Effective Supply Chain Management Strategies - Coursework Example

Supply Chain Management It was in the early 1980’s when the term supply chain management was first coined by henry Booz and Keith Oliver; since then the idea of harnessing a company’s power for the sake of driving business growth has rapidly developed I the global business community (Blanchard, 2010). With time there has been an expansion of more comprehensive designs which have enabled firms to improve supply chain management practices, as a result supply chain management techniques have become more complicated and smart. However even in light of this knowledge, they still remain some of the most underutilized business techniques for many business executives which is evidence of their expansive scope. Effective supply chain management strategies are essential for providing any organization a competitive edge over its peers. Excellence in the supply chain can be achieved if the organizational leaders attend to the particular details in the market infrastructure that make their organization more efficient and the transactions in the market fluid effective. Taking into account the complexity of supply chains more so those with global and regional scope, one must recognize that the magnitude of complexity in the task is immense (Jacobs and Chase & Chase, 2011). Therefore, it takes highly qualified and experienced managers to identify the correct issues to be prioritized and addressed as well as mark out new strategies and opportunities. In the long term, effective supply chain management is bound to deliver considerable benefits to any firm that recognizes and respects its necessity. To extrapolate on the importance of effective supply chain management this paper will dwell on several case studies in different industries where supply chains have been successfully or otherwise managed. The fashion industry is one where competition is ubiquitous despite the fact that most of the customers have very unique needs. However, given the low entry barriers, the stiffness in competition is understandable since many of the new entrants will offer customers and specialized products for customers forcing the firms already in the market to be constantly on their toes (Masson, MacKerron & Fernie, 2007). In this section, Zara, Adidas HM and Luis Vuitton and other firms are examined in respect to their specific supply chain management strategies. H&M has listed among its objective the intentions to be the price leader in the fashion industry, to this end they have restricted their supply chain such that it primarily targets the street trends which make easier but more expansive supply chains. The firm does not invest in any production facilities preferring to purchase from over 700 manufactures around the world, in addition they do not own stores since they use rented space. Essentially they are the model supplier since they act as a middlemen at various stages of the supply chain and consolidate buying volumes to create economies of scale. So as to remain in control of the supply chain they have a central go-down in Germany from where they control the distribution worldwide, their supply strategy allows them to bring products to the market in less than three weeks. In contrast, Benetton has a vertically integrated supply chain which means they control most of their own supply chain, this makes it easy for them to focus on quality control and promote the concept of a worldwide brand awareness. When they are making fast moving products they will use production facilities in Europe and then use their Asian suppliers for standardization purposes. Another very popular supplier is Zara, which focuses on small scale production to enhance its time based strategy; the new products are pilot texted in stores and this acts as part of the publicity for the company. If the product is found to be successful, it is then released in bulk, however if the pilot products fail to catch up, they are taken off the shelves and sold as mark down, this allows them to launch a new product in just 15 days. As a result, they create and retain among their consumers and competitors the impression that they are unique and the products should be bought while stocks last. In addition, their vertical integration means they are in charge of most of the production plants, ergo they can effectively launch quick response initiatives. The automated distribution centers have been strategically placed between the production centers and the target populace which means they can quickly distribute and supply products to various stores. Zara has partners with air France, KLM cargo population and emirates so they can coordinate their shipments directly; this way they make outbound shipments to their stores and the inbound ones are used to ferry half finished products and raw materials. The next firm to be considered is adidas, it copes with its customer demand through the adoption of a mass customization strategy, like Zara, it is vertically integrated and most of the processes from the manufacture to distribution is done in-house. Adidas has recognized the need to stimulate sales by creating demand then supplying based on the extent to which they are successful. The first step in the quest for achieving this is to offer a moderated number of product choices, too few variations may leave the customers disappointed and too many will increase ambivalence and result in the postponing of a buying decision. After this, Adidas requests the key suppliers to come up with custom made products so as to bring about economics of scale, taking to account the often long waiting time. Adidas prefers to uses air freight couriers services so that they can ship the finished product directly to the customers therefore cutting out the middlemen. Another model of a strategically placed fashion manufacturer is Luis Vuitton; they have managed to become one of the biggest luxury brands in the world by virtue of managing their supply chain effectively. Retrospectively, they would supply department stores, however