Supply Chain Management - Coursework Example

Supply Chain Management Plan al Affiliation) I. Executive Summary Supply chain management attempts to develop a virtually integrated channel comprising of a number of “owners” and offers a seamless delivery of goods and services. The creation of a process of this sought places a significantly heavy weight on manufacturers, who must coordinate up and downstream supply partners. By shortening the length of the supply chain, they hasten the speed to the market, decreasing inventory and goods supplied are better matched with the product demanded. In order to attain these benefits, there has to be reduction of time between production by the supplier and consumer consumption. The ability to facilitate seamless value delivery to the customer is measured by both effectiveness (actual accomplishment of the goal) and efficiency (lower unit cost) (Millett, 2011). I. Supply Chain Plan For our company’s Supply Chain Planning to be effective it will require a broad, deep understanding of some vital aspects of supply chain businesses, borrowing from experience and backed by benchmarking practices and strengthened by skills in both planning and execution. In order to make a comprehensive plan, our team focused majorly on predicting future requirements to balance demand and supply. Supply Chain Plan is bound for success because we considered an end-to-end perspective during planning and monitored results expected at every stage (Jespersen, & Skjøtt-Larsen, 2005). Availability and quality of suppliers Performance is taking inputs and effectively and efficiently changing them into valuable outputs to the customers. It is in our company’s best interest to identify and select suppliers that will work with us in ways that will enables us provide for high quality goods and services. In our view, there is more to supplier performance than just a low purchase price; including; the costs of transactions, problem resolution, and communication. Switching suppliers affects overall cost. The supplier’s reliability in delivery and the supplier’s internal regulations e.g. inventory levels, both impact supply-chain performances. The benefits of having a good partnership with suppliers include; 1. Partnerships with more suppliers mean having more options or variations during vital process inputs. 2. If our suppliers prove to be effective in their output control, we will not need to closely monitor them, hence focus on our core business. Availability and quality of third party service providers Our success in business largely depends on presence of third party or outsourced suppliers that will provide legal, consulting, storage, real estate, communications, processing, and Internet services. For implementation, we will consider planning a grace period of six to twelve months to try out various companies to outsource the work, to ensure we select the most reliable company with quality work. We have clearly identified our needs and expectations to the potential third party service providers to avoid disaffections due to miscommunications. We have also set performance measure with the following concrete guidelines Aims and methods through which those targets have to be achieved We have set milestones to be reached at every stage of the alliance project We will develop concept for the integration of alliance partners We will discuss critical parts of the contract We have given a time frame of the contract We have communicated the changes in relation to structures and reliabilities both internal and external employees so that they know why the company is outsourcing. This is to prevent incertitude of employees and make them understand the expectations of this step. By seeking the services of third party service providers, we hope to savings the cost and time of our operations, commit less capital o facilities we can do without, focus completely on our core business and exercise flexibility while looking out for the possibility of losing control. Sourcing and procurement strategy Sourcing is the value added process of identifying and choosing suppliers and the subsequent cooperation scheme. In order for our company to do so, we have incorporated supplier performance information and advanced analytics & market intelligence in this process  Our team has come up with the following integrated approach to facilitate this process. Spend Analysis Before adopting any sourcing / procurement activities, we found it necessary to consider the past, current and the expected spending patterns. This analysis spun the entire company and included data collected from different departments and locations. We have also identified sourcing barriers and limitations. This direct and indirect spending analysis gave us the information and decision-support we required to come up with supply strategies that are inclined to the company’s objectives and helped in the improvement of sourcing and procurement initiatives.  