Defining Supply Chain Management - Case Study Example

Running head: B2B implementation: C4U Case study B2B implementation: C4U Case study s Introduction to Company: 'CardsForYou' (hereafter 'C4U') is a company employing 50 people, based in the SouthWest region of the UK. Formed by John Jones and Stan Smith in 1990, C4U specialise in manufacturing greeting cards for birthdays, anniversaries, and other special occasions. What makes C4U's products special is their unique quality: each card is 'hand-made', involving the mounting by hand of a silk embroidered design on a series of quality cardboard backings. While the embroidery is done by computerised machinery, John, a trained artist, creates each design. This enables C4U to claim that their cards are 'crafted in the West Country'. This notion of the 'personal touch' has been successfully combined with a series of designs drawing upon floral and other motifs from the 'natural' landscape such as animals and rustic scenes (e.g. meadows, the seaside) to provide C4U with a product portfolio that sets them apart from other card manufacturers. Indeed, they even sell separate picture frames to accompany the cards, so that the recipient can keep them after the occasion in question: in this way, the product is 'more than just a card'. Importance of Change management: "Back in 1970 Alvin Toffler in Future Shock (Toffler, A. 1970) describes a trend towards accelerating rates of change. He illustrated how social and technological norms had shorter life spans with each generation, and he questioned society's ability to cope with the resulting turmoil and anxiety. In past generations periods of change were always punctuated with times of stability. This allowed society to assimilate the change and deal with it before the next change arrived." (Wikipedia, 2007) Discussion: In the volatile business environment of the 21st century the most important requirement for C4U is constant changing and updating with the external conditions. Change can be referred to as Internal, External, and business process re-engineering and transformation programs. The external change includes the changes in market, technology, and competitive environment, global and political environment etc. Since the trends in the cards industry is changing the company should also adopt these changes. Internal changes involve the actions, which the organisation has to take in order to put up with the external changes. These include the business restructuring and the transformation programs. The well-planned strategy to undertake change combine all of the above elements in the suitable ratio to undertake the process effectively and in timely manners. On the other hand an unplanned change introduction can worsen the things rather than improving. Therefore it is important for the leaders and mangers at C4U to undertake the change activities in a strategical way to reap the fruit of change introduction in the organisation. A change project undertaken without a suitable strategy can increase the operating cost of the business without improving the operations and performance of the business. In the globalised era when most of the business organisations are involved in different business activities it has become inevitable for the firms independently perform all the functions. Most of the companies do not operate their supply chain and rely on other firms to perform the multi-faceted tasks. The successful and efficient combination of the operations of these firms provides the company with the competitive edge in the market. (Cook, DeBree, and Feroleto, 2001). The company can also expand its market by forming a partnership with other distribution firms. Lummus and Vokurka (1999) points out towards the need for the managers to understand the performance of all the stake holding firms in the supply chain. According to (Pohlen, 2003), this insight in the performance of each firm will enable the managers to develop measures in order to fulfil the demands of the customers. The main task of the supply chain management is to develop a strategy which can cater the need of the customers and is aligned with the company objectives (Pohlen, 2003). In this lieu it is important for the mangers to keep on measuring the performance of different parts of supply chain (Deloitte, 1999). It has been a proven fact that the improvement in the company's performance cannot be undertaken with out improving the performance of its suppliers (Lummus, Vokurka, and Alber, 1999). The planning and information taking activities can be easily performed by the operations managers and senior executives it they have an up to date information regarding the performance of different supply chain firm and stake holders and the resources available to the firm. Authors (La Londe and Masters 1994; Lambert, Stock, and Ellram 1998; Mentzer et al. 2001) regard a supply chain as a set of firms involved in the upstream and downstream flows of products, services, information, and/or finances. Mentzer et al. (2001, p. 4) described a supply chain as "a set of three or more organisations directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer." Thus, the nature of a supply chain is comprehensive so