as a consequence they made big losses as a result of counterfeiters. The therefore decided to open their own stores which they have strategically placed in shopping malls and high end department stores. This means they get to interact better with their customers on a one on one basis and therefore can adopt more effectively to the market trends. The final case study, is based on marks and spencer which like Luis Vuitton which is one of the major retailers in the UK and much of Western Europe. Their key strategy is involves adjusting the supply chain so as to minimize on the cost of production their level of vertical integration is relatively low. They traditionally ask the suppliers to develop samples for all the range of fashion items with the intention of determine which the best is for their customers, to promote the culture of uniqueness in their products they have their suppliers make customized products for different department stores. This way each store has a degree of autonomy which makes it easy for them to maintain both the brand image while at the same time retain uniqueness which is the key a primary objective of most fashion houses. However, even with the popularity of the strategic marketing and supply chain management some firms have ended up failing as a result of poor implementation or weak management strategies. Commerce one, which was for a close to a decade one of the arch rivals of Ariba, it introduced electronic market places through which one could meet online with their suppliers and distributers considerably reducing the length of the supply chain. Among the flagship offerings were software solutions that facilitated procurement application and marketing platform it was for some time considered by high flying firms such as General motors and Boeing for its services in streamlining the supply chain to increase efficacy in the production process. However, it did not manage to sustain its initial thrust into the market and in 2004 exactly a decade after it stared operations it went under. For a supply chain to be effective, there must ultimately be collaboration between managers at all levels both within and without the organization, in addition there are several other contributing components to successful supply chain management implementation (Burgess, 2011). Some of the biggest gains in companies using the system have been made as a result of cross-docking where firms save on storage space by having their goods carried in pallets or containers such that they do not need to ho to a warehouse. On arrival, they can be directly sent to the destination, this appears to be just a small adjustment but it translates in hug savings in the long run since less time and labor will be used to prepare the goods in a warehouse. Secondly in addition to saving on warehousing cost dashing effective distribution methods has been found a most useful strategy for any firm irrespective of its size (Mol, Birkinshaw & Birkinshaw, 2008). When the effect of reduced redundancy on cost such as warehousing and the benefits for a leaner and more time efficient model of supply and distribution are put together, the overall gain for the firm involved enormous. Integration of current technology has been found to be potentially very beneficial for industries as it allows for innovative solutions (Simchi-Levi, 2005). At the same time, strongly integrated organizational relations more so between the activities and the outlined performance metrics provide management with an avenue though which they can perceive each part of the supply chain independently and the whole chain more comprehensively. At the end of the day, even minor adjustments on the supply chain have been found to have significant impacts on the return on interest especially when it comes to cutting down on purchasing and inventory cost which reflect positively on the bottom line. Aligning and managing a supply chain is however often a complex undertaking made even more complex by the size of the firm in question, one of the challenges they encounter is the inability to accurately prioritize the improvement efforts. In many situations companies struggle to identify the best areas where they should deploy their experts so that they can have the most impact on the chain (Mentzer, Stank & Esper, 2008). This often comes about as a result of the fact that there are no standard approaches to supply chain practices and different groups, even within the same industry may have radically different techniques. In addition, when a firm is serving millions of customers on a global market, there is often a great deal of participants and parties involved in several levels spanning across different countries. Many firms cannot pinpoint exactly where the problem in the chain lies since they do not even know exactly what their supply chain is, at the end of the day, determining the best size of a supply chain is next to impossible given that they are subject to variations within specific companies. References Blanchard, D. (2010). Supply chain management best practices. John Wiley & Sons. Burgess, J. (2011). An Evaluation of Managing Diversity in the Supply Chain: A Case Study of an Electrical Wholesale Distributor in the UK (Doctoral dissertation, University of Huddersfield). Jacobs, F. R., Chase, R. B., & Chase, R. (2011). Operations and supply chain management. McGraw-Hill/Irwin. Masson, R., Iosif, L., MacKerron, G., & Fernie, J. (2007). Managing complexity in agile global fashion industry supply chains. International Journal of Logistics Management, The, 18(2), 238-254. Mentzer, J. T., Stank, T. P., & Esper, T. L. (2008). Supply chain management and its relationship to logistics, marketing, production, and operations management. Journal of Business Logistics, 29(1), 31-46. Mol, M. J., Birkinshaw, J., & Birkinshaw, J. M. (2008). Giant steps in management: creating innovations that change the way we work. New Jersey: Pearson Education. Simchi-Levi, D. (2005). Designing and managing the supply chain. New York City: Mcgraw-Hill College. Read More