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Supply Chain Management under Porters Five Forces Model - Research Paper Example

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This research paper stresses that in the automotive supply chain, the bargaining power of suppliers is relatively low under Porter’s Five Forces model. This gives major auto companies the ability to dictate quality standards such as those in ISO and QS9000. …
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Supply Chain Management under Porters Five Forces Model
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Download file to see previous pages This paper declares there is a system in inventory control referred to as the two-bin system, consisting of a bin for producing materials and a back-up containing these same materials. By adopting a just-in-time methodology, when the main production bin becomes depleted, it is quickly replaced by the back-up. It is at this point when materials are reordered to replenish the main bin. What this will do is reduce the carrying costs of raw inventories, moving from a monthly replenishment system to a daily system that would streamline ordering of raw materials and subsequently allow for better predictive procurement. Implementation of an appropriate BRP system, such as SAP, would automatically calculate movement of materials for production, thus offering a model for procurement based on tangible, quantitative inventory usages. BRP as it relates to the two-bin system would provide the flexible feedback mechanism required for accurate inventory control. HMC should also work on developing relationships with the supplier corporate culture through transverse coordination innovation. This is a relationship marketing concept designed to remove communication barriers between up-stream suppliers and down-stream buyers with a focus on more coordination and partnership. HMC needs to establish mutually-beneficial alliance functions and negotiations throughout the supplier network to provide production/operations training to other corporate cultures and work together to develop a more responsive supply chain and supporting contract negotiation. The four drivers of supply chain management The four drivers of SCM include outsourcing, globalization, supply and demand risk, and product life cycle in the sales market. With new automotive contracts, the product life cycle is limited due to model changes and new structural best practices for automotive products. Thus, assembly will require a continuous adjustment methodology to existing assembly lines and machinery standards. This will somewhat limit the ability to consider long-term procurement and maximize production space and efficiency. This should be recognized when conducting quantitative quality planning, procurement models and predictions, and process controls.
From this study it is clear that HMC is not in control of these customer-driven aspects and must be flexible and adaptable to changing production design. However, globalization provides new opportunities for reducing pricing in the supply chain by considering supply alternatives and negotiating contracts with foreign manufacturers for non-automotive production (since these are guided by ISO or QS9000 standards). HMC is in a position to outsource assembly. For non-automotive parts, HMC could consider researching assembly partnerships for semi-finished assembly that can occur in foreign countries with lower labor standards and lower fair wage practices. This would reduce a percentage of labor costs, procurement costs, and allow for production space maximization in certain assembly areas. ...Download file to see next pagesRead More
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