chances are that you will find them having been manufactured in china or mexico. The strategic importance of supply chain management in creating value is. Value chain for strategic management accounting in higher. Structural cost management strategic cost management is the deliberate alignment of a firms resources and associated cost. A concise, applied and strategic introduction to the subject of logistics and supply chain management, perfect for modern managers and students of logistics and supply chain management. Mar 14, 2017 supply chain management scm is an important part of every organization, whether small or large. Theres some truth to this definition, but supply chain strategy really is broader.
You dont need to be a corporate giant to save big on supply chain costs. We enable a world class supply chain by investing in our people and capabilities. Flexibility refers to a strategy that seeks to provide a product or service that is less expensive than similar products or services offered by competitors. Important strategic concepts about supply chain management, including.
This means incorporating it as a key requirement across all supply chain processes. Strategic cost management of the e supply chain is one new concept which integrates three fields. Although the concept of supply chain management has been around for over 20 years, still there are many professionals who believe that supply chain is a simple tool that can be adopted and implemented without solid foundation and framework of how supply chain works. Chapter 2 developing a sustainable supply chain strategy. The term supply chain management crystallizes concepts about integrated. Supply chain management is primarily concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time, and so as to minimize total system cost subject to satisfying.
Using selected studies in accounting, operations management, and business strategy, we provide an overview of strategic cost management in supply chains, highlight. Strategic cost management in a global supply chain. Scm involves the flow of information and products between and among supply chain stages to maximize profitability. The strategic management process that unifies the systematic planning and. Structural cost management employs tools of organizational design, product design, and process design to create a supply chain cost structure that is coherent with firm strategy. Yet identifying the costs that can be eliminated and then doing so effectively can prove impossible without the right method. The essentials of supply chain management strategic. Existing literature on healthcare supply chain management. We specialize in increasing the efficiency and effectiveness of procurement, materials management and manufacturing operations. Strategic cost management in supply chains is not a new concept. In cost management, an approach to inventory valuation in which variable costs and a portion of fixed costs are assigned to or absorbed into each unit of production. Pdf strategic supply chain management implementation. Supply chain profitability is the difference between the revenue generated from the customer and the overall cost across the supply chain it is the total profit to be shared across all supply chain stages supply chain success is measured in terms of supply chain profitability and not in terms. For most supply chains, cost reduction is imperative to longterm survival.
The strategic importance of supply chain management. Three scm underlying concepts have been identified. The next generation of supply chain ideas how to better structure your supply chain strategy guidelines for making strategic sourcing and makebuy decisions how to integrate ebusiness thinking into supply chain strategy and management. The supply chain logistics course will cover transportation. Shank and vijay govindarajan discuss in depth on the strategic cost management scg and the value chain concept applied in real world situation from the airline industry. Supply chain management scm involves the movement of products and services from suppliers to distributors. The reorganization of the three air logistics depots. The emergence of edi and supply chain management has increased the importance of costing out activities in the value chain and determining the cost to the. Supply chains today must be robust enough to withstand social, economic and geopolitical risks, plus new and emerging threats such as cyberattacks. Yet these lowcost benefits are eroding through a combination of cost. Pdf on jan 1, 2004, vorst and others published supply chain management. Strategic cost management in esupply chain request pdf.
The essentials of supply chain management strategic sourcing. Cost management along the supply chain methodological. Shank, 1996, which in combination are suggested to produce strategyrelevant cost data. The driving force is senior management s need for strategic analysis in the face of globalization of the companys markets and supply chains, and competition in cost and service. So, in order to achieve strategic impact, firms must connect customers and suppliers in the integrated supply chain. Strategic supply management associates is a supply chain strategy and business process focused management consulting firm. Strategic cost management supply chain management cost. Strategic cost management in supply chains, part 2. However, at least for the sample observed, companies appear to be far removed from the strategic and systemic perspective of supply chain management proposed by researchers when evaluating current. May 16, 2011 the essentials of supply chain management strategic sourcing. Strategic cost management in supply chains, part 1. Because these seven opportunities apply to almost every aspect of supply chain management, you can be. Dec 12, 2019 supply chain management operates at three levels. Supply chain management definition and importance of its.
An example is bayer ag, which set up strategicsourcing teams to coordinate its buys. Request pdf on jan 1, 2002, lisa m ellram and others published strategic cost management in the supply chain. Supply chain strategy is an iterative process that evaluates the cost. Overview of strategic cost management and procurement in the supply chain. Chapter 1operations and supply chain strategy 2 copy 1. Jun 01, 2002 many leading firms in the usa have adopted an integrated strategic approach to purchasing and logistics management known as supply chain management. Airline companies are striving hard to reduce the supply. And in no part of the business is it any more critical than in procurement and sourcing activities. Shank vilay govindarajan analysis in this article shank and govindarajan analyze several management accounting cases and emphasize how traditional analyses could lead managers to make poor decisions and how their strategy should lead managers to make better decisions. Role in the supply chain set of business processes required to purchase goods and services in a supply chain.
Kasturi rangan, 0 president and fellows of harvard college. Objectives of scm a well designed sc is expected to support the strategic objectives of. The supply chain management specialization is made up of four basic courses in logistics, operations, planning, and sourcing, followed by a capstone course in supply chain management strategy. To understand the role that scma can play, it is important first to define supply chain management scm. Pdf book supply chain strategy the logistics of supply. Logistics management and strategy logistics management. Cost management within a supply chain management domain has. Request pdf strategic cost management in supply chains, part 1. This paper uses a multiple case study approach to contribute to the body of knowl. These seven areas offer significant savings opportunities for companies of all sizes and across all industries.
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