final _supply chain management

7/29/2019 Final _Supply Chain Management

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LO1: Understand the relationship between supply chain management (SCM) andorganizational business objectives.

LO1.1 Explain the role and importance of logistics in supply chain management in meeting your chosen organizations strategic objectives.

In the ancient Greek tale about the tortoise and the hare, the speedy and overconfident rabbit fellasleep on the job, while the "slow and steady" turtle won the race. That may have been true inAesop's time, but in today's demanding business environment, "slow and steady" won't get youout of the starting gate, let alone win any races. Managers these days identify that getting

products to customers faster than the competition will advance a company's competitive position.To remain competitive, companies must get new solutions to significant Supply ChainManagement issues such as modal analysis, supply chain management, load planning, route

planning and distribution network design.

Companies must face corporate challenges that sway Supply Chain Management such asreengineering globalisation and outsourcing. Why is it so significant for companies to get

products to their customers rapidly? Faster product availability is central to escalating sales, saysR. Michael Donovan of Natick, Mass., a management consultant specialising in manufacturingand information systems. "There's a substantial profit advantage for the extra time that you are inthe market and your competitor is not," he says. "If you can be there first, you are likely to getmore orders and more market share." The aptitude to convey a product faster also can make or

break a sale. "If two alternatives [products] emerge to be equal and one is right away availableand the other will be accessible in a week, which would you choose? evidently, "Supply Chain

Management has an central role to take part in moving products more speedily to their target.LO1.2 Explain the link between your chosen organizations supply chain management and its

business functions.

Williams et al. (2002) assured organizational novelty would drive the changes of the wholeorganizational framework and that of employees, which further affects the operation of the wholesupply chain. The mounting needs for the cooperation and the connection between buyers andsuppliers would reason strong effects to the organizational innovation (Lee, 1995). Atuahene-Gime (1996 a/b) also assured that supply chain management chiefly concentrates on the pluses

and value of the product innovation. As for service industry, the returns of innovation in bothservice and quality are subject to a good supply chain management. Athaide et al. (1996) saidthat in the happening of both product innovation and technique innovation, the supply.

The type of the corporate culture affects the likelihood of the individual innovation and theorganizational innovation. The bureaucratic culture restrains the individual innovation and thecorporations ability to make any conversion against competition. The supportive culture is


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easiest to shore up the individual innovation, and can also make corporations happy to alter for recuperating their competences. The effectual culture can egg on the individual innovation.However, its too much emphasis on results will bring on the opposing conflicts among staff, and

becomes a big obstacle for the organizational transformation. Hurley and Hut (1998) said that anorganization would give more resources to promote more innovation and build up competencesif its culture stresses innovation.

LO.1.3 What are the key drivers used by your organization to achieve an integrated SupplyChain?As companies increasingly put into action their supply chain to compete and attain market share,spending and action in this area are remarkably on the upswing. Technology and processupgrades at forward-thinking companies evidently demonstrate that supply chain excellence ismore broadly established as an element of overall business strategy and that growing value tocustomers is not just managements, but everyones business.

The transfer in how companys outlook their supply chain is taking hold. Scrutinize how your company views its supply chain and deem your answers to these fundamental questions. Doesleadership view your supply chain as a strategic competitive advantage? If not, are you bearingin mind outsourcing your supply chain? Are the capacity strengths of your supply chaingenerally known and understood by leadership of the company? If so, how do they sway growth,

profitability and customer service?

Hitachi Consulting works closely with leading manufacturing and distribution companies andaids them address their business challenges. From our experience operational with keycompanies in food and beverage, consumer products, high tech and industrial manufacturing,

there are six key trends causing significant impact and modify to supply chain design and performance:

Trend 1 Demand planning

Trend 2 Globalization

Trend 3 Increased competition and price pressures

Trend 4 Outsourcing

Trend 5 Shortened and more complex product life cycles Trend 6 Closer integration and collaboration with suppliers

LO2: Be able to use information technology to optimise supplier relationships in anorganization.


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LO2.1 Evaluate the effectiveness of strategies used by your organisation to maintain supplier relationships.