Strategic Sourcing  Our overall goals in setting sourcing strategies are to minimize risk of supply, attain huge and sustainable cost reductions and achieve long-term supply stability. To achieve these goals, our team opted to leverage spending across departments, rationalize the supplier base, leverage spending in all business units and geographical regions, develop strategic alliances with selected suppliers and reconfigure supply specifications. Supplier Management  We decided to shun the approach used previously of selecting the “least expensive supplier” and instead adopted a “total ownership cost” approach, which presupposes extensive knowledge of the performance of the supplier and its effect on our company’s operation. We acquired this knowledge through institutionalized processes that analyze and capture supplier performance data. Our company will incorporate this data into the process of selection and negotiation to assist in sourcing decisions that provide for the lowest total cost. Procurement Optimization  Here, our focus was on transactional efficiency. We intend to squeeze process-related costs and inefficiencies throughout the purchasing cycle, which begins with identifying the demand for the material and ends with its receipt. We intend to have the simplest possible procurement process Steps to a strategic sourcing process include 1. Assessment of our companys current spending 2. Assessment of offers by supply companies 3. Analyses on how much it will cost to source for those goods or services 4. Identify suitable suppliers. 5. Know where to purchase, considering demand and supply situations, while minimizing risk and costs. 6. Negotiate with suppliers over products, service levels, geographical coverage, prices, and Terms of Payment. 7. Implement our new supply structure. 8. Track results and make necessary changes according to assessment (Continuous cycle) Planning and forecasting strategy Our company will adopt the following techniques Time-series forecasting. We intend to analyze data collected over time and identify trends. We will take this data over a period spanning at least three years. This time series will incorporate trends, seasonal, cyclical, and irregular components shown as either downward or upward sloping lines representing increasing or decreasing trends, respectively. We can use the series to monitor national economic activities business cycles through cyclical trends. The time series illustrates seasonal components like annual changes in sales forecasts on profits, it estimates of the effects of recent decisions, effects of seasonal sales etc all from analysing past experience (Millett, 2011). Scenario Writing We will use this technique to generate different imagined outcomes on the basis on different sets of starting conditions and expected trends in important strategic factors. The company will then decide the outcome most likely to occur from the many scenarios presented. We intended to use it more during the SWOT analysis stage of strategic planning, rather than at the gap analysis stage forecasting as it relies on a panel of experts who will complete questionnaires in a series of rounds. A facilitator will provide a generalised summary of the opinions by experts in relation to future trends from the previous round and reasons why the experts supported certain forecasts. In the end, a stronger consensus emerges in support of the most likely outcomes of perceived trends. We will then use the mean or median results of the last round to establish the results. Inventory management strategy We understand the importance of incorporating a well-organized inventory management plan in increasing the probability of attaining effective results in handling the required inventory investment. Our strategy for an effective inventory management plan includes to; (1) Attain proper inventory mix the goods and services according to the demand. (2) Maintain efficient inventory levels by minimizing the costs of having too much too little inventory. We understand that different merchandise has different efficiency levels, so we will consider that and work to attain the “ideal” levels. (3) Scale down costs of inventory by making sure that every employee is aware of the costs associated with carefully (or carelessly) handling inventory. Our company will also balance the Cost of being out of stock with the cost of keeping inventory at the lowest total inventory cost. (4) Order efficiently-Our Company will ensure a balance between the higher costs of ordering associated with orders that are more frequent and the higher inventory maintenance costs that come with less frequent orders. (5) Understand pricing, margin concepts and mark-up – Our company will ensure sure that all employees charged with the responsibility of selling merchandise understand these formulas (6) Analyze inventory performance- Our Company will examine its financial performance in relation to inventory through data analysis and determination of sales, inventory turnover, gross margins, and inventory management index. Inbound and outbound transportation strategy We intend to streamline and control our inbound transportation in order to completely remove cost from our goods and lower our delivered price, while staying within our target margins. Collect current inbound transportation data. Our first step will be to dissect the current inbound transportation data by collecting and modelling it to represent the current state of our network. We will capture all the potential origins, destinations and the characteristics of the shipments in relation to each origin or destination pair as well. We will use this data, to review cost by each vendor and determine the related