ahmad - assignments 02 (scm).doc

8/9/2019 AHMAD - Assignments 02 (SCM).doc

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upply chain management operates at three levels! strategic" tactical and operational# At the

strategic level" company management makes high level strategic supply chain decisions that are

relevant to whole organi$ation# %he decisions that are made with regards to the supply chain

should reflect the overall corporate strategy that the organi$ation is following#

%he strategic supply chain processes that management has to decide upon will cover the breadthof the supply chain# %hese include product development" customers" manufacturing" vendors and

logistics#

Product Development: enior &anagement has to define a strategic direction when considering

the products that the company should manufacture and offer to their customers# As product

cycles mature or products sales decline" management has to make strategic decisions to develop

and introduce new versions of existing products into the marketplace" rationali$e the current

product offering or whether develop a new range of products and services# %hese strategic

decisions may include the need to ac'uire another company or sell existing businesses# (owever"

when making these strategic product development decisions" the overall objectives of the firmshould be the determining factor#

Customers: At the strategic level" a company has to identify the customers for its products and

services# )hen company management makes strategic decisions on the products to manufacture"

they need to then identify the key customer segments where company marketing and advertising

will be targeted#

Manufacturin: At the strategic level" manufacturing decisions define the manufacturing

infrastructure and technology that is re'uired# *ased on high level forecasting and sales

estimates" the company management has to make strategic decisions on how products will bemanufactured# %he decisions can re'uire new manufacturing facilities to be built or to increase

production at existing facilities# (owever" if the overall company objectives include moving

manufacturing overseas" then the decisions may lean towards using subcontracting and third

party logistics# As environmental issues influence corporate policy to a greater extent" this may

influence strategic supply chain decisions with regards to manufacturing#

!uppliers: +ompany management has to decide on the strategic supply chain policies with

regards to suppliers# ,educing the purchasing spend for a company can directly relate to an

increase in profit and strategically there are a number of decisions that can be made to obtain that

result# -everaging the total company’s purchases over many businesses can allow companymanagement to select strategic global suppliers who offer the greatest discounts# *ut these

decisions have to correspond with the overall company objectives# .f a company has adopted

policies on 'uality" then strategic decisions on suppliers will have to fall within the overall

company objective#


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Task 1: "nderstand t#e relations#ip bet$een suppl% c#ain manaement

&!CM' and oranisational business ob(ectives

Task 1)1: *+plain t#e importance of effective suppl% c#ain manaement in

ac#ievin oranisational ob(ectives.n the ancient /reek fable about the tortoise and the hare" the speedy and overconfident rabbit

fell asleep on the job" while the 0slow and steady0 turtle won the race# %hat may have been true

in Aesop1s time" but in today1s demanding business environment" 0slow and steady0 won1t get you

out of the starting gate" let alone win any races# &anagers these days recognise that getting

products to customers faster than the competition will improve a company1s competitive position#

%o remain competitive" companies must seek new solutions to important upply +hain

&anagement issues such as modal analysis" supply chain management" load planning" route

planning and distribution network design#

+ompanies must face corporate challenges that impact upply +hain &anagement such as

reengineering globalisation and outsourcing# )hy is it so important for companies to get

products to their customers 'uickly2 3aster product availability is key to increasing sales" says ,#

&ichael Donovan of 4atick" &ass#" a management consultant specialising in manufacturing and

information systems# 0%here1s a substantial profit advantage for the extra time that you are in the

market and your competitor is not"0 he says# 0.f you can be there first" you are likely to get more

orders and more market share#0 %he ability to deliver a product faster also can make or break a

sale# 0.f two alternative 5products6 appear to be e'ual and one is immediately available and the

other will be available in a week" which would you choose2 +learly" 0upply +hain &anagement

has an important role to play in moving goods more 'uickly to their destination#7

Task 1)2: *+plain t#e link bet$een suppl% c#ain manaement and business

functions in an oranisation

)illiams et al# 89::9; stated organi$ational innovation would drive the changes of the whole

organi$ational framework and that of employees" which further affects the operation of the whole

supply chain# %he increasing re'uirements for the cooperation and the connection between

buyers and suppliers would cause strong effects to the organi$ational innovation 8-ee" ;#

Atuahene?/ime 8


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corporations’ ability to make any transformation against competition# %he supportive culture is

easiest to encourage the individual innovation" and can also make corporations happy to change

for improving their competences# %he effective culture can encourage the individual innovation#

(owever" its excessive emphasis on results will bring on the contrary conflicts among staff" and

becomes a big obstruction for the organi$ational transformation# (urley and (ut 8


