Why is communication important to small and medium sized B2C businesses supply-chain management?

Supply Chain Management (SCM) integrates business functions concerned with the movement of goods, services and information along the value chain with the goal of creating value for the ultimate customer. The field of SCM is a cross-functional discipline involving many components of business, including product development, marketing, demand/supply planning, procurement/sourcing, production, inventory management, transportation/logistics, customer service, and the management of relationships between business organizations and their channels of distribution. The central elements of SCM, consists of E-business, Data Warehouse, Supply Chain Planning tools and Customer Relationship Management including Sales Force Automation.

The main objective of SCM is cost reduction. Improving performance and may include a better service level, featuring increased stock availability and shorter order to delivery lead times thus reducing the overall cost of the inventory. An improved service level increases customer satisfaction. This results in better customer retention and creates opportunities to extend business.

The integration of supply chain management (SCM) techniques of communication and information sharing provides small or medium size businesses an important and effective method of addressing the competitive challenges faced in today’s market especially in the face of tough competition from large B2C businesses like Wal-Mart, Dell, Proctor & Gamble, Hewlett-Packard and many others (Subramani, 02-14). Most small businesses are making significant efforts to enjoy the SCM benefits of coordination and collaboration, information sharing, bullwhip effect reduction, shared planning, performance forecasting and reporting to improve productivity and accountability (Fiala., 419).

The information and expertise gained by sharing with external partners and customers creates the leverage that often provides strategic advantage (Subramani., 02-14). Efficient communications ensures reduction of waste, increases responsiveness and enhances customer satisfaction. With the resources of some of the best information technology available, most small and medium B2C businesses now have the ability to take advantage of supply chain management strategies. The introduction of Internet to electronic commerce has facilitated an increased in information flows and removed the constraints of geography, time and space (Warkentin, 45-52). The Internet and other enterprise application integration can disseminate supply and demand information throughout the chain in real time. This has made it possible for small B2C business to deal effectively with SCM’s growing complexity. (Warkentin, 45-52).

The benefit of SCM communication strategy to a small and medium B2C business is best seen in the enhanced market responsiveness, reduction of cost and the physical delivery of products to customers. For example, Hunter Douglas, a supplier of window treatments and architectural products, The Company entered its shipping and inventory data into a forecast engine to create a demand plan. The data is constantly refined and finalized as more information is gathered from various departments and customers. This single collaborative effort helped increase sales by 20 percent and decrease safety stock by more than 15 percent. Order cycle times were also reduced from three months to four weeks, to the benefit of the supply chain as a whole (Forger, 1).

Another example of supply chain in the health industry is an orthopedic hospital system which saved about three million by implementing a supply chain to ensure a reduction of the number of orthopedic implant vendors and providing services directly to ensure neither excess inventory (Long, 3).

Supply chain management is a powerful concept because it can simultaneously reduce costs, improve service, and increase revenues. SCM has developed largely because of information technology tools that have enabled supply chains deal with the ever-increasing level of complexity. It has expanded dramatically in the past decade and will continue to expand, encompassing more functions and more decision factors. Implementation of SCM by a small and medium B2C business may take a major and difficult coordinated effort, due largely to the ever changing technology developments, dynamic world economics, and marketplace shifts. However an organization that can tap the potential of integrating product or service of supply chains will experience tremendous success.

By: Robert II Smith

Article Source: http://www.directorys.uniquearticles.info

Robert Smith is one of the staff freelance writers who has been working for online academic assistance agency since 2005.

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