Efficient management of suppliers is one of the ways manufacturing companies can advancetheir performance. There are many significant aspects of supplier management; they incorporate

sourcing strategies, and the way relationships are managed and the information exchange policies adopted by manufacturers. Characteristically, it has been argued in the literature thatclose relationships with suppliers should be urbanized, in contrast to the conventional price-driven transactional relationship. In concurrence with this approach manufacturers shouldemploy a single sourcing strategy rather than multi-sourcing. The research found that noteworthy

portion of the companies surveyed had experienced an alteration in their relationship withsuppliers in the last few years. In the main relationships had become closer and the use of

partnerships was in proof. Although the companies had developed partnerships with some of their suppliers the majority of firms continued to prefer a multi-sourcing policy. The researchresults have implications for German manufacturing companies as they point out the potential for development through the greater adoption of best practices in the area of supplier management.

LO.2.2 What information technology does your organisation use to create strategies indeveloping relationship with its suppliers?

As search costs and other coordination costs turn down, theory predicts that firms shouldoptimally amplify the number of suppliers with which they do business. Despite recent declinesin these costs due to information technology, there is little proof of an augment in the number of suppliers used. On the contrary, in many industries, firms are working with fewer suppliers. Thissuggests that other forces must be accounted for in a more complete model of buyer supplier

relationships.

As firms try to amplify their performance, the interface with suppliers has become a major pointof weight in the quest for additional efficiencies. This topic is enjoying ever-increasing

popularity, especially in view of the differences in customer-supplier relationships betweenJapanese and American firms. For instance, superior supplier relations have been approximate to

provide a $300-600 per car cost advantage to Japanese manufacturers. These trends are reflectedin the information technology (IT) literature as well, which has recognized the impact of IT onsupplier relationships as an important area for research, and has discussed these relationships inan institutional economics framework addressing the implications of firm size and the

governance structure of the affiliation.

LO 2.3 Identify systems used by your organisation to maintain relationship with its suppliers.A natural approach to determining the optimal number of suppliers is to begin from theassumption that a firm would profit by growing the number of its suppliers, thereby broadeningits choice, but that technological considerations constrain this strategy. In this perspective, the


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number of suppliers is restricted by considerations such as the cost of setting up a relationship,search costs, and transaction costs, which can commonly be summarized as coordination costs.

For example, in trying to determine the optimal number of suppliers for a given input, it may besupposed that suppliers' product offerings are substitutes for one another, except that they differ

in some desirable feature, such as price, fit, or product characteristics. Interacting with eachsupplier entails a coordination cost. After surveying some number of suppliers, the buyer selectsthe product offering that renders the best value according to its set of criteria. The optimalnumber of suppliers is determined by trading off the cost of further searches against the expected

benefit from identifying a better supplier. To demonstrate these trade-offs, in this section weoffer a model for the optimal number of suppliers in the neoclassical tradition of Stigler (1951).

For example, Consider a two-period setting with a buyer firm and N risk-neutral potentialsuppliers with identical production technology facing the same marginal cost, assumed to bezero. Supplier offerings differ in a product characteristic, which, without loss of generality, is

assumed to be one-dimensional, providing to the buyer firm utility e distributed in the interval[0,1] according to a known density function. e can be thought of as a "fit" indicator. Suppliers' ecan be discovered only after a relationship has been established between the buyer firm and thecorresponding supplier. The buyer firm faces an irreversible cost K for each supplier it does

business with, which can be thought of as a coordination cost. In the first period, the buyer firmselects n suppliers from the N available suppliers as the suppliers it will do business with. In thesecond period, the buyer discovers the values of the fit parameters i.e. for the suppliers and

purchases from the supplier whose offering provides the "best match" (i.e., the highest e).

LO3 Understand the role of information technology in supply chain management.

LO3.1 Assess how information technology could assist in the integration of the different parts of the supply chain within your organization.

Today 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 (Christopher, 1992; Lambert and Cooper, 2000). Supply chain management (SCM) literature

proposes that integrated control of these multi-company networks can provide significant benefits (e.g. Cooper et al., 1997; Burgess, 1998; de Leeuw et al., 1999; Mason-Jones andTowill, 1999; Norek and Pohlen, 2001). The utilization of information technology (IT), in turn,

is considered an imperative requirement for managing these networks, and has been associatedwith noteworthy supply chain efficiency improvements (e.g. Lee and Billington, 1992; Whiteand Pearson, 2001).


