Supply Chain Management Theories | Free Essay Example

Supply Chain Management Theories

Words: 870
Topic: Business & Economics
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Introduction

A supply chain is a system of information and resources that involves manufacturers/ producers, distributors/ middlemen, and the end customers, collaborating to convert raw materials to work in progress, and then to finished goods. Despite a lot of focus on the forward logistics by supply chain management, the importance of reverse logistics cannot be ignored.

Reverse logistics involves material flow from end users to suppliers. It is the planning, execution, controlling costs of inventories, work in progress and the final products from consumption point to the original point. Due to the high asset value which is involved in reverse logistics, it is prudent that firms develop a system that can share information and relate it with the partners besides handling return operations.

The study focuses on investigating, how supply chain management influences the performance of reverse logistics with specific examinations on how IT impacts it, the effects of IT on the reverse logistics performance and the collaboration and information sharing on reverse logistics. (Festus & Xiaoming, 2010)

The impact of the use and applications of various IT types on the performance of the company is not clear, but all in all, the importance of IT in the performance of the company cannot be refuted. Currently, there are three collaborative relationships which have been identified: type 1 involves building data using IT applications, standardizing information.

Type 2 involves joint plannings and decision makings on new products, business plans, forecasting and sales promotions. Finally, step 3 involves joint problem solving and warehouse schedule. This type requires building trusts, setting joint business goals and designing of inter-connected processes. (Festus & Xiaoming, 2010)

Theories involved in Supply Chain Management

There is a myriad of concepts which have been conceptualized leading to framing of some of the applicable theories. These theories include:

  • Resource-Based View (RBV). This theory stipulates that the designing of the supply management process should be based on the resources which are available to the company.
  • Transaction Cost Analysis (TCA) theory. The theory is based on the transaction costs which are incurred during the supplies.
  • Knowledge-Based View (KBV) theory. This theory is formulated going by the information knowledge that is available.
  • Strategic Choice Theory (SCT). The theory is based and dependent on various strategic theories which are taken by the management to ensure that they make rightful decisions on the supply chain. (Ketchen & Hult, 2006)
  • Agency Theory (AT). This theory explains the relationship between the principals and the agents. It ensures that relevant policies are adopted which minimize the costs and increase revenue.
  • Institutional theory (INT). This theory is based on the principles under which the institution is governed.
  • Systems Theory (ST). Systems theory is based on the systems in which the institution’s supplies are handled. The theory is based on the systems of the organization. (Halldorsson et al., 2007)
  • Network Perspective (NP) theory. This is a theory that gives relationship and explanations on all the networks which are available to facilitate connections between all levels in supply management.
  • Materials Logistics Management theory (MLM). The theory designs mechanisms to ensure that the level of inventory is controlled.

Just In Time

This is a practice which explains that the goods of the right quantity and specified quality are supplied in time without any surpluses. (Ketchen & Hult, 2006)

  • Materials Requirement Planning (MRP). This theory states that before goods are ordered and subsequently supplied, there is a need to plan everything that is required with the specifications of each customer.
  • Theory of Constraints (TOC) .This is a theory that designs a budget line with the required institutional specifications.
  • Performance Information Procurement Systems (PIPPS). This is a practice which designs an information system which measures the performance of procurement processes in the organization.
  • Performance Information Risk Management Systems (PIRMS). This is a practice that ensures that all the risks which might be involved during the procurement and supplies process are taken into consideration.
  • Total Quality Management (TQM). This is a theory which states that all the raw materials which are supplied must be of relevant quality.

Agile Manufacturing Theory

The theory stipulates that the supply chain management should be oriented towards improving the output within the organization. (Ketchen & Hult, 2006)

  • Time-Based Competition Theory (TBC) .This is a theory that ensures that the management of supplies is done in time.
  • Quick Response Manufacturing (QRM). This theory explains that there should be a quick response in dealing with all the manufacturing process. (Halldorsson et al., 2007)
  • Customer Relationship Management (CRM) theory. This explains that all the programs are designed to create a good relationship with the public.
  • Requirements Chain Management. This is a theory that ensures that the process of supply is done with considerations of all the relevant procedures and requirements.
  • Available to promise (ATP). This theory ensures that the customer’s agreements are met.

Issues in Supply Chain Management

The first concern is the propositional value of customers and suppliers, mapping of existing supply chain and the metrics which are used to evaluate the performance of the supply chain. The issue of the process of linking various stakeholders has also been of a big concern.

Relationships

The theories explained show a close relationship. Several theories have specifically addressed the issue of management information systems.

References

Festus, O. & Xiaoming, L. (2010). Information Sharing and Collaboration Practices In reverse Logistics, Supply Chain Management: an International Journal, Vol. 15 Iss: 6 Pages.454-462.

Halldorsson, A, Kotzab, H, Mikkola J., Skjoett-Larsen, T.(2007). Complementary theories to supply chain management. Supply Chain Management: An International Journal, Volume 12 Issue 4, 284-296.

Ketchen G & Hult, M. (2006). Bridging organization theory and supply chain management: The case of best value supply chains. Journal of Operations Management, 25(2) Pages 573-580.