The supply chain is an extended enterprise with different upstream and downstream companies and various service providers that need to operate closely together. These companies are directly linked by the flow of products, services, money, and information from various sources to the customer (Simchi-Levi et al., 2004).
Supply chain management (SCM) then includes all the methods, systems, people, and resources that help improve processes and organisations throughout the supply chain.
SCM involves close working together of all companies in the chain. Simchi Levi et al. (2004) classify SCM into two categories: configuration, which is related to basic infrastructure (hardware, software, transport, etc.); and coordination, related to the way the supply chain operates.
Configuration issues include decisions on choosing suppliers, outsourcing activities, and policies for purchasing, decisions on production, site location, capacity; distribution channels, retail locations, and transportation costs and issues.
Coordination issues include decisions on material flows throughout the chain, how information is exchanged, and payment systems. This shows how complex supply chain management is because it involves many functions and geographic areas. Design and execution are therefore difficult and need to be managed for the supply chain to move with efficiency.
An example is shown in Figure 1 (Gereffi, 2002) for retail apparel which links cotton and synthetic fibre manufacturers, textile mills, apparel manufacturers, and retail outlets from all the five continents.
If one link in this chain breaks, e.g., the container ship with the raw material supply of African cotton gets lost at sea, the whole supply chain can break down and thousands of clients of Marks & Spencer will have to party using last season's fashion.
Supply Chain, Meet Bullwhip
What is known as the "bull-whip effect" can be described as follows: the farther away from the customer a supplier is along the supply chain, the higher would be the difference between what is really needed from what is ordered. The term was coined by Lee et al. (1997) based on observations and descriptions made by supply chain professionals at Procter & Gamble (P&G).
They noticed that whilst the number of babies and the demand for nappies were stable, the orders coming from retailers and wholesalers for Pampers deliveries, P&G's best-selling nappies brand, fluctuated dramatically. And as they went further down the supply chain, starting with the orders made by P&G from the suppliers of the components that went into a nappy - plastic, cotton, and so on - they noticed even wilder fluctuations.
On a graph, they noticed that these fluctuations were similar to the way the amplitude of a whiplash increases down the length of the whip once it is cracked. Thus was born the phenomenon known as the Bullwhip Effect. Figure 2 shows this phenomenon in action, using data ...
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“Bullwhip Effect in Retail Supply Chains Essay Example | Topics and Well Written Essays - 3000 Words”, n.d. https://studentshare.net/business/302172-bullwhip-effect-in-retail-supply-chains.
This is because demand variations within the supply change escalate as we travel upward. Therefore when information relative to demand variations is inaccurate, the bullwhip effect can be created (Chen, Drezner, Ryan & Simchi-Levi, 2000). This research study identifies the factors causing the bullwhip effect and what steps can be taken to tame the bullwhip effect.
This essay analyzes the goal of integrating the supply Chain. As the first tier supplier, Engineering Limited needs to remain cognizant of the fact that the supply chain is made up of manufacturers, suppliers, central businesses and consumers. In this regard, the supply chain involves production, distribution, supplies and sales.
No matter how strong a company’s management is or how creatively it executes its marketing and communication campaigns, if it fails to supply the right product, to the right consumer, at the right place, in the right quantity, at the right time then it will not be able to survive in the market place for a sustainable period of time.
Environmental observance requirements and the global competition are forcing a need for maintenance in the supply sequence. The Green Supply chain is now an opportunity for increased innovation, profits and efficiency. Companies are using a lot of power and resources to modify their supply chains and make them friendlier to the environment.
Zara is a manufacturing business with high service content, because they take customer requests from the store (i.e., ‘customized’) and expedite these requests as fast as possible through the design process (Winsor, et al, 2004). In the design stage, Zara shuns outsourcing and situates its 300 designers throughout the manufacturing process, a tactic which enables the speed with which products are taken to market (Gallaugher, 2008; Inditex Annual Report 2011).
Meditech’s distribution network is managed from a main warehouse, where members of staff dispatch the instruments both to local, as well as, international customers. Meditech has been successful in the past, but numerous customer complaints indicate a problem in supply chain management.
This effect translates into lost sales and loss of significant margins. One method of alleviating this is implementation vendor managed inventory (VMI) explained at the end of this paper.
This research proposal further details
The problems encountered by Wal-Dart appear to be caused by what is known as a bullwhip effect, which affects the whole supply chain. The importance of linking the supply chain to organisational objectives and purpose is highlighted as it is