| Supply Chain Management (SCM) is the management | | | | Therefore the small supplier has to look at ways of |
| of a network of interconnected businesses involved | | | | reducing their costs internally- Lean techniques. |
| in the ultimate provision of product and service | | | | Cost Involved to represent large Customers- Large |
| packages required by end customers (Hartland, 1996). | | | | OEM's usually require the small suppliers to have |
| Supply chain management encompasses the planning | | | | certain regulations and processes in place such as ISO |
| and management of all activities involved in sourcing, | | | | 9000/ 9001. This takes time and funding and in |
| procurement, conversion and logistics management | | | | today's uncertain market conditions is a catch 22 |
| activities. The question in today's volatile market is | | | | situation. Also another regular demand placed on small |
| whether Small and Medium Manufacturers (SMM) | | | | suppliers is that large customers tend to have a vast |
| benefit from participating in the supply chain. | | | | amount of paper work, detailed documentation etc |
| To answer this depends on a number of different | | | | and these cost are incurred by the supplier as they |
| factors which include but are no means limited to, | | | | have to have relevant staff and systems in place to |
| size of the supplier, network capabilities of supplier, | | | | cope. |
| and who the customer at the top of the chain is and | | | | Profit - Seems logical but it is a vital question of any |
| there policies and procedures. | | | | supply chain relationship - "CAN THE CUSTOMER BE |
| For major blue chip companies like IBM where the | | | | SERVED PROFITABLY?" The pace of demand and |
| supply chain oversees almost $40 billion of annual | | | | expectations has heightened, and with customers |
| spending, which involves all sourcing, procurement to | | | | driving prices lower and lower down through the |
| logistics and customer support worldwide then it is | | | | supply chain, it is important for small suppliers to |
| very clear that IBM has everything to gain by | | | | work out their margins and acknowledge when |
| managing their supply chain. | | | | enough is enough in terms of bottom line figures. It is |
| However for smaller supplier UK companies there are | | | | imperative that any hidden costs which large |
| a few factors worth considering. | | | | customers add on are accounted for. |
| Long term contracts - Every small supplier focuses | | | | In order to keep UK manufacturing from crashing any |
| on winning that long term contract that relieves | | | | further Larger Customers need to acknowledge that |
| pressure and helps with scheduling their production | | | | working with small suppliers is a two way relationship |
| and planning. However the knock on effects is that | | | | and partnership. Only when the customer shares |
| these long term contracts usually impose contractual | | | | burdens and benefits is it a partnership. |
| agreements and can include heavy fines and also | | | | "We need to hand together in the supply chain or we |
| substantial cost reduction to the customer annually. | | | | will Hang separately" Michael Collins. |