Supply Chain Management of a Company - Assignment Example

?Supply chain management –article analysis Meeting demands with supply is the basic goal of every market. Reaching the equilibrium point is the finalproblem to be solved in basic economics. Whenever there is an excess demand or supply in the market, the forces act in order to get rid of the excess inventory or to meet the excess demand. For a firm, which operates globally, resolving the problem of demand, supply uncertainties is a crucial problem to be tackled and also a strategy to gain larger market share. The paper undertakes an analysis of four different articles centering on supply chain management and dealing with the demand supply uncertainties. The first article “Aligning Supply Chain Strategies with Product Uncertainties” by Lee discusses theoretically the process involved in supply chain management and the factors, which necessitates the same. The article elaborately discusses the risks in production entailed by demand and supply sides. The center point is supply uncertainties that thereby leads to reinforce the necessity of supply chain management. The second article ‘Avon gets its Makeover’ by Cohen and Roussel point out how Avon, a global cosmetics firm has reformed the infrastructure in its manufacturing and transportation base using an end-to-end approach and the benefits which resulted form this step. The third article ‘Making Supply Meet Demand’ by Fischer, Hammond, Obermeyer and Raman focuses on the errors in forecasting and other means of uncertainties affecting demand supply interaction. The fourth article ‘Mass Customization at’ by Feitzinger and Lee explains the strategies employed for mass customization. All four articles also incorporate the role played by information in supply chain management. Demand-Supply interaction and supply chain management Managing supply chains is closely associated with demand related uncertainties. Supply Chain Management is an integrated set of complex operations needed for a business to succeed in a competitive atmosphere. Efficient supply chain management functions practiced by a company help it in achieving several business objectives. It helps in reducing the cost of operations, improving the quality of the products and services rendered and in maintaining efficient delivery system. Moreover effective supply chain management practice promotes the system of spontaneous innovation taken by a concern. Effective supply chain management helps in the augmentation of the value and quality of products through proper forecasting of market demand and thereby making necessary replenishment (Fischer, Hammond, Obermeyer and Raman). The challenges and benefits of supply chains should be closely studied before any practical strategies are framed and Lee successfully explore that focusing on the uncertainties on both demand and supply sides. Management of supply chains have been more complicated owing to the shortening of life cycles of a product, expansion of business worldwide and persistent up gradation of information technology. The main indicators of the health of supply chain are its market position, inventory, customer service, cost and returns on assets. One important thing must be noted here. Every product or segment cannot have the same kind of supply chain management and a market with unstable demand or uncertain supply source cannot be managed in the same way as that with a stable demand and supply dynamics. For instance products, which are functional, might have lesser uncertainties in demand structure than those that are innovative in nature (Lee). The distinction on grounds of predictability can also be made on grounds of accurate response. Fischer, Hammond, Obermeyer and Raman discuss different models for forecasting demand and consequently supply. The products, which are functional in nature, can be forecast without much risk of deviation (Lee). An instance of a successful supply chain management might be found in case of Avon. The company undertook an end-to-end supply chain structure where it could see the entire chain as one. A brilliant example of this might be cited from the labeling of bottles, which were previously pre-printed by the suppliers of Avon. But this resulted in undue delay and inventories owing to the changes and additions of languages as the markets spread to different regions across the word. Marketing segment thought that the look would suffer and from financial point of view, this would be a little costly. Yet it showed instant benefits to the company and this postponement strategy (the local warehouses labeled the bottles which were otherwise purchased in plain form from the suppliers) became a success. Through the example of Hewlett Packard Feitzinger and Lee illustrates the key points of mass customization agenda. Segregating the product into independent components or parts might help their integration smooth and cheap. Even the process of manufacturing a product might be broken up into independent parts such that they might be arranged and rearranged in order to suit different systems of distribution. The framework of supply and the inventory along with manufacturing and distribution facilities need to be so designed that customization might be conceptualized in a cost effective way. Secondly, the framework might be flexible and sensitive to the orders of every customer such that the customized products can reach the user end as quickly as possible. Importance of information in supply chain management The key role of information is its assistance in forecasting and therefore predicting demand so as to manage the supply side. One on hand information helps in forecasting and on the other it helps in curbing the problem of inadequate inventory. The basic information required for effective forecast is that of predictability of demand. Once it is known which products are predictable and which are not, production patterns can follow suit. For instance unpredictable products should be produced in smaller quantities compared to the predictable products and after observing the sales response the future forecast might be performed. Information on lost sales is important to bring about accuracy in response (Fischer, Hammond, Obermeyer and Raman, 92). Here the authors carefully relate the importance of information and the response time in the supply chains in order to provide a guideline to bring a balance between the two. In a world where information technology is getting upgraded almost on a regular basis, it is important to incorporate the same in the supply chain framework. Cohen and Roussel points out that Avon which believes more in process laden framework rather than systems ridden have been facing a problem in integration. Hence having a complicated response and timing structure driven by process without information technology could be exasperating for a firm (Cohen and Roussel 6). However the authors do not elaborate on the details of the problems that a company might face without an inbuilt information technology to handle the complicated structure of end-to-end supply chain. Lee uses a simplistic approach to identify the importance of information sharing in the supply chain structure and more specifically the importance of Internet, which helps in staying connected in real time. Sharing knowledge and information would be the essential components of supply chain management and help in reducing uncertainties (Lee, 105-106). Feitzinger and Lee illustrate the role of information in mass customization. According to the authors it is difficult to decide the customers’ preferences at the beginning and the end of life cycles. Four different groups act in unison to decide this. First, marketing helps in identifying the level of customization required by customers. The research team identifies the ideal design, which can ensure timely delivery of the customized product. Manufacturing and distribution teams help in coordinating the redesigning and supply of products while the finance team provides the cost related information and different financial alternatives (Feitzinger and Lee 118). The authors provide the instance of Hewlett Packard to illustrate the function of these groups in the decision making process. In conclusion therefore one might say that the four articles focus on the common themes of demand supply uncertainties, which lead to the importance of supply chain management in business houses and the role of information in effective supply chain management. Information technology and its constant upgradation have posed a challenge to the firms’ management of supply chains. Therefore adequate training of employees to meet the management strategies should also be focused upon. The firms should focus on maintaining efficient database and circulating knowledge such that proper coordination between the stages of production might be maintained with a focus on lowering of cost and increasing market benefits. Adequate level of integration of the different components of supply chains should be maintained for an efficient functioning and expansion of businesses. Works Cited Lee, Hau L. “Aligning Supply Chain Strategies with Product Uncertainties”. CALIFORNIA MANAGEMENT REVIEW, (SPRING 2002) 44. 3, 103-119 Fisher, Marshall L. Hammond, Janice H. Obermeyer, Walter R. and Ananth Raman, “Making Supply Meet Demand”, May-June, 1994. Feitzinger, Edward and Hau L. Lee, Mass Customization at, HARVARD BUSINESS REVIEW , January-February 1997 Cohen, Shoshanah and Joseph Roussel, “Avon gets its Makeover”, Fortune, November 1, 2004. Read More