Demand in Discrete Manufacturing - Research Paper Example

Industrial/Discrete Manufacturing Section Analysis Demand is well-known to be the driving factor of any business. Fluctuations in demand patterns differ significantly between industries (Agarwal 2). The clothing industry, for instance, is subject to substantial demand adjustments driven by seasonality as well as business cycles, while the diaper market benefits from a relatively steady demand. One would be expecting players in various retail supply chains to habitually misjudge demand, creating shortages or inventory surpluses at diverse stages in the supply chain. Changes in demand patterns also affect the supply chain of different manufacturing environments. These environments are, for instance, Make-to-Stock environment, Configure-to-Order environment, and Engineer-to-Order environment. The changes, however, can affect the supply chain of a business environment either positively or negatively. It is, therefore, vital for any business to be capable of recognizing the factors that affect the demand patterns and distinguish whether the patterns affect them positively or negatively (Agarwal 2). Findings When demand for products decreases, the supply of the products also goes down. This happens in any manufacturing environment, Make-to-Stock, Configure-to-Order or either Engineer-to-Order. Make-to-Stock is a manufacturing environment that mostly depends on consumer demand forecasts. This means that if demand for goods is low in the Make-to-Stock, then supply will also be low since no goods will be distributed due to the low demand being experienced. Configure-to-Order permits a customer to choose a base product and organize all the variable parameters linked to that product. Engineer-to-Order, on the other hand, refers to a world that allows companies to build unique products that are designed to their customers’ specifications. Demand for the latter two also affects demand since if their demand decreases, business for the manufacturers will also go down (Agarwal 3). Recommendations Manufactures could impose various rules that could help deal with the changes that take place in demand patterns. Manufactures should increase their frequency and quality of teaming up through joint demand information. They should do away with inventory replenishment methods that put demand lumps into the supply chain. They should also do away with incentives for consumers that directly create demand accumulation as well as order staging before a replenishment request like volume transportation discounts. Manufactures should also try to understand product demand patterns at every stage of the supply chain. They should minimize the cycle period of receiving projected, plus actual demand information. Manufactures should identify and eliminate the causes of client order decrease or cancellations. They should, finally, offer their products at consistent prices to reduce buying surges that are created by temporary promotional discounts (Agarwal 3). Conclusion For Make-to-Stock manufacturing environment, which are incorporated in diverse supply chains, the production activities and plans are based on demand forecasting from consumers. The products are supplied by stock inventory. Make-to-Stock policies stress on the immediate delivery of products, reasonable prices, as well as superb quality and standard products. The consumers expect that holdups of the products are inexcusable. As a result, the supplier must maintain adequate stock. For Configure-to-Order and Engineer-to-Order manufacturing environments, the manufacturers should maintain a friendly customer base since their sales do not depend on how well they are renowned, but how a customer likes their products (Agarwal 5). Section 2 Analysis A silo behavior refers to the behaviors that companies have of keeping goods for a long period instead of putting them out to the market. The two obvious reasons for this behavior are because the companies anticipate a future price increase of the commodity that they are holding back, or the demand for the goods has decreased. As companies seek to blend Business Process Management (BPR), which wants to achieve both short and long-term benefits, they should appreciate the need to involve diverse people and to reason differently concerning these projects than before. The question is whether holding products back due to a decrease in demand, or expectation of higher prices in the future is helping the economy positively or negatively. Even though, holding the products back will help the company in achieving higher profits in the future and avoid wastage, it still has a serious effect in the market (Agarwal 6). Findings Companies shy away from putting out their goods in the supply market because they anticipate a future increase in the prices of the goods. This is because they want make higher profits in future than before. They do this because no harsh rules are imposed on any company that decides to hold back its products. No matter how vital a product is to the market, it is up to the firm that is producing the product to decide whether or not they will put it in the market. Cases like this are now on the rise as every large company wants to make maximum profit as much as possible. They, therefore, do not take into consideration the consumer who might be suffering since he or she is lacking the product. The key people to consult in this matter are the company owners since the “selfish” behavior arises from them (Agarwal 7). Recommendations Many company leaders consider that conflict management is the key to solving the silo behavior. They want competing departments to cut down their supplies, believing that this will deal with the problem. These same company leaders are not capable of seeing the contributing factor as well as the strategic role they must perform to transform this silo dynamic. In order to solve the silo dynamic, departments in the firms need to stop competing with one another. This is for the good of the business. Silos in companies do no good, but instead they separate the consumers from the company. A company should, hence, avoid forming a silo at any cost. Firms should be aware that silo behaviors are self-inflicted, and the people who bring this up should be terminated from the firm. Even though, internal competition can be healthy in the productivity of a company, workers of the firm must not take it to a point that brings conflict in the company (Agarwal 7). Conclusion Companies should seek to support workers internally, up from management to the subordinate workers. Even though competition among workers of the same company is healthy, the management of the company should make sure that the competition is not taken to the level where it brings conflict in the firm. It is vital that all the workers are encouraged to work for the gain of the firm, but not for their own personal benefit. This is what will bring achievement to the company. Section 3 Analysis Cost elements refer to what classifies a company’s valuated consumption of production factors in a controlling area. Total cost of ownership, on the other hand, refers to a financial estimate whose aim is to help companies, as well as consumers, determine direct or indirect costs of a system or a product (Agarwal 14). Some of the cost elements that are available are primary cost revenue elements as well as secondary cost elements. In order for a company, to achieve its financial goals, it needs to select a proper cost element that will ease its total cost of ownership. Some companies do not take this into consideration, and they find it had to adapt in the supply chains. This reduces their chances of growing into a big company, or if the company is already renowned then its publicity will decrease. Findings A primary cost and revenue refer to the cost as well as the revenue-relevant item in the chart of accounts in which an equivalent ledger account is present in financial accounting. Firms can only create a cost and revenue element if they have defined the elements as ledger accounts in the chart accounts. They also need to shape the two elements as accounts in financial accounting. Secondary accounts, however, can only be created and administered in cost accounting. Secondary elements portray value flows, for instance, those that are found in internal activity allocation, settlement transactions, as well as overhead calculations. Majority of the companies seek to reduce their total cost of ownership, but still want to thrive in the supply chain (Agarwal 16). This could be done if the companies only realize how to manage their cost elements. Recommendations Any cost element that a company puts to practice will bring positive changes to the company. This is only if the company imposes the correct rules that go with the cost elements. Determining cost-to-serve requires a clear structure in order to set precise definitions that enable accurate measurement. Data that should be considered when creating a Cost-to-Serve framework is like raw material costs, packaging cost, conversion cost, production cycle, demand volatility, as well as forecast accuracy. With these factors in mind, any company could anticipate flourishing in the supply chain. A Cost-to-Serve framework can be a key factor in the supply chain if the correct factors that affect the Cost-to-Serve are put into practice (Agarwal 16). Conclusion In conclusion, a company should realize that if it wants to achieve its high goals, then it should look to introduce the proper cost elements as well as the factors that affect a Cost-to-Serve framework. Work Cited Agarwal, Paritosh. Supply Chain Management (Cracking the bullwhip effect): An Approach Paper. NP, 2011. Web. Read More