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Supply Chain Management In Information Technology

      Supply chain management (SCM) is primarily related to transfer of goods, information, and products between different members of the supply chain, including the supplier, manufacturers, wholesalers, retailers, and finally the consumers. More..

Nowadays, majority of supply chain executives are aware of the various risks that are involved in managing supply chains, but are usually not well-equipped to deal with them. Most of these risks come up due to immense pressure to upgrade bottom-line, eliminate duplication of supply chains, reduce waste, and increase productivity. Risks in SCM are classified into two categories: Unsystematic risks and Systematic risks.

Unsystematic risks come up due to factors that are within the internal control of the organization. In contrast, systematic risks surface due to environmental factors that are not within the control of the organization.

Following are the various reasons that cause these SCM risks to surface and hamper the effectiveness of the company’s supply chains:

Environment Risk: As all businesses operate in a common environment, they are highly susceptible to any sort of change in environmental factors, such as national cultures, legal and political frameworks, and prevailing competition in market.

Industry Risk: Any significant change in technology and/or production of cheap substitutes in market can cause the industry risks to surface and leave am impact on entire structure of the industry.

Organization Risk: Significant changes in culture, leadership, structure, technologies, people, and processes of an organization also come with their own risks, each of which should be handled in a unique way.

Domain Specific Risk: Strategic planning by the officials of top management of the organization are exposed to high risks and pay-offs that can affect the business in long-term.

Decision Making Risks: Every single activity of a supply chain involves a decision maker whose decisions and capabilities have significant effect on supply chain performance of any company.

Thus, to ensure the success of value chain and to tap maximum business value of SCM, it is necessary for any SCM manager to understand all the risks involved and their sources.

More Articles :

• Business Value Of Supply Chain Management
• Performance Measurements In The Supply Chain
• Risks In Supply Chain Management
• Supply Chain Management In Information Technology