that membership is not limited to a supplier, a manufacturer, and a distributor, but open to any firm that performs various flow-related services (Mentzer et al. 2001). The notion of production management has been transformed from the manufacturing activities and has expanded to activities as purchasing, warehousing, transportation, and other operations from the procurement of raw materials through various activities until a product in available to the buyer. The notion includes the process of delivering the services to the customers with the products. With the changing time the aspects covered are increasing, the process now also includes R&D, value creation, marketing management, sales activities, accounting and finance. The operation management model constitutes of inputs and outputs. The list of inputs include, 1. customer needs 2. Information 3. Technology management 4. Fixed assets of the business 5. Human capital 6. Variable assets related to transformation process. Information and the physical factors play an important role for managers in order to produce outputs. Most of the physical assets remain unchanged. These include buildings, land, manufacturing plants, warehouses etc. Planning, operating and controlling are the important constituents of transformation process. The improvement in the system is also an important aim of the model. Outputs consist of products and services and may even be information, such as that provided by a consulting organisation. (Koontz and Weihrich, 1994; p 633, 634) The international sourcing policy effects the corporate, marketing, purchasing, and other strategies. It is important for the firm to connect the future objectives with corporate objectives and strategy. The purchasing function should also be undertaken in order to support the corporate objectives. It is often observed that the purchasing functions in the firms are undertaken without gathering proper and enough information. Also the purchasing decision of most of the companies are not undertaken in the line of the strategy of the company. It is also important for the companies to undertake strategic planning while undertaking the purchasing decision. Most of the researchers emphasise the need of aligning the purchasing function with the firm's strategic planning process. In order to undertake effective planning according to the company's goal it is important to plan and implement strategic planning more effectively at the departmental level. Some of the researches also pay great attention in establishment of the link between the customers and the suppliers as part of their purchasing strategy. The raw material purchasing decision in the right direction will help the company in acquiring the market leadership through cost reduction. "Purchasing contributions to corporate strategic planning include the following: monitoring supply market trends, interpreting the impact of these trends on the firm, identifying the materials and services required to support company and strategic business unit strategies, and developing supply options." (Ellram and Carr, 1994) SWOT ANALYSIS OF CARDS INDUSTRY Strengths Weaknesses Opportunities Threats *Increase in the retail outlets all over the country. *Improvement in the efficient production through the installation of highly advanced production and distribution techniques * Saving the business loss due to the time taking travel to the employment places from the residence. *Helping in improvement of Supply chain of production sector by providing efficient transport through vehicles. . *The increased cost due to the technology implementation at wider level. *Conservative thinking of the board members. * Increase in the overall cost of production of Goods due to increased transportation cost. *Division of the company into small groups. *Increase in business through the introduction of B2B. Capturing global market as a growing market opportunity with some of the countries by the implementation of B2B. *Clear understanding of the customer's perception through a double looped information system. * Failure to update the system according to the changing technology. *Increase in the cost of production due to increase in the cost of raw material. Business to Business (B2B): "Although the business-to-consumer (B2B) market grabs more of the news headlines, the business-to-business (B2B) market is considerably larger and expected to grow much more rapidly. Business-to-business e-commerce offers enormous opportunities. It allows manufacturers to buy at a low cost world-wide, and it offers enterprises the chance to sell to a global market right from the start. Moreover, e-commerce offers great promise for developing countries, helping them to enter the prosperous global marketplace, and hence helping reduce the gap between rich and poor countries. The rapid development of e-commerce presents great challenges to society. Even though e-commerce is creating new job opportunities, it could also cause a loss of employment in traditional job sectors. Many companies may fail in the intense competitive environment of e-commerce and find themselves out of business. Therefore, it is vital that the opportunities and implications of e-commerce