| Supply Chain Management (SCM) as defined by | | | | strategy works and now Toyota Motor |
| Tom McGuffog is "Maximising added value and | | | | Corporation, a Japanese company, is |
| reducing total cost across the entire trading | | | | considered to be the number one auto car |
| process through focusing on speed and | | | | maker in the world beating Ford and General |
| certainty of response to the market." Due to | | | | Motors of the United States. |
| globalization and ICT, SCM has become a tool | | | | |
| for companies to compete effectively either | | | | Value Advantage |
| at a local level or at a global scale. SCM | | | | |
| has become a necessity especially for | | | | SCM has allowed business nowadays to not just |
| manufacturing industry when it comes to | | | | have productivity advantage alone but also on |
| deliver products at a competitive cost and at | | | | value advantage. As Martin Christopher in his |
| a higher quality than their competitors. Here | | | | book, Logistics and Supply Chain Management: |
| are some of the reason SCM has become | | | | Strategies for Reducing Cost and Improving |
| important to today's manufacturing industry:- | | | | Service' states, 'Productivity advantage |
| | | | gives a lower cost profile and the value |
| Competitive Edge through Core Competencies | | | | advantage gives the product or offering a |
| | | | differential 'plus' over competitive |
| Today's business climate has rapidly changed | | | | offerings.' Through maximizing added value |
| and has become more competitive as ever in | | | | and also reduce the cost in the same time, |
| nature. Businesses now not only need to | | | | more innovation can be added to the product |
| operate at a lower cost to compete, it must | | | | and process. Mass manufacturing offers |
| also develop its own core competencies to | | | | productivity advantage but through effective |
| distinguish itself from competitors and stand | | | | supply chain management, mass customization |
| out in the market. In creating the | | | | can be achieved. With mass customization, |
| competitive edge, companies need to divert | | | | customers are given the value advantage |
| its resources to focus on what they do best | | | | through flexible manufacturing and customized |
| and outsource the process and task that is | | | | adaptation. Product life cycles also can be |
| not important to the overall objective of the | | | | improved through effective use of SCM. Value |
| company. SCM has allowed company to rethink | | | | advantage also changes the norm of |
| their entire operation and restructure it so | | | | traditional offerings that is |
| that they can focus on its core competencies | | | | 'one-size-fits-all.' Through SCM, the more |
| and outsource processes that are not within | | | | accepted offerings by the industry to the |
| the core competencies of the company. Due to | | | | consumers would be a variety of products |
| the current competitive market, it is the | | | | catered to different market segments and |
| only way for a company to survive. The | | | | customers preferences. |
| strategy on applying SCM will not only impact | | | | |
| their market positioning but also strategic | | | | As an example, the Toyota Production System |
| decision on choosing the right partners, | | | | practiced in Toyota, evaluates its supply |
| resources and manpower. By focusing on core | | | | chain and determines what is value added |
| competencies also will allow the company to | | | | activities and what is not value added |
| create niches and specialization of core | | | | activities. Non added value activities are |
| areas. As stated in the Blue Ocean Strategy | | | | considered to be 'Muda' or waste and |
| outlined by Chan Kim, in order to create a | | | | therefore must be eliminated. Such non added |
| niche for competitive advantage, companies | | | | value activities are overproduction, waiting, |
| must look at the big picture of the whole | | | | unnecessary transport, over processing, |
| process, and figuring out which process can | | | | excess inventory, unnecessary movement, |
| be reduce, eliminate, raise and create. | | | | defects and unused employee creativity. The |
| | | | steps taken to eliminate waste are through |
| As an example stated by Chan Kim, the | | | | Kaizen, Kanban, Just-in-time and also |
| Japanese automotive industries capitalise on | | | | push-pull production to meet actual |
| its resources to build small and efficient | | | | customer's demands. The Toyota Production |
| cars. The Japanese automotive industries gain | | | | System revolutionise the Supply Chain |
| competitive edge by utilising their supply | | | | Management towards becoming a leaner supply |
| chain to maximise their core competencies and | | | | chain system that is more agile and flexible |
| position itself in a niche market. The | | | | towards meeting the end users demands. |