What is SCQM?

‘Supply Chain Management is efficient management of the end to end process starting
from the design of the product, products or service to the time when it has been sold, consumed
and finally gotten rid of by the customer. This complete process includes product design,
procurement, planning and forecasting, production, distribution, fulfilment and after sale
support’ or it can be simplified further – ‘the sequence of processes involved and distribution of
commodity’ ~ Oxford Dictionary.
Supply chain quality management (SCQM) is when quality management and supply
chain management integrate their departments and activities to ensure the quality of the supply
chain management practices. This improves cost efficiency, reduces waste, improves inventory
management, keep up with the demand effectively and efficiently, etc.

The importance of SCM:

Supply chain management is important because it contains one of the most essential
processes a company deals with, the management of the process that works towards delivering
the end product to the customer is very crucial. Supply chain management provides the business
with several benefits and these benefits can act as a competitive advantage against other
businesses, some of these benefits are: Improving a brands reputation in the market, helps with
the management of returns and recalls, improves customer service, provides higher efficiency
rates, helps with inventory buffers, simplifies finding the optimal shipping options, and
minimizes delays in deliveries. These will be explained in detail later on. On the other hand,
failing to implement and develop a successful supply chain would lead several drawbacks some
are: damaging the company’s reputation, excessive transportation costs, poor forecast accuracy,
inventory and storage costs, and waste in the supply chain. These will also be explained in more
detail later on.

What is the emphasis of quality control on SCM?

“Quality control is a process through which a business seeks to ensure that product or
service quality is maintained or improved with either reduced or zero errors.” (Investopedia)

As the definition states, the main goal of quality control is reduced or zero errors. This is
what is missing when a company decides to implement a supply chain management system to
manage its products or services. When a SCM system is implemented someone must be present
to continuously check and make sure that everything is going smoothly and correctly, this
someone is usually a team of employees that split up to keep checking quality at all times and at
all places whether it is for the distribution process or for the production process. This team is
usually a key factor to mark the successful implementation of a SCM system because if quality is
of low standard the likelihood of defects and errors is much higher, this leads to lower
productivity, and to increased costs, customer dissatisfaction, returns, reparations, and delays of
products.
What are SCM’s advantages and how does it act as a competitive advantage?

1. Control over suppliers:

Having total control over a company’s suppliers is very beneficial because it gives
the company a better relationship with its suppliers due to everything being fully
organized and making the experience of the supplier during the logistics processes very
smooth and satisfactory. This will make the supplier be comfortable with the company
and would most likely keep working with the company.

2. Improve reputation of brand in the market:

When a company improves its management over its supply chains and it uses this
improvement to make sure that everything is going okay it is going to be more efficient
and therefore will have better customer services overall. This improvement in everything
will be a huge benefit for the image of the company because people will spread the word
that they received amazing customer service and these satisfied customers will act as a
word of mouth advertisers, this leads to more people knowing about the brand that finally
results in the improved reputation of the brand in the market.

3. Good for returns and recall management:

Effective and efficient supply chain management allows for the company to know
every little detail about their inventory’s movements and whereabouts, this knowledge
will act as an advantage for the company when a customer decides to return a product.
Returning a product usually is a hassle for the company to deal with because it has to
coordinate with the supplier and the shippers and provide a way to provide both of them
with the information they need to know in order to return the returned product to the
correct supplier/vendor to avoid any inconveniences and mistakes that may arise during
this process the company needs to have a perfectly executed and coordinated supply
chain.

