Challenges of Integrated Supply Chain Management - Essay Example

Business Management The Integrated Supply Chain Improving an existing supply chains within any organisation can be fraught with difficultiesespecially as, within the modern world, commercial organisations are valued by speed of operations. This means that supply systems have to be integrated to ensure maximum efficiency. Even within the smallest organisation there are numerous factors outside of the control of the business to contend with. Within this study we attempt to identify the difficulties faced when a company is seeking to improve their supply system and create an integrated process. As an integral part of this study, research has been carried out to evaluate the techniques and tools that are available to organisations to assist them with a smooth transition from their current procedures towards a totally integrated Supply Chain. . Business Management The Integrated Supply Chain What key issues face an organisation when they attempt to improve their supply chain process? How do they evaluate what such problems are? There are a number of views on the techniques and tools available to assist with this process, but the major decisions facing the business is which of these will assist them in making the transition from a current position to a fully integrated system. In simple terms the supply chain is the link from supplier, through ones organisation to the customer. In other words how to start with raw goods, manufacture them into a finished product and selling that finished product to the consumer. The difficulty is exactly where one should start the chain and where it should end. Does it start with the supplier, or the suppliers’ supplier? Similarly is your customer the end of the chain, or is it their? Mark Fox (2004). However nothing is that simple. In the modern world most organisations will have a multitude of suppliers of varying sizes and a complex customer chain. The art is constructing the most efficient and cost effective integrated supply chain for your organisation and, through delegation of responsibility, ensure that your immediate suppliers and immediate customers are managing their own supply chains with equal efficiency. In terms of supply, businesses are faced with differing levels of quality in terms of their own supply chains. Small, owner operated, businesses will experience different supply problems to that of larger organisations and these will need to be identified. (National Research Council 2000) With the advent of globalisation the difficulties are further exacerbated by the position of the supplier. One of the main difficulties facing an organisation that constructs a product relates to the number of supplies they need in order to access all the component parts required to construct the finished product. The difficulty is ensuring that all of the components arrive in good time to be linked smoothly into the production process, thereby avoiding the quality problems inherent with pausing production processes, Carol A. Ptak (2004). As an integral part of this process, quantity of supply is important. A major disruption occurs when quantity and flow of components is interrupted. This is where efficient ERM1 is essential, Dimitris N. Chorafas (2001) The next step in the chain is the production itself. The business needs to ensure that, for maximum efficiency the process is prepared to take the components on delivery, manufacture the product and output the finished product all as part of a seamless process. At the other end of the chain lies the customer, one of the most important factors of the business. Without customers the business ceases. CRM2 is an essential element of the supply chain process. Knowing what the customer wants, when they want it and the quantity they require will impact on the supply and production links of the supply chain. As with the raw material aspect of the supply chain, quantity and timing of supply to the retailer or consumer is equally important. Intimate knowledge of customer needs is essential, IT Director.com (2000) Between supplier and producer, and between producer and customer there is another important aspect of the supply chain, distribution and delivery. It is pointless having an efficient supply chain if the process is process is corrupted by the delivery system from supplier to producer. Similar there is no point in outputting x number of finished products if the warehouse and distribution service to end user can only cope with y number of products. All of these elements come together to make the complete Supply Chain (see appendix figure 1). The techniques and tools available for use in creating an integrated Supply Chain system are many and varied. As modern technology has virtually destroyed the need for paper generated and manual systems, it is not intended to discuss those here. The obvious route for solving supply chain difficulties is via a computerised system. But what are the elements that this requires? H.L. Lee and S. Whang. (2001) Firstly, and especially important if you have intentions of taking advantage in the global marketplace, whatever system chosen need to have network and Internet access facilities. Then it needs to have the ability to