inbound component. This also enables our company model potential geographical changes or the impact of shipment size on our cost. Identify our business objectives. The second step was determining our inbound strategy in relation to our company’s overall strategy. Here we ensured that we had a firm understanding of our company’s plan before we implemented operational and tactical and components of inbound transportation management. Identify requirements for vendor compliance. The next step was defining clear and concise requirements for our vendor pool, including the data elements our vendors must give us, when shipping the product to us, as well as the technology that meant for communication between us. Implement inbound solution. We will begin implementing our solution by training the vendors on the Web-based TMS using a phased-in approach. We begin with our work backward from our top-volume vendors, while also simplifying and making training hands on and for our vendors to follow Establish KPIs and metrics for continuous improvement. Establishing Key Performance Indexes and metrics is a vital final step towards developing a complete Transportation Management Strategy. With the proper TMS, our company will prepare daily reports to track compliance with their inbound program. The capacity to report is limited only by the data captured in the Transportation Management Strategy, so when we set data requirements in Step Three, we selected the data based on what we want to report. With thorough data, we have the capacity to establish our expected savings and offer further analysis for extra savings. Inbound transportation management is vital in managing our company’s supply chain. Controlling inbound costs is an essential in lowering our cost of goods and allowing us to maintain healthy profit margins as we offer our products at competitive prices (Blecker, Aldarrat, 2008). Warehouse/distribution center strategy We identified the following strategies helpful in assisting our Company stay competitive. 1. Green Technologies Propelled by consumer awareness, increased regulations and efficiency, we have identified green initiatives as key aspects in having a good warehouse strategy. Going green is sure to drive new technology innovations and influence existing equipment as well with an aim to cut costs and enhance efficiency. We expect to increase profits through improving the quality of merchandise by ensuring sustainability. 2. Productivity Reporting we realize that market unnecessary and uncertainty spending will keep on affecting distributors, and subsequently create a greater need to closely monitor productivity and improve areas lacking efficiency. This will boost our warehouse efficiency. 3. Reducing handling we also realize that the lesser the handling requirements of a product, the less costly it will be to ship. Our warehouse strategies for cost reduction incorporate the streamlining of operations in order to reduce handling costs. After receiving a product, this task is accomplished by moving the product directly to shipping (Tompkins, 2005). Outsourcing/3PL strategy 3PL’s have contracted hundreds of qualified carriers with the ability to handle our freight. Third-party logistics companies have the ability to reduce the amount of investments in infrastructure, software, personnel and facilities. Hiring these 3PL’s services will be like a having non-paid employees on our staff and this will allow us as a company to focus our resources on our areas of expertise. Most reputable 3PL’s have developed their own TMS system so we might save on the transport strategy since these systems can be utilized free of charge when using a third-party logistics provider. Third-party logistics companies enjoy economies of scale and can therefore provide large shipping discounts. 3PL’s are able to achieve much lower operating costs per load due to their ability to leverage their entire business for substantial discounts with trucking companies. Customer Relationship Management Our CRM systems will be designed to compile information about our customers at various points of contact or across different channels between the customer and the company including the companys website, live chat, telephone, direct mail, social media and other online marketing platforms. Our CRM systems will also give customer-facing staff information on the details of the customers including their purchase history, personal information, buying preferences and their overall concerns (Baran, Galka, & Strunk, 2008). We intend to incorporate CRM software to consolidate customer information into a single CRM database. We intend to use this software to record all customer interactions, automate all workflow processes and enable managers to track productivity and performance on the basis of the information logged within the system. To add value to customer interactions on social media, businesses use various tools that monitor social conversations, from specific mentions of a brand to the frequency of keywords used, to determine their target audience and which platforms they use. Other tools are designed to analyze social media feedback and address customer queries and issues. Companies are interested in capturing sentiments such as a customers likelihood of recommending their products and the customers overall satisfaction