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Unit 1: 21st Century Supply Chains

The primary SCM activities are: Notes
1. Integrated behaviour and integration of processes
2. Mutually sharing information
3. Mutually sharing channel risks and rewards

4. Co-operation
5. Goal-sharing and partnership
To be fully effective in today’s competitive environment, firms must exhibit integrated behaviour
with the supply chain partners, such as suppliers, carriers, and manufacturers, to dynamically
respond to the needs of the end customer. Customer Relationship Management (CRM) and
Demand Planning have given today’s businesses better tools for managing and integrating
customers’ demands across a company’s entire value chain. These tools, coupled with proven
business strategies and processes, produce a uniform picture of demand that can then integrate
the behaviour and drive all subsequent planning and operations helping in the integration of
processes. The end result is an agile organization, capable of rapidly recognizing and responding
to changes in the market.
Integrated behaviour and integration of processes leads to information sharing. Information
sharing is the willingness to make strategic and tactical data available to other members of the
supply chain. Open sharing of information such as inventory levels, forecasts, sales promotion
strategies, and marketing strategies reduces the uncertainty between supply partners and results
in enhanced performance.

Effective SCM also requires supply chain partners mutually sharing channel risks and rewards
that yield a competitive advantage.

Notes Risk and reward sharing should happen over the long-term.

According to many experts, for long-term focus and cooperation among the supply chain
members, risk and reward sharing is extremely important. Risk and reward sharing is a very,
very difficult task. Though conceptually, it is possible, but no organization likes to forego its
revenues and profits, and it becomes very difficult unless you can sell the benefits to the
organization.

Co-operation among the channel members is required for effective SCM. Co-operation starts
with joint planning and ends with joint control activities to evaluate performance of the supply
chain members. It happens at several management levels involving cross-functional coordination
across the channel members.
Getting people to co-operate is the most difficult part of supply chain management, even when
it may produce superior mutual outcomes. People are generally concerned about them and
would like to promote their individual parochial objectives and co-operation limits the freedom
of firms to act in their own interest when performing similar or complementary activities.
A supply chain succeeds if all the members of the supply chain have the same goal and the same
focus on serving customers. Establishing the same goal and the same focus among supply chain
members means that they are working towards a form of policy integration. Most organizations
go through four stages of policy integration:
Stage 1: It represents the base line case. At this point, the supply chain is a function of fragmented
operations within the individual company. It is based on traditional concepts and characterized

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