Strategic Supply Chain Management and Benefits of Optimization in a Service Industry

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Blog | Jun 27, 2014

Strategic SCM and Benefits of Optimization in a Service Industry

In contrast, the service industries are often at a loss in describing the strategic and financial impact of superior supply chain management for their large strategic spend categories, such as IT services, legal services and consulting.



SCMStrategic supply chain management and optimization of a supply chain have long been key competitive differentiators for manufacturing companies. These companies have designed their supply chain not only to find opportunities to reduce spend, but also to demand and ensure input quality and timely delivery. The supply chain is critical for their profitability. The input quality is directly reflected in the quality of finished products and the willingness of consumers to purchase them.

In contrast, the service industries are often at a loss in describing the strategic and financial impact of superior supply chain management for their large strategic spend categories, such as IT services, legal services and consulting. These companies also do not apply the same best-practice principles as manufacturers do. The supply chain management concepts that are common in manufacturing, such as centralizing and coordinating, sourcing and procurement, are not fully leveraged by the service companies. It is not unusual for important parts of the supply chain at service organizations to be managed in a decentralized fashion by line-of-business managers. These managers often make vendor decisions without the benefit of cross-company historic performance, such as on-time delivery and quality of services rendered.

The financial impact of an improved supply chain in the service industry is not much different than in the manufacturing industry. Service organizations have direct inputs to their offerings from external service providers. The quality and timely execution of consultancies will affect both the end quality of these offerings and the cost of their development. Controlling costs is indeed part of the story, but the service organizations must also ensure that their external service providers deliver the results.

Here are some of the benefits of strategic supply chain optimization in the Service Industry:

  •  It helps in developing new service-focused supply chain management tools and processes. Processes such as procurement and its enabling technology are integrated with other enterprise applications that help in expanding the ecosystem and increase the control related project development, costing/budgeting and financial management.
  • Supply chain network optimization- For instance in banks, it involves all the distribution channels where cash is held and through which customers transact, such as ATMs, branches, mobile devices, net banking and agent back outlets. Banks need to monitor transactions at these locations and leverage modeling to forecast requirements and plan the logistics for distribution of cash and other transactional devices. This can reduce costs and optimize service levels.
  • Leveraging better information and analytics – With the development of scorecards based on high-quality information, maintained in the supply chain management system, vendors should start expecting companies to hold them accountable for business results based on the quality of their services.

As supply chain tools and processes in the service industry mature, strategic supply chain management has the potential to become essential to building a competitive advantage. The supply chain management can be a powerful strategic enabler with the ability to better analyze categories of expenditure, services, project costs and execution results. . One can collaborate and accelerate innovation with 'Social', make better decisions anytime and anywhere with 'Mobile' powered by 'Analytics', scale quickly and reduce costs with 'Cloud' solutions.

TriCore's EBS Professional (Consulting) Services, Business Intelligence & Business Application Support Services provide Oracle SCM solutions. Our Supply Chain Solutions transform an entire supply chain into a value chain. By implementing our Supply Chain Solutions and automating with the Oracle EBS SCM applications, which is an out-of-the-box seamlessly integrated, an Advanced Supply Chain Planning & Forecasting, EBS Financial and Manufacturing application, we have been able to help various global manufacturing, consumer products & services companies improve their agility, transform to an adaptive supply network and achieve real-time visibility from the top floor to the shop floor.

More About TriCore Solutions
TriCore Solutions also provides a full suite of scalable and reliable managed application, cloud, infrastructure hosting, and consulting services to enterprise organizations. The company delivers its services and the TriCore Trusted Promise to more than 250 companies worldwide to reduce costs, raise service levels, improve customer experience, increase business agility, and accelerate innovation, unlocking the business value from their IT investments. TriCore Solutions is headquartered in Boston, MA, with offices in India and throughout North America.