Innovations in technology and management practices have produced a distinct paradigm shift since 1970. Even though companies are now focusing on customer satisfaction as a competitive weapon, the cornerstone of competition is still cost-minimization and affordability. With the invention of Internet, companies and manufacturing firms have been given the opportunity to effectively improve their supply chain management system.
The article "New challenges in managing supply chain" by Derek Maggs explores the definition of supply chain management (SCM) and then focuses on the relations among SCM systems, enterprise resource planning (ERP), and information technology (IT).
The author argues that the aim of SCM is more than just cost reduction. He further argues that SCM tries to minimize the costs of production and in the meantime to increase the quality of value added. According to this article, the dramatic decrease in IT implementation costs due to recent advances in this field have made IT solutions affordable to small and medium-size companies and retailers.
This has made a shift of power from manufacturers to retailer, resulting in a decrease in manufacturers' margins.
Furthermore, Internet allows companies to interface their EPP system with other SCM systems from all around the world. Therefore, manufacturers are now able to acquire their raw materials in an effective and timely fashion which in terms translates to an increase in customer satisfaction.
At the end the author outlines the goals, such as reduced inventory cost, that implementers are trying to achieve by integrating IT solutions into SCM systems. In this journey, IT implementers are faced with the globalization challenge. As a result, we are expected to see new business models and new economic relationships in the future to overcome this challenge.
The article is well focused around the fact that IT solutions will improve the...