4. Improve customer service:

By accomplishing all the previous points customer satisfaction is inevitable because

when a customer sees that his/her products are always being delivered on-time and in the
case returns his/her product is being brought back from the customer to the supplier using
the best and fastest routes and strategies. Customers will be happy with the service
provided and thus a company earns the respect and loyalty of the customer, resulting in
customer satisfaction.
5. Boost Cooperation Level:

Communication between suppliers and logistics and the company is extremely

important because if communication is not taking place every product would end up
being lost/damaged or delivered to the wrong address which usually leads to the returns
of the products to their original supplier without anything being accomplished. That is
why managing the supply chain is important, it is to ensure everyone knows their
respectable tasks and how and when to do these tasks, in addition to allowing for the ease
of communication between all whom are involved due to everything being managed and
everyone is reachable because their whereabouts are known.

6. Higher Efficiency Rate:

When a company implements a successful supply chain management system it gives

itself an advantage because it will be able to predict future trends in inventory due to the
accurate inventory data collected, this helps the company by giving it an idea about what
to plan for and gives it a more dynamic view of the demand and how its moving.

7. Eliminate waste:

When all products are being transported through integrated logistics the amount of
returns and recalls will decrease drastically because everything is being dealt with
carefully and professionally, allowing for no mistakes to be done thus minimizing or even
eliminating wasted products because of damages or losses.

8. Reduce Inventory Buffers:

Buffer inventory is when a company stocks excess products to ensure they don’t run
out of supply in case of a sudden increase in demand. A well designed supply chain
management system can be used efficiently to work against holding costs and allows the
company to cut unnecessary costs related to the inventory. So, when the supply chain
management system works towards helping the company predict future trends and
demand, as mentioned above, it also gives the company an idea to whether the company
needs to have excess stock or not.

9. Optimal shipping options:

When the supply chain is managed correctly and efficiently it can also work towards
choosing the best shipping routes and proper type of transportation to efficiently deliver
every order on time and without anything going wrong.

10. Minimize Delays:

 A company that is managing its inventory perfectly by implementing a good supply
chain management technique will most probably know where every bit of inventory is
available whether it’s inside or outside the company’s premises, which results in locating
any needed product faster and therefore leading to faster products manufacturing or
delivery.

Obstacles that stand in the way of good SCM:

To achieve a successful supply chain and to manage it perfectly, a company will have to
face several obstacles and challenges in order to reach the desired level of supply chain
efficiency and effectiveness. The obstacles that a company faces can be divided into two parts:
Internal and External. The Internal obstacles can be costs, working with outdated technology,
lack of training, and poor organizational structure. Whereas the external obstacles can be
customer preferences, globalization, and poor supplier commitment.
First of all, let’s talk about the internal obstacles. Starting with costs or in other words, the
internal costs that the company faces in order to provide the cheapest products or services, and
the best quality in the market. This means that to answer the customer’s wants for lower priced
goods the company need to fully utilize and efficiently use and manage everything that goes
through the production and distribution process and the supply chain management department or
system is the one responsible for these goals to become a reality. Now another internal obstacle
that might be one of the reasons for high internal costs is that the company is working with
outdated technology that cannot handle the evolving markets and the company simply falls
behind competitors because the technology used is not utilizing the available resources
efficiently enough to compete with others. On to the next internal obstacle which is the lack of
employee training. When a new employee enters an unfamiliar company he/she won’t be able
to deduce everything they have to do in an efficient manner, that’s why training new employees
is beneficial to the company, because the environmental awareness is important and should be
spread between the employees the day they enter the organization. Having employees with no
knowledge of what they are doing will only result in the failure of the company. The final
internal obstacle that is mentioned will be the poor organizational structure, this means that
the top management doesn’t achieve or work towards a certain goal efficiently. Signs of poor
organizational structure can be: slow decision making, unclear hierarchy, unequal distribution of
work, and low productivity.
Second comes the external obstacles that stand in the way of the improvement of the
company and its attempt to implement a worthwhile supply chain management system. The first
external obstacle which is considered by many to be a very important part of the supply chain
management systems, which is customer preferences. The reason for this is because when
customers keep having newer tastes and wants the company might not be able to keep up with
the changes and will eventually fall behind or in worst cases shutdown. That is why SCM
systems should be wary of upcoming trends in the market to stay up-to-date with the continuous
change in customer preferences in order to provide the required products without any delays and
without any excess inventory from previous trends to minimize costs. The second external
obstacle is important when a company is seriously thinking about working globally, this obstacle
is globalization. Globalization is extremely difficult to achieve in today’s market due to the fact
that all the market leader work globally and for a local company to enter this market it would
need a very high level of quality and meaningful innovation along cheap prices, these three
points alone are very hard to reach and to do that globally is even harder because the competition
is fiercer and requires much more experience than the local market. As is mentioned above,
customer preferences should be always monitored and with globalization the company need to
monitor the entirety of Earth’s population making globalization even harder to attain. On the
other hand, when a company actually succeeds in globalization it will grow much faster. The
third and final external obstacle is poor supplier commitment, this is measured by the how
much the supplier is willing to work. Poor supplier commitment means that the suppliers are not
ready, motivated, nor qualified to work with advanced technologies and to be part of the design
process.

