Supply Chain Management Approaches Traditional vs Modern SCM.pptx

Supply chain management (SCM) refers to the management of the flow of goods and services from the point of origin to the point of consumption. Effective SCM is essential for companies to ensure timely delivery of goods, minimize inventory costs, and improve customer satisfaction. There are two main approaches to SCM: traditional and modern.

Traditional SCM focuses on optimizing the supply chain by minimizing costs and maximizing efficiency. The approach is based on a linear, sequential model that involves sourcing raw materials, transforming them into finished goods, and delivering them to customers. The traditional approach is often associated with a centralized decision-making process, with a strong emphasis on control and coordination. The focus is on reducing costs and improving efficiency through the use of lean production techniques and just-in-time inventory management.

In contrast, modern SCM emphasizes collaboration and flexibility, with a focus on meeting customer needs and achieving sustainability goals. The modern approach is based on a circular, networked model that involves multiple stakeholders working together to create value. The modern approach is often associated with decentralized decision-making processes, with a strong emphasis on collaboration and communication. The focus is on achieving sustainability and resilience through the use of digital technologies, data analytics, and supply chain visibility.

Some of the key differences between traditional and modern SCM include:

Focus: Traditional SCM focuses on reducing costs and improving efficiency, while modern SCM focuses on meeting customer needs and achieving sustainability goals.

Decision-making: Traditional SCM relies on centralized decision-making processes, while modern SCM emphasizes decentralized decision-making processes.

Collaboration: Traditional SCM is based on a linear model that emphasizes control and coordination, while modern SCM is based on a circular model that emphasizes collaboration and communication.

Technology: Modern SCM makes greater use of digital technologies, data analytics, and supply chain visibility to achieve sustainability and resilience.

Overall, while both traditional and modern SCM approaches have their strengths, the modern approach is seen as more effective in meeting the complex challenges of today's global supply chains, including sustainability, flexibility, and resilience.

1. Supply Chain Management: Approaches Traditional vs Modern SCM Snehal Athawale PhD Scholar (School of Social Sciences) CPGS-AS, Umiam , Meghalaya Course no. ABM-508

2. Approaches to SCM Advances in computer technology Technological Changing relationship within and between firms Relational Tools and procedures to study customers, competitors, suppliers and firm’s itself. Analytical (Larson and Rogers, 1998)

3. Technological Approach Several technological approaches to SCM are- Electronic data interchange (EDI) The Internet, a.k.a. world wide web (WWW) Enterprise resource planning (ERP). The Internet provides a public access information infrastructure, while the WWW is a commercial venue for publication of information across the Internet. Crum and Allen (1990) define EDI as "the computer-to-computer exchange of business documents such as bills of lading, invoices, and purchase orders."

4. Technological Approach Artificial Intelligence Automated Material Handling Systems Bar-coding/ Automatic Identification Cloud Computing Computer Aided Design (CAD) Computer Graphics Computer Network Databases Block Chain Embedded Systems Environmental Control Systems Internet-of-Things ( IoT ) Machine Learning Real-Time Process Control Systems Robotics Sensor Networks Wireless Communication 3D Printing Big Data

5. Supply Chain Analytics

6. Analytical Approach Analytical approaches to SCM include benchmarking and activity-based costing (ABC). According to Cooke (1996), benchmarking "provides a tool for managers to measure their distribution operations against those of companies that stand out from the crowd for their mastery of supply-chain management." Significant use of ABC in the following areas Transportation Warehousing Purchasing.

7. Analytical Approach Supply chain analytics helps organizations to play a smart role while making key business decisions. Gartner’s model, there are various types of supply chain analytics Descriptive analytics Prescriptive analytics Predictive analytics Diagnostic analytics. However, analytics can be referred to different models based on the form and the function.

8. Relational Approach Carrier reduction, single sourcing, and outsourcing or third party logistics (3PL) are relational approaches to SCM. Carrier reduction is a performance improvement program in which a shipper spreads its freight movement volume among fewer transportation providers. The ultimate end of a carrier or supplier reduction program is single sourcing--narrowing the base down to one provider. Single sourcing implies multiple suppliers or service providers are available, but the buyer selects and is using only one supplier. The terms "outsourcing," "contract logistics," and "third party logistics" are essentially synonymous in the logistics lexicon.

9. Relational Approach At a minimum, they are often used together. Shippers outsource logistics functions, on a contractual basis. (Logistics involves the movement and storage of goods, as well as the management of information). Firms outsource to responsive third parties if it is too expensive for them to develop this responsiveness on their own. An example is the outsourcing of next-day package delivery by all firms to a few package carriers because it is too expensive for a firm to develop next-day delivery capability on its own.

10. Traditional vs Modern SCM

11. Modern SCM Traditional SCM Focuses on production. Push based strategy Gap between supply & demand Limited visibility Lack of real time data Increased inventory More expected delay Less responsive to changing market condition. Traditional vs. Modern SCM Focuses on customers Implementation of Tech. Forecasting demand, market share, sells etc. Higher traceability Efficient flow of information Customized inventory Comparative less delays More responsive to changing market condition.