2.

3 Supply Chain Management (SCM)

Fawcet and Magnan (2001) define supply chain management is the collaborative effort of multiple
channel members to design, implement, and manage seamless value-added processes to meet the
real needs of the end customer. The development and integration of people and technological
resources as well as the coordinated management of materials, information, and financial flows
underlie successful supply chain integration. Nayron (1999) defines supply chain as following
(Ben Naylor et al. 1999): A supply chain is a system whose constituent parts include material
suppliers, production facilities, distribution services and customers linked together via a feed
forward flow of materials and feedback flow of information. Stevens (1989) views a supply chain
as; a system whose constituent parts include material suppliers, production facilities, distribution
services and customers linked together via the feed-forward flow of materials and the feedback
flow of information. The supply chain encompasses every effort involved in producing and
delivering a final product, from the suppliers supplier to the customers customer. Five basic
processes; plan, source, make, deliver and return broadly define these efforts, which include
managing supply and demand, sourcing raw materials and parts, manufacturing and assembly,
warehousing and inventory tracking, order entry and order management, distribution across all
channels, and delivery to the customer (Supply Chain Council, 2005).

According to the Supply Chain Council (2005), there are four basic processes in the SC: plan,
source, delivery and return. Plan refers to processes that balance aggregate demand and delivery
requirements. Sources are processes that transform product to a finished state to meet planned or
actual demand. Delivery is a process in which the finished goods are delivered to a customer.
Return is defined as processes associated with returning or receiving returned products. A network
of companies to which interdependent organizations have linked up can be regarded as a SC.
Organizations co-operate in order to control, manage and improve material and information flows
from suppliers to end users. A supply chain is described as a chain that creates products or services
and forwards them from suppliers to customers. In reality, a SC is not a separate chain. Therefore,
a supply network would be more appropriate term to describe a SC. The network consists of
companys partners as well as various suppliers and clients. Also customers of the customers are
part of the network that a company builds around it (Christopher 1998).

Supply Chain Management (SCM) is the integration of key business processes from end user
through original suppliers that provides products, services, and information that add value for
customers and other stakeholders Cooper et al. 1997, Lambert et al. 1998). Christopher (1998)
uses the terms supply network or supply web to describe the netstructure of most of the SCs.
According to him, a supply chain is a network of organizations that are involved, through upstream
and downstream linkages, in the different processes and activities that produce value in the form
of products and services in the hands of the ultimate customer.
SCM encompasses co-operation of various functions between suppliers and customers. Most
essential divisions of SCM are those of managing business relations and managing customers.
Actual competition takes place along the whole SC when companies involved in the SC have the
prerequisites for competitive operations. From the point of view of the SC, moving the orders
upstream or downstream does not make the aggregate more competitive. Costs are divided with
respect to the whole supply chain by the price requested from the client.

CUSTOMER RELATIONSHIP
Customer relationship comprises the entire array of practices that are employed for the purpose of
managing customer complaints, building long-term relationships with customers and improving
customer satisfaction. It is a comprehensive strategy and process of acquiring, retaining and
partnering with selective customers to create superior value for the company and the customer
through the integration of marketing, sales, customer service and the supply-chain functions of the
organization to achieve greater efficiencies and effectiveness in delivering customer value
(Parvatiyar & Jagdish, 2001). Buttle, (2009) considered Customer relationship management
(CRM) as the core business strategy that integrates internal processes and functions, and external
networks, to create and deliver value to targeted customers at a profit. In order to realize this, the
organization must identify customers requirements and then provide the right combinations of
transportation, storage, packaging and information services (Wisner et al, 2010).

Predictions of customer behavior help the company to forecast which products customers are likely
to purchase and the company can be able to revise pricing policies, offer discounts and design
promotions for specific customers. This can be achieved through applications of sophisticated
software that sorts customers information from all sources and uses this information to strengthen
the relationship with the customer. These software tools and technologies provide individualize
and personalize relationships with customers by providing vital information of the customer from
loyalty cards to enhance demand management (Harrison & Van Hoek, 2008). Baran, Galka and
Strunk (2008), assert that Customer relationship management is the automation of horizontally
integrated business processes involving customer touch point and customer service through
telephone, e-mail, web, and direct interaction.Techniques such as collaborative filtering, rule-
based expert systems, artificial intelligence and relational databases are increasingly being applied
to develop enterprise level solutions for managing information on customer interactions
(Parvatiyar & Jagdish, 2001).

The motivating factors for companies moving toward Customer relationship management (CRM)
technology are to improve customer satisfaction level, to retain existing customers and to attract
new customers by transforming the customer data into knowledge and then uses that knowledge
to build relationship (Zavareh, 2008). Customer relationship management systems help the
company to identify and reward its most loyal customers for the purpose of retaining and
expanding their business. Some of the systems developed to assist in customer relationship
management include ERP. Enterprise development planning (ERP) software applications that has
been integrated with different modules that deals with customer relationship management, supplier
relationship management and e-procurement. Most companies consider customer relationship
management as an important component of Supply chain management practices. Day (2000)
asserts that committed relationships are the most sustainable advantage because of their inherent
barriers to competition. The growth of mass customization and personalized service is leading to
an era in which relationship management with customers is becoming crucial for corporate
survival. Good relationships with supply chain members, including customers, are needed for
successful implementation of Supply chain management programs. The customer service
performance measures are designed to measure flexibility in responding to customer order,
information system response and post-sale support. Some companies have established call centers
or customer contact centers to ensure they are closer to their clients and be able to attend to their
needs. Close customer relationship allows an organization to differentiate its product from
competitors, sustain customer loyalty and improve the value given to its customers.

