EFFECT OF SUPPLY CHAIN MANAGEMENT ON ORGANIZATIONAL PERFORMANCE
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EFFECT OF SUPPLY CHAIN MANAGEMENT ON ORGANIZATIONAL PERFORMANCE
Chapter 1: Introduction 1.1 Background of the Study.
Organisations use a variety of business improvement strategies to improve their performance. As competition heats up, so do the problems of getting a product or service to the right place at the right time for the lowest overall cost of delivery. Manufacturing companies are beginning to recognise the potential benefits and relevance of strategic and cooperative buyer-supplier relationships.
They have begun to include strategic suppliers in resource allocation choices (Morgan and Monczka, 2006). Instead of using tools like acceptance sampling to determine the quality of incoming materials and component parts, manufacturers buy from a smaller number of qualified or certified suppliers and embrace supply base management
hoping to save money by reducing inventory and improving supply chain efficiency (Watts and Hahn, 2003). Furthermore, organisations have begun to place a greater emphasis on customer-driven corporate policies that strive to achieve the goals of customer satisfaction, quality and productivity improvement, and cost reduction.
SCM practices have acquired various additional definitions; Koh et al. (2007) defined SCM practice as the set of activities conducted by an organisation to support successful management of its supply chain; as the methodologies used in integration, management, and
Coordination of supply, demand, and relationships in order to effectively satisfy clients (Wong et al., 2005); as tangible activities/technologies that play an important role in a focal firm’s collaboration with its suppliers and/or clients (Vaart and Donk, 2008); and as an approach to involving suppliers in decision making, encouraging information sharing
And looking for new ways to integrate upstream activities. As a result, it entails creating client contacts based on feedback in order to combine downstream activities and send orders directly to customers (Chow et al. 2008). SCM concepts and techniques have been advocated as boosting the performance of participating organisations.
The overall goal of supply chain management is to improve customer value delivery by depending on a just-in-time system, avoiding waste, involving all stakeholders in the value creation process, and working closely with suppliers.
According to Ireland and Webb (2007), organisations continue to use SCM as a means of gaining and maintaining a competitive edge, and such a shift is logical given the potential benefits of effective supply chain management. Inventory reduction, improved delivery service, and shorter product development cycles are among the benefits associated with supply chain management.
Slack et al. (1995) found that the objectives of supply chain management include focusing on customer satisfaction, developing and implementing strategies for gaining and retaining client business, and managing the entire chain effectively and efficiently. SCM is one of the most effective approaches for businesses to boost performance (Ou et al., 2010). With the goal of regulating supply
To increase enterprise performance through supply chain operations, it is required to improve the planning and management of activities such as materials planning, inventory management, capacity planning, and logistics (Chandra and Kumar, 2000).
Supply chain management refers to the simultaneous integration of client requirements, internal procedures, and upstream supplier performance. Supply chain management (SCM) is a comprehensive approach that begins with the planning and control of materials,
logistics, services, and information streams from suppliers to manufacturers or service providers to end users; it represents a significant shift in business management practices (Fantazy et al., 2010).
SCM is one of the most effective approaches for businesses to boost performance (Ou et al., 2010). To manage supply chain operations and improve company performance, it is required to improve the planning and management of activities such as materials planning, inventory management, capacity planning, and supplier and client logistics.
Individual supply chain practices cannot enhance efficiencies since efficiency can only be attained via the interplay of multiple supply chain practices. Dawe (2004) argues that for effective SCM
a complete effort to improve all supply chain activities inside a firm should be made, and that the focus of supply chain practices should move from functional and independent to general and integrative.
This implies that the performance of each supply chain practice should be evaluated based on how the practice has a significant impact on the efficient integration of entire supply chain processes, and thus, successful SCM integration can be achieved through the systematic application of various supply chain practices. Bowersox (2009) shares the same perspective as the preceding argument.
Organizational performance is the final achievement of an organization and contains; existence of specific targets to be accomplished, has a length of time in attaining the targets and the realization of efficiency and effectiveness (Gibson et al., 2010).
Organisational performance, on the other hand, relates to an enterprise’s ability to achieve goals such as high profit, quality product, huge market share, strong financial outcomes, and survival at a predetermined time utilising applicable action strategies (Koontz and Donnell, 2003).
Organisational performance can also be used to assess how a firm performs in terms of profit, market share, and product quality in comparison to other businesses in the same sector. As a result, it reflects the productivity of enterprise members as measured by revenue, profit, growth, development, and organisational expansion.
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