be understood." (Stair & Reynolds, 2001) B2B E-commerce and the Impact on Industry Structure: The most important characteristic of the B2B e-commerce is that it has changed the way the procurement activities undertaken by the intermediary firms. Although the online competitors are not wholly replacing the traditional intermediary firms but still they are giving tough competition to the traditional competitors. They have the cutting edge of speedy and easy to reach service. These intermediary firms are also using the electronic media as a way of optimising their services. There are many techniques, which can be undertaken by the management in order to improve the quality of management process. Some of them are described below. Time-Event Networks: Time network analysis is a logical extension of the famous Gantt chart. Often referred to as the program Evaluation and Review Technique (PERT) an in its essentials as the Critical Path Method (CPM), this technique of planning and control has wide potential use in many applications. But PERT and its various refinements, like PERT/COST, have considerable potential for use in many aspects of planning and controlling operations (Koontz and Weihrich, 1994; p.648). Value Engineering: A product can be improved and its cost lowered through value engineering, which consists of analysing the operations of the product or service, estimating the value of each operation, and attempting to improve that operation by trying to keep costs low at each step or part. The following specific steps can be taken in order to improve the supply chain. 1. Identify the costs for each part and operation. 2. Identify each part's relative contribution value to the final unit or product. 3. Find a new approach for those items, which appear to have high cost and low value. (Koontz and Weihrich, 1994; p.648) Work Simplification: Work methods can be improved through work simplification, which is the process of obtaining the participation of workers in simplifying their work. Training sessions should be conducted in the company to teach concepts and principles of techniques such as time and motion studies, workflow analyses, and the layout of the work situation. (Koontz and Weihrich, 1994; p.648) Quality Circles The supply chain management should establish a group of people from the same organisational area who meet regularly to solve problems they experience at work. (Goldstein, 1985; p.504-517) Members should be trained in solving problems, in applying statistical quality control, and in working in-groups. A facilitator should work with each group consisting of six to twelve members. The QCs may meet 4 hours a month. Although QC members may receive recognition, they should also receive monetary rewards. Quality circles should evolve from suggestion programs. In both approaches, workers will participate in solving work-related problems. Although in suggestion programs the problems are usually quite specific, those dealt with by quality control circles are often more complex and require the involvement of several team members. The team should consist primarily of rank-and-file workers and sometimes it can also include supervisors. (Koontz and Weihrich, 1994; p.649) The Concept of TQM: TQM is defined as both a philosophy and a set of guiding principles that represent the foundation of a continuously improving organisation. It is the application of quantitative methods and human resources to improve all the process within an organisation and exceed customer needs now and in the future. TQM integrates fundamental management techniques, existing improvement efforts, and technical tools under a disciplined approach. (Besterfield, Michna, Besterfied & Sacre, p.1) Possibilities for improvements of the downstream supply chain: TQM is based on a number of ideas. It means thinking about quality in terms of all functions of the enterprise and is a start is a start-to-finish process that integrates interrelated functions at all levels. It is a systems approach that considers every interaction between the various elements of the organisation. Thus, the overall effectiveness of the system is higher than the sum of the individual outputs from the subsystems. The subsystems include all the organisational functions in the life cycle of a product, such as (1) design, (2) planning, (3) production, (4) distribution, and (5) field service. The management subsystems also require integration, including (1) strategy with a customer focus, (2) the tools of quality and (3) employee involvement (the linking process that integrates the whole). A corollary is that any product, process, or service can be improved, and a successful organisation is one that consciously seeks and exploits opportunities for improvement at all levels. The load-bearing structure is customer satisfaction. The watchword is continuous improvement. (Ross) Hence following steps should be taken in order to improve the supply chain of the company: 1. Management Commitment: Top management must become convinced of the need for quality and must clearly communicate this to the entire company be written policy, starting that each person is expected to perform according to the requirement or cause the requirement to be officially changed to what the company and the customers really need. 2. Quality improvement team: From a team composed of department heads to oversee improvements in their departments and in the company as a whole. 