Logistics:
Logistics are all operations in a supply chain concerned with the movement of inputs and finished
goods through different operational levels within the organization. A good logistics strategy
requires an end to end movement of inputs and final goods to the consumer in a timely manner.
Organizations should embrace and invest in a good logistical framework that integrates well with
the other supply chain activities in the supply chain. It therefore cuts across the entire business
activities for the purpose of providing value to the customer/consumer (Alphonse, 2013). The
development and application of this strategy requires that a concerted effort be used to strengthen
relationships and facilitate the inclusion of all processes (Bearnon, 2014).

Chen and Paulraj (2010) proposed a model for future supply chain research that includes logistics
as the best the link between supply chain structure and performance. Wisner (2003) demonstrated
a positive link between logistics strategy and organizational performance. Cooper etal.,(2014)
studied the relationship between logistics quality and the organizational performance of businesses
in the retail sector. Logistics is key for any multinational manufacturing company because it will
help it in managing its supply chain and improve interaction with its key stakeholders, customers
and suppliers by ensuring a continuous flow of materials and information.

An area of competitive advantages, logistics management as a separate part of their operations

from other company activities with the growing logistic management said by Wilson (2009).
Figuring out the competitive areas they need to focus on in their operations is another principle of
logistic management. It is critical to make a move immediately to satisfy clients' needs to help
construct and keep up client esteem because continuous change in the logistics environment.
Hence, only when logistics management strategies depend on the requirements of the organization,
would they be able to pick up an upper hand.
Inbound and outbound transportation management, fleet management, warehousing, materials
handling, order fulfillment, logistics network design, inventory management, supply/demand
planning, and management of third party logistics services providers are included in logistic
management activities, from the definition. Sourcing and procurement, production planning and
scheduling, packaging and assembly, and customer service are also included in logistics functions.
All levels of planning and execution strategic, operational and tactical are involved in it. Logical
management is an incorporating capacity, which organizes and streamlines all coordinations
exercises, and additionally coordinates coordinations exercises with different capacities including
showcasing, deals assembling, back, and data innovation.

ORGANIZATIONAL PERFORMANCE:
Organization performance refers to how well an organization achieves its market oriented goals as
well as its financial goals. Performance of the organization can be measured by looking at the
quality of product or service, competitiveness of the supply chain, customer satisfaction and
profitability. In recent years, organizational performance measurement has received much
attention from researchers and practitioners (Gunasekaran et al., 2004). Measuring the
performance of supply chain and their member firms is critical for identifying underlying problems
and keeping end customers satisfied in todays highly competitive and rapidly changing market
place (Wisner et al., 2010). According to Neely (2005) measuring performance is a necessary tool
to highlight the extent to which organizational objectives were achieved and to provide information
necessary to improve various processes and activities within the organization. Clark (2004) asserts
that measuring performance means both quantifying and assessing the level of customer
satisfaction and comparing the organization with other organizations starting from different market
criteria. Nteere, Namusonge, and Mukulu, (2012) opines that performance measurement is
important for organization in ensuring continuous improvement and also assists in determining
whether or not an organization is achieving its objectives. In any organization, the performance
measures need to be well integrated across the departments and all firms in the Supply Chain
(Barrat, 2004).

Performance measures need to determine the gap between actual and targeted performance and
determine organization effectiveness and operational efficiency. Ideal measures of performance
will lead to the attainment of double benefits-improvement of supply chain management and
effective measurement of the achieved benefits. The performance measure can be grouped in to
two; those that concentrate on financial measures such as profit return on investment and
productivity. Also there are those measures that put more emphasis on less tangible and non-
financial measures in performance measurements.Financial performance measure while important
to shareholder, it provide too little information regarding the long-term effectiveness of firm in
satisfying customers and hence the many organizations have successfully used product quality and
customer service capabilities measures (Wisner et al., 2010). In this study, the metrics for
measuring the performance of the steel manufacturing companies was based on non-financial
measures that include the product quality and customer satisfaction. Non-financial performance
measures positively affect future performance of the organization (Banker, Potter, & Srinivasan,
2000). Non-financial performance measures are also often considered as the process measures that
should lead to good financial performance.

Awino and Gituro (2009) concentrated on Supply Chain Management practices in extensive
private companies of manufacture in Kenya. The preparatory tests engaged the utilization of Kaiser
Mayer-Olkin (KMO) and Bartlett's Test. A sample of 52 extensive private manufacturing
organizations, which are individuals from Kenya Association of Manufacturers (KAM) was
utilized. To build up SCM practices, 39 factors were utilized to gauge the level of application
among those organizations. The factors were investigated using factor analysis method to
accomplish a basic and important structure that is, have a nonzero locking of the described variance
for every individual factor. Thus 11 crucial factors were recognized as the finest practices: linkages
within supply chain firms, systems strategic alliances, operating policies, improved performance,
IT, performance measures, goal orientation, supplier evaluation, customer and relationships,
guidelines and procedures supplier selection. Whenever benchmarked, these practices were
observed to be all inclusive and contrasted and the finest practices worldwide.

The competitive priorities can likewise be thought as an approach to theorize and measure
operational performance. Enhancements in performance can show themselves in various
perspectives like reduction in inventory, reduction in lead time or improvement in quality.
Making groups of these sorts of enhancements under the more extensive classes of competitive
priorities as quality, conveyance, cost and time can be a valuable approach to measure which
allows comprehensiveness, theoretical underpinning and comparability (Priscila and Luiz, 2011).