offer access by your supplier, distribution centres and customers. From the supplier point of view, when your stock system flags a requirement for components, you should be able to electronically signal the requirement to the supplier who can check his records. If the part is available he will then signal that fact together with the delivery schedules. Your business will be able check the progress of the delivery at all times and thus time your production schedules to integrate with delivery. In turn you, as the supplier to your customer, will be able to offer the same facilities to your customer. Incorporated within the system will be the e-mail messaging process, which allows for updates on progress and general communication with other in the chain. In addition you can use these systems as part of your e-business marketing programme, advising customers of new product lines and other important information. Results The results of our research have proven how important an integrated Supply Chain is to any business. In the current climate of global sourcing and selling, the use of Internet and precision supply chain software enables a business to keep up to the minute information and allows for immediate reaction time to resolve any issues that arise. In addition to the technology employed to achieve maximum efficiency in the system, it is important to recognise the role that the human element plays in the process. The best systems in the world crash because of lack of knowledge or experience of the operators. Therefore staff training is essential, and as an extension of this, training by explanation of your systems to both the supplier and customer end of the chains. If suppliers and customers fully understand your supply chain process and demands, and your staff are trained to delivery results in the most effective manner, your business is close to achieve an optimum level of supply chain integration and operation. Our recommendations therefore, are that to integrate your supply chain system effectively, you will need to install a computer based software package, but one that is capable of being accessed via the Internet as well. This way your supplier will be able to react instantly to your needs and requirements and your customers will be able to inform you of their changing requirements, the result being that your business will be capable of smooth transition to changing requirements. Discussions Like all other aspect of business, the Supply Chain is not a system that can be put in place and then left to operate on its own. It is a process of continuing evolution. David Simchi-Levi et al (2002). With the modern emphasis on quality of service as well as the finished product it has also become an integral element of the business profile. As Bob Moffat, VP of IBM stated. “The supply chain can be a competitive advantage. It’s not just a cost of doing business any longer. Therefore in our opinion it should become an integral element of the overall business management, linking with costing, R.B. Handfield and E.L. Nichols Jr (2002) It will impact on, and be affected by, the accounting procedures, statistical quality controls and, of course, outside forces such as fluctuations in the marketplace, technological, material and scientific innovation and political climates. The most essential element of your integrated supply chain process in our opinion therefore rests with its flexibility. The more flexibility, the better placed you will be for reaction. References Bagchi, P.K. and Ha, Byoung Chun. (2004) Supply Chain Integration in Europe. A Status Report. Boyer, K and Frohlich, Markham and Hult, G.T.M. (2005) Extending the Supply Chain. Amacom. Chorafas, D.N. (2001). Integrating ERP, Supply Chain Management and Smart Materials. Auerbach Publishers INC. USA Commission on Engineering & Technical Systems National Research Council. (2000) Surviving Supply Chain Integration: Strategies for Small Manufacturers. National Academy Press Flaherty, M.T. (1996). Global Operations Management. McGraw Hill Fox, Mark. S. (No date) The Integrated Supply Chain Management Project. Department of Industrial Engineering, University of Toronto. Frohlich, Markham, T. (2002) E-integration in the Supply Chain: Barriers and performance. Decision Sciences. Handfield, R.B. and Nichols Jr, E.L. (2002). Supply Chain Redesign – Transforming Chains into Integrated Value Systems, Prentice Hall. London. John, M.E. (2000). Break it Up – Supply Chain Management in the New Economy. In CIO Magazine. Lee, H.L. and Whang,S. (2001) E-business and Supply Chain Integration. Stanford University. Moffat, B. VP IBM. (no date). Connecting to Value. http://www-306.ibm.com/e-business/ondemand/us/growth/moffat/moffat_flat.shtml Ptak, Carol.A. (2004) ERP: Tools, Techniques, and Applications for Integrating the Supply Chain. St Lucie Press. Florida. Simchi-Levi, D. and Kaminsky, P. and Smichi-Levi, E. (2002) Designing and Managing the Supply Chain. McGraw Hill Unknown (2000) Supply Chain Integration. Article Published in IT Director.com Vrijhoef, Ruben and de Ridder, Hennes. A.J. (2005) Supply Chain Integration for achieving best value for construction clients: Client-driven versus supplier driven integration. Article for RICS. Figure 1 Read More