What are the practices used in SCM?

-Supply Chain Management practices:
1. Centralized Governance:
To have a successful SCM, only select few should be able to manage the SCM in
order to avoid conflict.
2. Supplier Focus:
This lets the supplier feel more wanted and this increases their loyalty the firm, thus
the supplier will be more committed to work with the firm.
3. External Integration:
The SCM creates a better environment to make integration with external
suppliers/customers/companies easier and more fluid.
4. Government regulation:
The government can act either as an advantage or an obstacle to SCM, it all depends
on the rules and regulations it implements.
5. Trust and commitment:
Having several departments work with each other on a continual basis increases their
trust and commitment towards each other.
6. IT enabled firms.
These are firms that have implemented IT in their management and Research &
Development departments.  

How can poor SCM affect the company?

1. Damages the reputation of the company:
When a company has poor supply chain management it means that it will have
a higher rate of returns than usual because it will most probably deliver products
 to the wrong customer due to an unintegrated supply chain between the company,
suppliers, and the customer. All of this is taken into account when the company is
being rated and evaluated. The company’s reputation gets damaged due to
customers talking about the bad service they received, thus less people would be
willing to use said company’s services. In addition, suppliers will not work with
the company because the company doesn’t have a clear way of explaining the job
that is needed to be done.

2. Excessive transportation costs:

Poor supply chain management means there is little to no optimization and
efficiency in the shipping routes and options whether it be through air land or sea.
This results in the company paying more on the chosen route/option of shipping
because it wasn’t the most optimal course of action, and paying extra costs that
can be avoided if managed correctly is a huge drawback to the company’s profits
and financial status. Managing transportation should be a top priority when a
company wants to improve its supply chain process.

3. Inventory and storage costs:

Inventory and storage costs are costs that arise from the poor management of
the inventory, and a poor inventory management is a result of poor supply chain
management, this is a fact because when a lot of recalls and returns happen in
response to the inadequate management of the supply chain it adds more than
usual products to the existing inventory which in turn makes planning for future
inventory purchases much harder and may lead to a shortage in supply and failing
to keep up with the demand of the customers.

4. Waste in the supply chain

When the supply chain isn’t well integrated and there is little to no
communication between the company, the suppliers, and even the customer,
products tend to be delivered to wrong addresses or get lost most of the time. This
means that the supply chain is wasting products only because it is poorly
managed.

5. Poor forecast accuracy:

This means that at the end of each week/month/year the inventory forecast,
which is supposed to contain every detail regarding the inventory that was
shipped/ wasted/returned/etc. would be inaccurate because the employees who
work on these forecasts most probably won’t know about any products that went
missing without a reason and therefore these missing products will not be part of
the forecast, they will most probably be noted as “shipped” but they don’t know
to where. Therefore, the lousy management of the supply chain is the main cause
of this, because there is no communication and well-planned management of the
integration between the company as a whole and its suppliers.
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