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Task 2: ,e able to use information tec#nolo% to optimise supplier

relations#ips in an oranisation

Task 2)1: *valuate t#e effectiveness of strateies used b% an oranisation to

maintain supplier relations#ips

Effective management of suppliers is one of the ways manufacturing companies can improve

their performance# %here are several important aspects of supplier management" they include

sourcing strategies" the way relationships are management and the information exchange policies

adopted by manufacturers# %ypically" it has been argued in the literature that close relationships

with suppliers should be developed" in contrast to the traditional price?driven transactional

relationship# .n conjunction with this approach manufacturers should employ a single sourcing

strategy rather than multi?sourcing# %his paper presents the results of a study 8using a survey; of

supplier management practices among /erman manufacturing companies# %he research found

that significant portion of the companies surveyed had experienced a change in their relationshipwith suppliers in the last few years# .n the main relationships had become closer and the use of

partnerships was in evidence# Although the companies had developed partnerships with some of

their suppliers the majority of firms continued to prefer a multi?sourcing policy# %he research

results have implications for /erman manufacturing companies as they indicate the potential for

improvement through the greater adoption of best practices in the area of supplier management#

Task 2)2: "se information tec#nolo% to create strateies to develop an

oranisation-s relations#ip $it# its suppliers

As search costs and other coordination costs decline" theory predicts that firms should optimallyincrease the number of suppliers with which they do business# Despite recent declines in these

costs due to information technology" there is little evidence of an increase in the number of

suppliers used# Gn the contrary" in many industries" firms are working with fewer suppliers# %his

suggests that other forces must be accounted for in a more complete model of buyer supplier

relationships#

As firms try to increase their performance" the interface with suppliers has become a major point

of emphasis in the 'uest for additional efficiencies# %his topic is enjoying increasing popularity"

especially in view of the differences in customer?supplier relationships between Hapanese and

American firms# 3or instance" superior supplier relations have been estimated to provide a I::?@:: per car cost advantage to Hapanese manufacturers# %hese trends are reflected in the

information technology 8.%; literature as well" which has identified the impact of .% on supplier

relationships as an important area for research" and has discussed these relationships in an

institutional economics framework addressing the implications of firm si$e and the governance

structure of the relationship#


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Task 2)3: Develop s%stems to maintain an orani.ation-s relations#ip $it# its

suppliers

A natural approach to determining the optimal number of suppliers is to start from the

assumption that a firm would benefit by increasing the number of its suppliers" thereby

broadening its choice" but that technological considerations constrain this strategy# .n this perspective" the number of suppliers is limited by considerations such as the cost of setting up a

relationship" search costs" and transaction costs" which can generally be summari$ed as

coordination costs#

3or example" in trying to determine the optimal number of suppliers for a given input" it may be

assumed that suppliers1 product offerings are substitutes for one another" except that they differ in

some desirable feature" such as price" fit" or product characteristics# .nteracting with each

supplier entails a coordination cost# After surveying some number of suppliers" the buyer selects

the product offering that provides the best value according to its set of criteria# %he optimal

number of suppliers is determined by trading off the cost of further searches against the expected benefit from identifying a better supplier# %o illustrate these trade?offs" in this section we offer a

model for the optimal number of suppliers in the neoclassical tradition of tigler 8


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Task 3: "nderstand t#e role of information tec#nolo% in suppl% c#ain

manaement

Task 3)1: /ssess #o$ information tec#nolo% could assist interation of

different parts of t#e suppl% c#ain of an oranisation

%oday companies are often not considered independent entities" but parts of multi?company"

multi?echelon networks" i#e# supply chains" delivering goods and services to the final customer

8+hristopher"


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the increasing rate of technologies# .n the integrated supply chain model 83ig#


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infrastructure capabilities provide a competitive positioning of business initiatives like cycle time

reduction" implementation" implementing redesigned cross?functional processes# everal well

know firms involved in supply chain relationship through information technology# %hree factors

have strongly impacted this change in the importance of information# 3irst" satisfying in fact

pleasing customer has become something of a corporate obsession# erving the customer in the

best" most efficient and effective manner has become critical# econd information is a crucial

factor in the managers1 abilities to reduce inventory and human resource re'uirement to a

competitive level# .nformation flows plays a crucial role in strategic planning#


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Task 4: "nderstand t#e role of loistics and procurement in suppl% c#ain

manaement

Task 4)1: *+plain t#e role of loistics in suppl% c#ain manaement in an

oranisation

*oth logistics and supply chain management are important and exciting areas that touch our

lives# Hust imagine the different products that are bought and consumed by us every day# (ow do

they reach the customer and at what cost2 .n ancient times" international trade was dominated by

bulky raw materials# %oday" in?process and finished products 8not raw materials; play a greater

role in world trade# Gwing to piling up of inventory and carrying cost" hospitals and factories

have put in systems in place to arrest unnecessary purchases#

-ogistics management is that part of +& that plans" implements and controls the efficient"

effective" forward and reverse flow and storage of goods" services and related information

between the point of origin and the point of consumption in order to meet customer re'uirement#

