"Module 1Module 1 Workbook5 Elements of Supply Chain Management[This page should take about 40 minutes to complete]Jigsaw puzzle (detail) flickr photo by James E. Petts shared under a Creative Commons (BY- SA) licenseSupply chain management involves a number of important elements that are critical toprosperity of supply chain members as part of their mutual goal achievement (seeFigure1 , Supply chain management: integrating and managing business processes across thesupply chain, in Cooper and Lambert, 2000, p. 67). These range from information, materials, finances and relationship flows to customer relationship management, demand management,order fulfilment, procurement, product development and commercialisation, and returnsprocesses. Also, there are key internal functions such as research and development,production, purchasing, and marketing and sales that have to operate in alignment withsupply chain decisions and operations.6 Trends in Supply Chain Management[This page should take about 50 minutes to complete]flickr photo sharedby FutUndBeidl under a Creative Commons ( BY ) licenseA review of the most recent surveys and interviews of executives in various industries revealsa number of supply chain issues that companies are addressing today, including thecontraction (shrinking) of the supply chain, managing supply chain risk, andincreasing supply chain visibility.Three key trendsWhile a range of supply chain management issues will be discussed in the coming weeks,three key trends are outlined below to give you a better sense of some of the issues facingexecutives and their companies’ supply chains today.Trend 1: Shrinking the supply chainA number of concerns have many company executives considering moving theirforeign production back home or close to home, referred to as back-shoring, near-shoring, orright-shoring. Volatile fuel costs, a desire to reduce delivery times and hence improve on- time capabilities, and the decreasing labour cost differentials when comparing labour costs inChina, India, and the U.S. have all contributed to this trend. Some of these firms have alsofound that demand in their foreign markets is contracting or their foreign suppliers have goneout of business. Further, security concerns are growing in many foreign markets, prompting aconcern that it might be time to concentrate on doing what the firm does best, back in itsdomestic market.Trend 2: Managing supply chain riskSupply chain risk can be defined as the likelihood of an internal or external event that causesa disruption or failure of supply chain operations, causing potential reductions in servicelevels, product quality, and sales, with an increase in costs. In recent years, some companieshave been subjected to severe internal events while having no contingency plans toadequately manage these risks—Mattel’s recall in 2007 of millions of Chinese made toys thathad been coated with lead paint; Toyota’s sticking gas pedals in 2009/2010 vehicles, causingrecalls and huge liability problems; and BP’s 2010 Gulf of Mexico oil well blowout thatkilled eleven people and thousands of animals while disrupting commerce along the Gulf Coast, are a few such events. In other cases, external events have caused supply chain failuresfor many organisations—for example, when Hurricane Katrina slammed into New Orleans,Louisiana, and the surrounding area in 2005; the Eyjafjallajökull volcano in Iceland eruptedin 2010, causing disruption to air travel across Europe; the Haiti earthquake in 2010 flattenedcities and killed 200,000; and the 2011 Japanese tsunami engulfed many communities inJapan, killing 28,000 people. Even small events such as weather and traffic problems that canimpact deliveries are a part of supply chain risk. Finally, security problems such as freightthefts, product tampering, intentional property damage, and terrorism all constitute potentialrisks to supply chains. In other words, supply chain risk can be the result of economicvolatility, environmental crises, natural disasters, work stoppages, supply shortages, qualitybreakdowns, and many other unpleasant surprises. When one of these unanticipated eventsinvolves supply chains, the consequences can range from unpleasant to catastrophic; fromincreased costs and delays to a complete market collapse.Trend 3: Increasing supply chain visibilitySupply chain visibility can be defined as the ability of suppliers, manufacturers,business partners, and customers to know exactly where products are, at any point in thesupply chain. This inventory visibility is obviously made easier by technology and canprove very advantageous when dealing with the types of disruptive events discussed above inthe risk segment. UPS and Fedex tracking methods are good examples of visibility— shipments are tracked and monitored using technology and alerts are sent to shippers as theitem is in transit and then delivered. Today, more sophisticated software applications arebeing developed and offered to organizations for tracking orders, inventories, deliveries,returned goods, and even employee attendance7 Supply Chain Strategy "