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LO3.2 Evaluate how information technology has contributed to the management of the supplychain within your organisation.

Supply chain management (SCM) is concerned with the flow of products and information between supply chain members' organizations. Recent development in technologies enables theorganization to gain information easily in their premises. These technologies are supportive to

coordinates the activities to manage the supply chain. The cost of information is decreased due tothe escalating rate of technologies. In the integrated supply chain model (Fig.1) bi-directionalarrow reflect the accommodation of reverse materials and information feedback flows. Manager needs to comprehend that information technology is more than just computers. Except computer data recognition equipment, communication technologies, factory automation and other hardware and services are incorporated.


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Bi-directional arrow reflects the adjustment of reverse materials and information feedback flows.

Managers need to comprehend that information technology is more than just computers. Except

computer, data recognition equipment, communication technologies, factory automation andother hardware and services are incorporated.

LO.3.3 Assess the effectiveness of information technology in managing the supply chain in your organization.

Prior to 1980s the information flow between functional areas within an organization and betweensupply chain members organizations were paper based. The paper based transaction andcommunication is slow. During this period, information was frequently over looked as a criticalcompetitive resource because its value to supply chain members was not obviously understood.IT infrastructure capabilities give a competitive positioning of business initiatives like cycle timereduction, implementation, implementing redesigned cross-functional processes. Numerous wellknow firms involved in supply chain relationship through information technology. Three factorshave strongly swayed this alteration in the significance of information. First, satisfying in factsatisfying customer has become something of a corporate obsession. Serving the customer in the

best, most efficient and effective manner has become critical. Second information is a crucialfactor in the managers' abilities to reduce inventory and human resource requirement to acompetitive level. Information flows plays a crucial role in strategic planning.


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LO4 Understand the role of logistics and procurement in supply chain management.LO4.1 Explain the role of logistics in supply chain management in system in your organization.

Both logistics and supply chain management are significant and exciting areas that touch our lives. Just imagine the different products that are bought and consumed by us every day. How do

they reach the customer and at what cost? In ancient times, international trade was subjugated by bulky raw materials. Today, in-process and finished products (not raw materials) play a greater role in world trade. Owing to piling up of inventory and carrying cost, hospitals and factorieshave put in systems in place to arrest unnecessary purchases.

Logistics management is that part of SCM 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 prerequisites.Logistics involves getting in the right way, the right product, in the right quantity and rightquality, in the right place at the right time, for the right customer at the right cost.

Getting some of these 'Rs' right may be easy for many, but getting all correct can be quite achallenge. For example, in both retail distribution and in high-value manufacturing, it is nowquite common to offer suppliers quite specific and narrow time windows within which to deliver freight.

LO4.2 Evaluate any procurement practices in your organization.Worldwide competitive pressures necessitate greater contribution from the purchasing andsupply management functions, procurement practices and suppliers to improve the organizationsrelative position on quality, price, technology, and responsivenessthat doesnt mean sittingaround and waiting for it to happen!

Here are some fascinating general observations based upon recent purchasing analysis:

Each day, buyers spend hundreds of millions of dollars which can account for anywherefrom 20-70% of an organizations revenue, budget, or sales dollar.

An analysis of payments has shown that, in most companies, 50-60% of the numbers of checks to vendors are of payments of less than $500.

These payments often represent less than 5% of the annual material expenditures.

The payments under $1,000 represent the disbursements and approximately 10% of thedollars.

LO4.3 What are some of the factors that must be considered when improving logistics and procurement practices in your organisation?


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LO4.3 What are some of the factors that must be considered when improving logistics andprocurement practices in your organisation?