-ogistics involves getting in the right way" the right product" in the right 'uantity and right

'uality" in the right place at the right time" for the right customer at the right cost#

/etting some of these 1,s1 right may be easy for many" but getting all correct can be 'uite a

challenge# 3or example" in both retail distribution and in high?value manufacturing" it is now

'uite common to offer suppliers 'uite specific and narrow time windows within which to deliver

freight#

Task 4)2: *valuate procurement practices in an oranisation%oday" purchasing must be the most progressive group in the company# Lour systems"

techni'ues" and operational theories must be flexible and dynamic# %he typical philosophy of

M)e have done it that way for 9: years" so it must be good"7 or" M)e make money in spite of

ourselvesN7 does not apply in modern procurement practices#

)orldwide competitive pressures re'uire greater contribution from the purchasing and supply

management functions" procurement practices and suppliers to improve the organi$ation’s

relative position on 'uality" price" technology" and responsivenessOthat doesn’t mean sitting

around and waiting for it to happenN

(ere are some interesting general observations based upon recent purchasing analysesC

Each day" buyers spend hundreds of millions of dollars which can account for anywhere

from 9:?K: of an organi$ation’s revenue" budget" or sales dollar#

An analysis of payments has shown that" in most companies" >:?@: of the numbers of

checks to vendors are of payments of less than I>::#


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%hese payments often represent less than > of the annual material expenditures#

%he payments under I


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Task 5: ,e able to plan a strate% to improve an oranisation-s suppl% c#ain

Task 5)1: Plan a strate% to improve an oranisation-s suppl% c#ain

%his strategy 8as is shown in diagram; was developed using a multi?tiered approach# %he

Department brought together subject matter experts from component agencies and divisions

including the U+/" +*P" %A" D( Policy" cience and %echnology" Domestic 4uclear

Detection Gffice" /rants and %raining" and Preparedness to create an initial draft of the strategy#

%his draft was then subjected to an extensive review process involving internal staff across the

Department" interagency reviews with non?D( agencies" consultation with the private sector

through advisory committees" includingC the 4ational &aritime ecurity Advisory +ommittee

and the +ommercial Gperations Advisory +ommittee" and consultation with international trade

partners" principally selected by volume of trade with the United tates 8e#g#" APE+;#

After a final round of corrections" taking into account the recommendations and re'uests of thereviewers and consultants" the strategy subject to a formal review by D( components and

submitted for formal Department review#

3ollowing initial release" further consultation in developing the final strategy is anticipated withC

• %he private sector through formal trade organi$ations 8e#g#" the )orld hipping +ouncil

and Port Authorities" including coastal and inland ports;#

• tate and local stakeholders#

• .nternational organi$ations" including the .&G" the )+G" the .nternational -abor

Grgani$ation" and the .nternational Grgani$ation for tandardi$ation#


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Task 5)2: /ssess #o$ a suppl% c#ain improvement strate% $ill benefit overall

business performance in an oranisation

.t helps in the following waysC


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Task 5)3: *+plain #o$ barriers $ill be overcome in an oranisation $#en

implementin a suppl% c#ain improvement strate%

*usinesses need effective tools for supply chain management# %he supply chain is inherently is

oftentimes unpredictable and always dynamic" and ineffective supply chain management means

poor business performance and a lower bottom line# +onventional software solutions to thesupply chain management problem have proved moderately effective" but they have been unable

to render data visible" manageable and accessible# %he .*& +ognos +P& solution provides an

integrated software application that enables supply chain managers to identify and remedy issues

effectively and efficiently" keeping information organi$ed and at hand#

+ompanies can use the .*& +ognos +P& solution to connect supply chain data to other

enterprise applications" including finance" (," +,&" and external data# .n this way" .*&

+ognos +P& not only improves the performance of a supply chain" it integrates an entire

company into a single source of mission?critical information" effectively increasing not only

performance" but the value of existing .% resources# Employees throughout the organi$ation canaccess .*& +ognos +P& for accurate and current data needed to collaborate on issues and

make better business decisions# %he benefits of .*& +ognos +P& thereby become those of the

entire organi$ation#


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ahmad - assignments 02 (scm).doc

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