Page 322 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 14: Supply Chain Logistics Administration

Notes
Figure 14.1: Internal Relations
Marketing

Customer
requirements
Forecasts
Configuration management Engineering Product quality requiremants

Estimates
Specs. V.A.
Quality map
Source
Material Timing Supply approval Quality
Control Quantities Management inspection
Quality procedures
Makes or buy Inspection
Quality complaints
Production plans
Supplier capabilities
Schedules
Manufacturing
Product availability
Distribution
Marketing

Source: Upendra Kachru (2010). “Exploring the Supply Chain”. Excel Books
Functional groups (engineering/R&D, manufacturing, and sales/marketing) are all instrumental
in designing, building, and selling products most efficiently for the supply chain. This
cooperation is desirable as it improves the supply chain’s ability to match supply and demand
effectively. However, many organizations find the different functional units to have very little
communication between them. For example, marketing and manufacturing may have different
forecasts when making their plans. The various parts of the company have to cooperate to align
purchases, processing and logistics. ISCM is focused on internal improvement. The effort is to
fulfil demand generated by the CRM processes in a timely manner and at the lowest possible
cost by taking costs out of sourcing and logistics.

14.1.4 Supplier Relationship Management (SRM) Focus

The SRM macro process aims to arrange for and manage supply sources for various goods and
services. Supplier relationship management is a comprehensive approach to managing an
enterprise’s interactions with suppliers. Its objective is to streamline and make more effective
the processes between an enterprise and its suppliers. This is in a sense similar to customer
relationship management (CRM) which streamlines and makes more effective the processes
between the firm and its customers.
SRM reflects the need to integrate the entire supply chain – and to do so in a way that preserves
flexibility, opens its enterprise infrastructure to the inventions, expertise and networks of others,
and lets them shed the bits of the supply chain that can be better run by partners. SRM practices
create a common frame of reference to enable effective communication between an enterprise
and suppliers who may use quite different business practices and terminology. SRM processes
include the evaluation and selection of suppliers, negotiation of supply terms, communication
regarding new product and orders with suppliers and integration with the expertise of others.
All the three macro processes are aimed at serving the same customer. However, integration of
the systems is to a large degree dependent on the organizational structure of the firm. In many
firms, marketing is in charge of the CRM macro process, manufacturing handles the ISCM
macro process and purchasing oversees the SRM.

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