Supply Chain Management Foundations

Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy.

In recent decades, globalization, outsourcing, and information technology have enabled many organizations to successfully operate collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities. This inter-organizational supply network can be acknowledged as a new form of organization. However, with the complicated interactions among the players, the network structure fits neither “market” nor “hierarchy” categories. It is not clear what kind of performance impacts different supply-network structures could have on firms, and little is known about the coordination conditions and trade-offs that may exist among the players. From a systems perspective, a complex network structure can be decomposed into individual component firms. Traditionally, companies in a supply network concentrate on the inputs and outputs of the processes, with little concern for the internal management working of other individual players. Therefore, the choice of an internal management control structure is known to impact local firm performance.

In the 21st century, changes in the business environment have contributed to the development of supply chain networks.

First, as an outcome of globalization and the proliferation of multinational companies, joint ventures, strategic alliances, and business partnerships, significant success factors were identified, complementing the earlier “just-in-time”, lean manufacturing, and agile manufacturing practices.

Second, technological changes, particularly the dramatic fall in communication costs (a significant component of transaction costs), have led to changes in coordination among the members of the supply chain network.

The importance of supply chain management proved crucial in the 2019-2021 fight against the coronavirus (COVID-19) pandemic that swept across the world. During the pandemic period, governments in countries which had in place effective domestic supply chain management had enough medical supplies to support their needs and enough to donate their surplus to front-line health workers in other jurisdictions. The devastating COVID-19 crisis in US and any countries has turned many sectors of the local economy upside down, including the country’s storied logistics industry. Some organizations were able to quickly develop foreign supply chains in order to import much needed medical supplies.

Supply chain management is also important for organizational learning. Firms with geographically more extensive supply chains connecting diverse trading cliques tend to become more innovative and productive.

Supply Chain Management draws heavily from the areas of operations management, logistics, procurement, and information technology, and strives for an integrated approach. As you can learn from this course.