in order to develop marketing and service strategies. (Baran, Galka, & Strunk, 2008). Companies try to integrate social CRM data with other customer data obtained from sales or marketing departments in order to get a single view of the customer. We will use social CRM to read our customers’ posted reviews about our products, engage with them to handle real time issues on research products. The use of customer communities will help us reduce the calls at contact centre; identify new product ideas or feedback without requiring to enlist feedback groups into the company. Supply Chain Integration The purchasing department is the paramount of an effective supply chain since initiates all ordering documents. As such, we have identified the manager of the purchasing department as the final authority on decisions on supply chain management. In order to integrate our supply chain we put together a team of people from sales, logistics engineering and purchasing departments, as well as representatives of every other departments in the company’s structure that may have operational interest in the supply chain. We understand that although the buyer has gains the most, often times the supplier’s and the transportation company’s observations can result to an improvement in the manner in which the supply chain functions (Oliveira and Gimeno, 2014). Performance management strategy Define Requirements. The two keys requirements are letting the business requirements motivate the project, not be the tool; and quick iteration of a team made up of an IT professional and three business people to develop a detailed blueprint of the key performance indexes dashboard with an entire set of specifications to be used by a technical team to build the dashboard. We found out that the blueprint will reduce the product development iterations by 80% to 90%. Prioritize. After the brainstorming session by the team on the potential metrics and requirements, it goes on to prioritize and normalize them. To prioritize, teams need to identify potential Key Performance Indicators (KPIs) using rating systems that measure each KPI against different criteria, many of which can stem from our list of already identified KPI characteristics. Normalizing is the process of standardizing definitions and rules; in this case, getting the concerned parties in the same room and recommend they come up with an agreement. The parties simply have to agree to attach unique labels to all metrics and map out their definitions into a single definition for wholesome reporting purposes. Develop the Dashboard. Once the processes above are completed, the technical team can start developing the dashboard. Our team recommended working on parallel tracks incorporating an agile or spiral development methodology that comprises frequent iterations. II. Next Steps Monitor and Revise. It is critical that the all company’s departments adopt this plan and the top managements monitor. If the people in charge notice that, the company employees do not use the systems as perfectly as expected, or if the plan fails to deliver expected result, they have to schedule a meeting in order to identify the obstacles limiting adoption. Govern the Process. We should form the basis on which to a plan governance team that monitors the effectiveness of the plan, allow new plans and changes existing ones, and sets direction for the program as well. We will hire a chief performance officer whose job will be to oversee performance processes and technical implementations and guide the governance committees. Coach Managers and Users. One of the most important but overlooked elements of a performance strategy is the need to teach managers how to interpret the supply chain management plan and coach subordinates about how to improve their performance. IV. Conclusion As the saying goes, nothing good comes easy. Creating an effective plan is a very tedious process, whose outcome is worth the hustle. Fortunately, the task can be made significantly easier if executives have taken the time to create a well-articulated strategy and kept it up to date. Lacking that, teams assigned to create dashboards or scorecards will struggle to define KPIs that align with strategic objectives and move the organization in the desired direction. References Millett, S. M. (2011). Managing the future: A guide to forecasting and strategic planning in the 21st century. Axminster: Triarchy. Capon, N., Farley, J. U., & Hulbert, J. M. (1987). Corporate strategic planning. New York: Columbia University Press. Bhattacharya, H. (2009). Working capital management: Strategies and techniques. New Delhi: Prentice-Hall of India. Oliveira, A., & Gimeno, A. (2014). Supply chain management strategy: Using SCM to create greater corporate efficiency and profits. Upper Saddle River, N.J: Pearson Education. Blecker, T., & Aldarrat, H. (2008). Management in logistics networks and nodes: Concepts, technology and applications. Berlin: Erich Schmidt. Baran, R. J., Galka, R. J., & Strunk, D. P. (2008). Principles of customer relationship management. Mason, Ohio: Thomson/South-Western. Tompkins, J. A. (2005). Logistics and manufacturing outsourcing: Harness your core competencies. Raleigh, N.C: Tompkins Press. Jespersen, B. D., & Skjøtt-Larsen, T. (2005). Supply Chain Management: In Theory and Practice. S.l: s.n.. Read More