Coordinating Supply Chain Management - Assignment Example

COORDINATING SUPPLY CHAIN MANAGEMENT- SERVICE TO THE By Topic5. Coordinating Supply Chain Management- service to the customer 1 The concept of SCM and the notion that today the firms are links in a networked supply chain. 2 The global cooperation, vertical disintegration and a focus on core activities 3 Current research towards a systematic identification of the core initiatives and constructs involved in SCM. 4 The challenge of coordinating effectively the entire supply chain, from upstream to downstream activities Executive summary on the concept of SCM and the notion that today the firms are links in a networked supply chain By definition, supply chain management (SCM) is total sum of all businesses and persons involved in creation of a product from its raw form to final stage where it is received by consumers. The interconnected networks that see the entire process of provision of goods and services is what holistically constitutes a supply chain. Several literary works have been produce on supply chain management and this paper will review a few among the body of literature to gain a deeper understanding into SCM and its impact on services to customers. Literature Survey on SCM In the year 1997, Supply Chain management Review, one of the industry’s leading prints published an article by David Anderson, Frank Brit and Donavon Favre titled: The seven principles of Supply Chain Management. This came at the time when the depth of SCM as a concept was relatively unexplored and the article therefore opened a door into further studies on how to better the idea and come up with improved models. According to Bowersox, Closs, & Cooper (2007), the 1997 article properly discussed the need to adapt supply chain to the needs of customers. The agreement with this is an indicator of the futuristic nature of the article by Anderson et al, who suggested that customers should be segmented according to their diverse service needs. The suggestion to use sales volume and profitability as the matrices for segmentation has since the production of this literature been adopted by industries and major trade channels. Amazon for example, applied this concept to initiate a program dubbed; Amazon Prime where free 2 day and one day shipping at a discounted rate is provided. In the midst of scepticism, customer numbers at Amazon has continued to rise since the launch of this program as evidence of its success. Chopra & Meindl (2001) in their book- Supply chain management: strategy, planning, and operation discussed the need to customize logistics networks if service to customers if to be optimised. According to them, once customers have been segments and their needs clearly outlined, logistics networks must then be tailored to best serve each segment. This in the end ensures that custom made solutions apply among the many groupings for maximum efficiency and profitability. Wang, Heng & Chau (2007) discussed the need to align demand planning across the entire supply chain so that data on demand is shared on a common platform among associates to ensure all those involved do not keep excess stock. This sharing of demand data ensured that partners know in real time where a specific product is in short supply in one region; holders of such stock can easily supply and reduce their inventory levels. This idea, though thought to be impractical is what drives sales at Wal-Mart and its partner companies. Hugos (2003) evaluated the idea of differentiation where products close to customers like is the case with Dell where only components are kept and assembly is undertaken after receiving customer orders so that products are unique in line with customer demands. This is the opposite of standardization that is at use in the cosmetic industry. Both differentiation and standardization have an effect on the entire supply chain with regards to efficiency and customer satisfaction. Executive summary on global cooperation, vertical disintegration and a focus on core activities Supply chain the in the contemporary world has brought different organization together through cooperation around the world. By working together, vertical links (between consumers and suppliers) are strengthened for more efficiency and profitability. According to Poirier (1999), there is more value in cooperation among entities within a supply chain by virtue of the positive effects of such arrangements that include; cost reduction and increase in volumes of orders placed by customers. A company in China for example, can use international delivery companies to effectively service orders in the UK. This entire process will involve the supplier, delivery company and customer, all of who must work seamlessly to realize results and stay in business. The function of companies like DHL in global supply chain cooperation can therefore not be taken for granted because they are core to the entire system. Developing close working relationships with global players for business to business (B2B) is pivotal for both vertical and horizontal success in supply chain. Given the provision of services by companies in the global supply chain, companies on both ends (supply and customer) have the freedom to focus on their core objectives of providing quality goods and services. Boeing for example, should focus on