Supply Chain Management: A dazzling orchestra without a conductor<\/p>\n
Richardus Eko Indrajit, Contributor, Jakarta<\/p>\n
To correctly comprehend the concept of supply chain management
\nor SCM is not easy; more so to implement it.<\/p>\n
Probably one simple way to understand this new paradigm is by
\nanalogizing with the way Indonesians living in a kampong or
\ndensely-populated area extinguish a fire in their neighborhood.<\/p>\n
Normally, the crowd will hastily make a human chain stretching
\nfrom the burning house to the source of water. And they will
\nquickly pass on buckets of water to put out the fire.<\/p>\n
Through the process, each of the people in the line plays the
\nsame important role to make their efforts the most effective and
\nefficient. If someone slows down or carelessly spills the water,
\nit will definitely take longer to put the fire out.<\/p>\n
The same principles apply to SCM. The house on fire denotes
\nconsumers who are always demanding products of better quality, at
\nlower prices and speedy delivery, while the people in line
\nrepresent independent companies working in synergy to produce and
\ndeliver products, starting from the manufacturing centers -- the
\nupstream point, to the end customers -- the downstream point.<\/p>\n
In the SCM concept it is obvious that a product can only be
\nsold at a lower price if the manufacturing and distribution
\nprocess at each of the companies in the chain is done
\nefficiently. Similarly, the quality and delivery speed also
\ndepend on their efficiency. Consumers can finally enjoy high
\nquality products that are delivered promptly if each of the
\ncompanies in the SCM link works at the maximum speed and with
\nhigh quality standards.<\/p>\n
Thus it does not mean much when a supermarket succeeds in
\nincreasing the speed of its services while, on the other hand,
\nits partner is slow in distributing its products. Likewise, it is
\nno use for a wholesaler to have a good warehouse system to
\nmaintain the quality of products, when eventually the retailers
\nare careless and sloppy in storing them.<\/p>\n
In both cases, the consumer ultimately become the victim and
\nis not satisfied with the service and products. Consequently,
\nthey will look for another place with a better SCM system that
\noffers cheaper and better products with a faster delivery
\nservice.<\/p>\n
Resembling an orchestra without a conductor, where each
\nmusician does his best to play his instrument according to the
\nmusical score provided in order to please the listeners' ears,
\neach company in the SCM system also does its utmost in carrying
\nout their specific assignment to satisfy the customers.<\/p>\n
This illustration shows that the only way to develop an
\neffective and efficient SCM is by establishing a strategic
\npartnership among the entire companies in the chain from the
\nupstream to the downstream points.<\/p>\n
Historically, the SCM concept was born when companies'
\nmanagements were desperately looking for a way to maximize their
\nown resources. The feeling of despair was due to the fact that
\nmost top executives were focusing only on their own internal
\nresources, without ever attempting to work in partnership with
\nexternal entities, which could actually enhance their performance
\nsignificantly.<\/p>\n
To illustrate this better, let's view some major publishing
\nhouses and bookshops in the country like Gramedia, Gunung Agung,
\nAndi Offset and Kanisius.<\/p>\n
At the downstream point, not all of them have their own stores
\nin the provincial capitals, and far less in the regency cities
\nand subdistricts. However, this does not mean that they do not
\nhave the opportunity to establish a network of book retailers,
\nbecause they can work in conjunction with the local subdistrict
\noffices, telecommunications kiosks, schools and public clinics
\nbased on a profit sharing or franchise system.<\/p>\n
After taking care of the downstream business, the company has
\nto focus on the distribution process. Rather than investing a
\nhuge sum of money in purchasing and maintaining its own
\ntransportation system, it could hand over the distribution to the
\nmost reliable and cost-effective courier company. Or it can get a
\ncompany specializing in handling book distribution.<\/p>\n
Having settled the distribution problem, it is then time for
\nthe company to start thinking about the printing plant that it
\nowns, as a number of outside printers have recently cropped up in
\nthe market and can provide printing services that are cheaper,
\nfaster and of a higher quality than the company's own internal
\nfacilities. Based on simple logic, the company has no more reason
\nto maintain such costly and ineffective printing equipment.<\/p>\n
Things become more interesting once the management discovers
\nthat other segments of the printing process are no less costly,
\nsuch as editing and layout.<\/p>\n
In many cases, the number of manuscripts certainly far exceeds
\nthe number of permanent employees in the two sections. In view of
\ntheir competence and skill, the editing can actually be assigned
\nto senior university students of the language department, while
\nthe graphic design students can look after the layout. This
\noutsourcing to higher education institutes will certainly remove
\nanother chunk of the company's costs.<\/p>\n
At this stage, finally only a few people will remain in the
\ncompany. Their simple daily routine will be just checking e-mails
\nfor manuscripts in soft copy from writers, returning the
\nunapproved files and sending material to universities for editing
\nand layout. These will then be printed by outside printing
\npartners, distributed nationwide by couriers and sold by various
\ndistribution channels in most of the subdistricts in the country.<\/p>\n
In today's world, a company need not necessarily own and
\noperate the whole upstream to downstream points. In fact, each
\nand every process, which is not the company's core business,
\nshould be handed over to outside companies and a strategic
\npartnership should be formed.<\/p>\n
This "Collaboration to Compete" scheme will be the key to
\nsuccess for any company in the current highly competitive market.<\/p>",
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