3. Quality measurement: Establish measurements appropriate to every activity in order to identify areas in need of improvement. 4. Cost of quality: Estimate the costs of quality in order to identify areas where improvements would be profitable. 5. Quality awareness: Raise quality awareness among employees. They non-conformance. 6. Corrective action: Take corrective action as a result of steps 3 and 4. 7. Zero defects planning: From a committee to plan a program appropriate to the company and its culture. 8. Supervisor training: All levels of management must be trained in how to implement their part of the quality improvement program. 9. Zero defects day: Schedule a day to signal to employees that the company has a new standard. 10. Goal setting: Individuals must establish improvement goals for themselves and their groups. 11. Error causes removal: Employees should be encouraged to inform management of any problems that prevent them from performing error free work. 12. Recognition: Give public, non-financial appreciation to those who meet their quality goals or perform outstandingly. 13. Quality councils: Composed of quality professionals and team chairpersons, quality councils should meet regularly to share experiences, problems, and ideas. 14. Does it all over again: Repeat steps 1 to 13 in order to emphasise the never-ending process of quality improvement. (Ross) Conclusion: Production management refers to all those activities necessary to manufacture products; it may also include purchasing, warehousing, transportation, and other operations. Operations management has a similar meaning, referring to activities necessary to produce and deliver a service as well as a physical product. It is important for the supply chain management to give importance to all of the above activities. Since a low level of performance from any part of supply chain can effect the whole process. (Koontz and Weihrich, 1994; p.653) The method of operations research, which is the application of scientific methods to the study of alternatives in a problem situation to obtain a quantitative basis for arriving at the best solution, should be used. Other tools of production management such as linear programming inventory planning and control, the just-in time inventory system, and distribution logistics should be used to enhance the productivity of the Company. Other tools and techniques such as time-event inventory system, engineering, work simplification, quality circles, total quality management, and a variety of computer-aided approaches can also be used according to the need. (Koontz and Weihrich, 1994; p.653) References Besterfield, D. H., Michna, C. B., Besterfied, G., H., & Sacre, B. S., (no date available). Total Quality Management, Third Edition, pp. 1-3. Cook, J. S., DeBree, K., and Feroleto, A. (2001). From raw materials to customers: Supply chain management in the service industry. SAM Advanced Management Journal, 66(4), 14-21. Deloitte Consulting. (1999). Energising the supply chain: Trends and issues in supply chain management. Retrieved from http://www.deloitte.com/dtt/research/ Goldstein, S. G., (1985). "Organisational Dualism and Quality Circles," Academy of Management Review (July 1985), pp.504-517. Koontz, H., and Weihrich, H., (1994). Management: A Global Perspective, Tenth Edition, McGraw-Hill, International Editions, pp.633-653 La Londe, Bernard J. and James M. Masters (1994), "Emerging Logistics Strategies: Blueprints for the Next Century," International Journal of Physical Distribution and Logistics Management, Vol. 24, No. 7, pp. 35-47 Lambert, Douglas M., James R. Stock, and Lisa M. Ellram (1998), Fundamentals of Logistics Management, Boston, MA: Irwin/McGraw-Hill, Chapter 14. Lisa M. Ellram and Amelia Carr, (1994). Strategic Purchasing: A History and Review of the Literature, April 1, 1994, International Journal of Purchasing and Materials Management -Spring 1994, pp. 10-18. Lummus, R. R., and Vokurka, R. J. (1999). Managing the demand chain through managing the information flow: Capturing moments of information. Production and Inventory Management Journal, 40(1), 16-20. Lummus, R. R., Vokurka, R. J., and Alber, K. L. (1998). Strategic supply chain planning. Production and Inventory Management Journal, 39(3), 49-58 Mentzer, John T, William J. DeWitt, James S. Keebler, Soonhong Min, Nancy W. Nix, Carlo D. Smith, and Zach G. Zacharia (2001), "Defining Supply Chain Management," Journal of Business Logistics, Vol. 22, No. 2, pp. 1-26. Pohlen, T. L. (2003). A framework for evaluating supplies chain performance. Journal of Transportation Management, 14(2), 1-21. Ross, J. E., (no date available). Total Quality Management: Text, Cases and Readings, Second Edition, Florida Atlantic University, Boca Raton, Florida, pp. 1-3 Stair Ralph, M., and Reynolds Goerge, W., (2001). Principles of Information Systems, Fifth Edition, Course Technology, Thomson Learning. Wikipedia, (2007). Strategic management, Available from Read More