designing and assembling planes while Rolls Royce focuses on producing quality jet engines without having to worry about how the complete products will reach the Boeing assembly plant in Washington DC. That is one of the major advantages of global cooperation within SCM. Executive summary on current research towards a systematic identification of the core initiatives and constructs involved in SCM To establish the many theoretical determinant of SCM, it is important to pay due attention to buyer supplier relationship because of its significance to effective management of the supply chain from a holistic perspective. The following initiatives and constructs, therefore, summarize some of the key aspects of buyer – supplier relationship: Environmental uncertainty This is an important construct because it covers the three core sources of uncertainty on the supplier side that include; on-time performance, average lateness and level of inconsistency. Issues on the customer side of this construct arise from errors in forecasting and irregular orders. To handle these challenges, suppliers must make use of technology to ensure excellent process performance and reduce breakdown in manufacturing processes (Hahn et al. 1990). Customer focus Even with advanced technology in manufacturing, neglect of customer interests is the beginning of any organizations downfall. The desire to invigorate manufacturing over the years has created an interesting culture where customers demand superior products within very short lead times requiring organizations to regularly assess customer expectations and come up with proper adjustments in their operations to match these new desires. The more a company invests in research to understand the needs of its customer portfolio, the more rewards it reaps from workings within its supply chain. It is important to exceed and not just meet to a bare minimum the needs of its customers to stay competitive. Supply Strategy This approach goes beyond just manufacturing to incorporate interactions among the diverse components of supply chain. All organizations have their distinct strategies and employ diverse resources to build a supply identity using unique networks and constituent activities. To understanding the standing and efficiency of an organization’s strategy, a comparative analysis with other industry players must be undertaken (Poirier, 1999). Support from top management Top management is in the best position to understand the dynamics and unique needs of supply chain management because of their recognition of the overall organizational growth strategy. It is therefore important for them to provide adequate support if a firm is to remain competitive within its industry of operation. The nature of support from top management can come in the form of human and financial resources, support to suppliers who are willing and ready to enter into long term partnerships for the good of the entire structure. Executive summary on the challenge of coordinating effectively the entire supply chain, from upstream to downstream activities There are various proxy measures that can articulate coordination within the supply chain. Machinery of a supply chain usually has conflicting objectives over their diverse domains on decisions and action paths at each point. A typical supply chain has human systems that pose the following coordination challenges: Self interest: Members of a supply chain may lack a global perspective and look at issues from their own local standpoints that fuel opportunistic mentalities with may end up in a mismatch between the realities of demand and supply in the marketplace (Fisher et al. 1994). Classical measures of performance on the basis of individual output may be irrelevant if profits are to be maximised in the supply chain through a coordinated approach. According to Piplani and Fu (2005), supply chain misalignment is plagued with technicalities that involve changing product lines and fast hanging environment that sees a high turnover of partners. Orders. Organizations desire to attain the best suppliers irrespective of their geographical location which comes with huge risks of uncertainties in handling supply chains across borders. This posse the challenges of political and legal shortcomings as well as problems with infrastructure especially if the foreign locations are relatively underdeveloped. Bibliography Bowersox, D. J., Closs, D. J., & Cooper, M. B. (2007). Supply chain logistics management (2nd Ed.). Boston, Mass.: McGraw-Hill/Irwin. Chopra, S., & Meindl, P. (2001). Supply chain management: strategy, planning, and operation. Upper Saddle River, N.J.: Prentice Hall. Hahn, C.K., Watts, C.A., Kim, K.Y., 1990. The supplier development program: a conceptual model. International Journal of Purchasing and Materials Management 26 (2), 2–7. Hugos, M. H. (2003). Essentials of supply chain management. Hoboken, N.J.: John Wiley & Sons. Piplani R, Fu Y (2005) A coordination framework for supply chain inventory alignment. J Manuf Technol Manage 16(6):598–614 Poirier, C. C. (1999). Advanced supply chain management: How to build a sustained competitive advantage. San Francisco: Berrett-Kochler Publishers. Wang, W. Y. C., Heng, M. S. H., & Chau, P. Y. K. (2007). Supply chain management issues in the new era of collaboration and competition. Norwood Mass, Books Read More