Procurement is a key activity in the supply chain. It can considerably influence the overallachievement of an emergency response depending on how it is managed. In supply chains,

procurement grabs a very large proportion of the total spend and should be managed effectivelyto achieve optimal value. It serves three levels of users:

1. The internal customer.

2. Programs in response to emergencies and ongoing programs.

3. Propositioning of stocks, for both internal customers and program needs.

Some of the factors that should be considered to improve logistics and procurement practicescould be:

o Establishment of supply chain management council: A council's purpose is to givedirection and help align supply chain strategy with the company's overall strategy.

o Proper alignment and staff the supply chain organization

o Use of technology

o Establishment of alliances with key suppliers

o Engage in mutual strategic sourcing

o Focus on total cost of ownership, not price

o Optimize company-owned inventory

o Establishment of appropriate levels of control and minimize risk

LO5In your different groups

LO5.1 Plan a strategy to improve an organizations supply chain.This strategy (as is shown in diagram) was devised using a multi-tiered approach. TheDepartment brought together subject matter experts from component agencies and divisionsincluding the USCG, CBP, TSA, DHS Policy, Science and Technology, Domestic Nuclear Detection Office, Grants and Training, and Preparedness to make an initial draft of the strategy.

This draft was then subjected to an extensive review process involving internal staff across theDepartment, interagency reviews with non-DHS agencies, consultation with the private sector through advisory committees, including: the National Maritime Security Advisory Committee


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and the Commercial Operations Advisory Committee, and consultation with international trade partners, principally selected by volume of trade with the United States (e.g., APEC).

After a final round of corrections, taking into account the recommendations and requests of thereviewers and consultants, the strategy subject to a formal review by DHS components and

submitted for formal Department review.

Following initial release, further consultation in developing the final strategy is expected with:

The private sector through formal trade organizations (e.g., the World Shipping Counciland Port Authorities, including coastal and inland ports).

State and local stakeholders.

International organizations, including the IMO, the WCO, the International Labor Organization, and the International Organization for Standardization.

LO5.2 Assess how a supply chain improvement strategy will benefit overall businessperformance in the organization.

Supply chain improvement strategy can help in the following ways:


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1. Improved Supply : Supply chain management software provides inclusive, 360-degreevisibility across the entire supply chain network. It allows users to track the status of allactivities across all suppliers, production plants, storage facilities, and distributioncenters.

2. Minimum Delays: Many supply chains are overwhelmed by delays that can result in poor relationships and lost business. With supply chain management software, allactivities can be flawlessly synchronized and executed from start to end, ensuring muchhigher levels of on-time delivery across the board.

3. Improved Collaboration : This type of direct, unrestricted communication and data-sharing helps to keep all key stakeholders informed, so that supply chain processes canrun as smoothly as possible.

4. Reduced Costs: Supply Chain Management software can help reduce overhead expenses

in lot many ways.LO5.3 Explain how barriers will be overcome in the organisation when implementing asupply chain improvement strategy.

Businesses require effective tools for supply chain management. The supply chain is generallyunpredictable and always dynamic, and ineffective supply chain management means poor

business performance. Conventional software solutions to the supply chain management problemhave proved reasonably effective, but they have been incapable to render data visible,manageable and handy. Some renowned IT companies provides an integrated software

application that enables supply chain managers to identify and remedy issues effectively andefficiently, keeping information organized and at hand.

Companies can use such solutions to connect supply chain data to other enterprise applications,including finance, HR, CRM, and external data. In this way, they can not only improve the

performance of a supply chain, but integrates an entire company into a single source of mission-critical information, effectively increasing not only performance, but the value of existing ITresources.

References1. Burgess, R. (1998), Avoiding supply chain management failure: lessons from business

process re-engineering, International Journal of Logistics Management , Vol. 9, No. 1, pp. 15-23.

2. Kanji, G. K. (Ed.). (1995). Total quality management proceedings of the


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first world congress. Boundary Row, London: Chapman & Hall.

3. Kanter, R. M. (1989). When Giants Learn to Dance. (W. D. Hitt, comp.) New York:Simon and Schuster.

4. Sink, D. S. (1985, January). Strategic planning: A crucial step toward a successful

productivity management program. IE, 52-60.5. Sink, D. S., Morris, W. T., & Johnston, C. S. (1995) By What Method? Norcross, GA:Institute of Industrial Engineers.

6. Ala-Risku, T., Krkkinen, M. and Holmstrm, J. (2003), Evaluating the applicability of

merge-in-transit: A step by step process for supply chain managers, International Journal

of Logistics Management, Vol. 14, No. 2, pp. 67-81.

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