DECEMBER 21, 2011

MB0044 [PRODUCTION & OPERATIONS MANAGEMENT] Set1 Q5

Q5. Explain the necessity and objectives of SCM?

Ans: SCM is the abbreviation of Supply Chain Management. It is considered by many experts worldwide as the ultimate solution towards efficient enterprise management. Many management failures have been attributed to the lack of a system to bind various sub-systems within a geographically widespread enterprise, which true to modern trends, also includes an umbrella of customers, suppliers and associates. Managers of tomorrow are therefore, expected to raise themselves above the level of perpetual crisis management to one of proactive, predictive, and performanceoriented management.

Need and objectives SCM is required by an enterprise as a tool to enhance management effectiveness with the following organisational objectives: Reduction of inventory Enhancement of participation level and empowerment level Increase in functional effectiveness of existing systems like Enterprise Resource Planning(ERP), Accounting Software, and Documentation such as Financial reports/ Statements/ISO 9000 Documents Effective integration of multiple systems like ERP, communication systems, documentation system and security Design / Research & Development (R&D) systems Better utilization of resources like men, material, equipment, and money Optimization of money flow cycle within the organisation as well as from external agencies Enhancement of value of products, operations, and services. These enhancements will consequently enhance the profitability of organisation Enhancement of satisfaction level of customers and clients, supporting institutions, statutory control agencies, suppliers and vendors, employees and executives Enhancement of flexibility in the organisation to help in easy implementation of schemes involving modernisation, expansion and diversification even divestments, mergers and acquisitions Enhancement of coverage and accuracy of management information systems

With the objectives of SCM its implementation are required. Implementation is in the form of various functional blocks of an organization interpenetrated through which a smooth flow of the product development is possible.