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Supply Change Management - Essay Example

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Supply Change Management

nformation.3 In this respect, the Internet, as an enabling technology with the ability to automate the supply chain, integrate business activities, supply real-time data, and reduce costs presents a powerful resource to improve SCM.
One of the biggest challenges companies are facing insofar as SCM initiatives are concerned is streamlining the supply chain to reduce cycle time without having to maintain high inventory levels. On one hand, these goals can often be conflicting such it will be difficult to provide on-time delivery of products without maintaining high inventory levels; while on the other hand, such operations can be difficult to maintain given high holding costs, warehouse and production-line storage costs, and insurance costs among others.4 In order to resolve this, companies have traditionally resorted to forecasting customer demand and matching inventory levels to these forecasts, as much as possible. However, given the uncertainties and fluctuations in the supply chain, this can often lead to inefficient operations and customer dissatisfaction. In this respect, Internet-enabled SCM strategies, by automating the supply chain and linking the supply chain activities presents an effective and efficient way to reduce cycle times, reduce inventory levels, and reduce costs.
Looking at the example of Dell, and its Command and Control Model, one can illustrate how an Internet-enabled SCM strategy can reduce cycle times and inventory, thereby reducing costs. Dell, as a leader in the high-tech industry, has a "Command and Control" supply chain where it sells direct to the consumer through its website or its hotline.5 In implementing i2 SCM solutions, the company implemented i2 Collaboration Planner, i2 Factory Planner, and i2 Supply Chain Planner, powered by a Windows NT and Intel architecture platform, which as i2 expert Lance St. Clair notes, goes against the "conventional wisdom" of "industrial strength operating system (OS) for high-volume e-Business applications".6 Through the i2 Collaboration Planner, Dell gathers real-time information from its telephone and Internet orders, aggregated every twenty seconds. From this data, the i2 Factory Planner generates an updated manufacturing schedule every two hours; while its i2 Supply Chain Planner compares Cell's on-hand inventory with that of their suppliers' and creates a supplier bill of material based on actual orders, eliminating the need to keep inventory. Using real-time data, suppliers then respond through a secure extranet where they have ninety minutes to complete the orders and deliver products to the assembly line. Thus, Dell then keeps inventory only within the actual time needed to configure their computers and bundle them with peripheral components, delivering them to customers within a week.7
In this respect, Dell's on-demand fulfillment based on actual data, as opposed to forecasts, achieves both internal ...Show more

Summary

A company's supply chain, which consists of the "network of facilities and distribution options that performs the functions of procurement of materials, transformations of these materials into intermediate and finished products, and the distribution of these products to the customers"1, is a crucial aspect of any business enterprise encompassing all activities internal and external to a company's costs and value-creating endeavors…
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