Supply Chain Management - Essay Example

Supply Chain Management Supply chain management is a vital aspect in value creation in any entity. It enables an entity to manage different aspects of the business such as acquisition of raw materials, processing and distributing the finished commodities. Therefore, supply chain management is an imperative aspect of managing the operations of an entity holistically. Having proper supply chain management strategies will influence the proportion of value that can be created in an entity. Supply chain management entails having appropriate influence over activities ranging from the acquisition of raw materials to the sale of the resultant products (Chan & Lee, 2005). Various economic sectors face diverse supply chain challenges depending primarily on the nature of their products. The food production, automobile and electronic sectors denote some of the most vibrant constituents of the global economic. The above sectors have varying supply chain management challenges due to the nature of their products and their mode of operations. In the above supply chains, production and retailing is undertaken differently. In the electronic sector, the rising cost of production in western nations has resulted in the off-shoring of most production operations (Ballou & Srivastava, 2009). In the western nations, such as America, the high cost of maintaining a work force, strict labour force regulations and raw materials expenditure have been the key factors that have necessitated entities to make strategic supply chain decisions. Asian countries such as Taiwan, Malaysia and China have been characterized by lower cost of production. As such, numerous electronic entities such as Apple have relocated their production operations to countries such as China and Hong Kong. The entities have undertaken the above steps in their quest to enact cost-cutting measures, which will enable the entities to remain competitive in their respective industries. Some electronic entities have also opted to outsource production of their gadgetry in its entirety, which has gone a long way in enabling them cut production cost. In the food production and automobile supply chains, it is harder to outsource production functionalities owing to the nature of their products. Automobile entities are responsible for the safety record of their products and as a result, many organizations in the sector are unwilling to delegate production to an entity that will not bear responsibility for the safety standards of the products manufactured. Similarly, food production entities face numerous safety regulations, which limit their capacity to outsource production. Production or manufacturing is a vital aspect in both supply chains since it is the initial stage via which entities begin creating the product that should convey a certain amount of value to the client, which should be commensurate to the price charged. In the automobile sector, the production or manufacturing section represents the most imperative stage in the entire supply chain (Kim, 2005). It is in this stage, that the quality of the automobiles is determined. A poor production process will result in a car that will not last long. For entities that make top of the range vehicles such as Land Rover, BMW and Roll Royce, creativity and ingenuity are vital components of manufacturing, which enables the company to cut down on production costs while also providing an exceptional and innovative product. Manufacturing is also a vital stage for the food production sector owing to sensitive nature of the products. For an entity in the food industry to maintain competitiveness, it has to provide products whose quality is above that of the rivals. In addition, in a competitive market where the customer base is not expanding a popular way to maintain profitability is via cost cutting. An innovative entity will focus on its production section as one of the cost centres where innovation may help in cost management. For instance, entity may recycle cans or papers instead of procuring more packaging materials. Moreover, the organization may also focus on saving cost on energy by harnessing solar power. Conversely, the production process seems less imperative in the electronic sector as entities such as Apple have outsourced most of the manufacturing processes to firms in China and other Southern Asia. This has enabled the above firm to reduce cost significantly and avoid constraining labour regulations in western countries. Retailing entails the activities leading to the sale of product such as rebranding and marketing. In the electronic sector, retailing is a crucial aspect since it ensures that the client purchases the product. Electronic entities such as Samsung and Apple spend massive amounts of funds on retailing activities such as marketing. Such activities enable the entities to publicize their products to the target market. Marketing creates value since its alerts the clientele as to the features of the electronic gadgetry. In a market where the products change rapidly due to innovation, marketing plays a vital role (Kim, 2005). By contrast, established car brands such as Roll Royce, BMW and Mercedes Benz spend considerably lower amounts of fund on retailing primarily because of having an established customer base. Customer loyalty in the automobile sector is higher as compared to the electronic sector where customers will try out different gadgets to test the users’ experience. In the food production supply chain, retailing also plays an essential role. It enables relevant entities to alert their clientele on the value the product conveys and its availability. Retailing is an expensive undertaking for automobile entities. Accordingly, they normally establish franchises in smaller markets while they open regional branches in the large and lucrative markets. Clearly, retailing and production differ in the three supply chains. Production show clear-cut disparities due to global trends such as outsourcing and cost cutting. Production or manufacturing presents a huge opportunity for entities to undertake cost-cutting measures (Chan & Lee, 2005). However, out sourcing of manufacturing will be limited by quality and safety concerns. Most automobile entities will avoid outsourcing manufacturing since poor quality may lead to a recall of products that may be very expensive resulting in bankruptcy or loss of customer base. Retailing also differ in the three supply chains with the electronic sector focusing a considerable proportion of its efforts on retailing as compared to other sector due to its ability to influence the customers’ consumption trends. Power lies in different locations in the three supply chains. For the automobile and food industry, the power lies at the manufacturing or production stage as manufacturing determines vital aspects of the automobile sector such as innovation, customer loyalty, cost-cutting measures and most importantly the quality of the product. Automobiles sell based on quality, fuel consumption and the heritage, which are determined at the manufacturing stage. In food production, the quality and hygiene standards of the product are vital factors that determine the level of sales, which means that the production phase of the supply chain bears considerable power (Ballou & Srivastava, 2009). By contrast, power in the electronic sector lies in the retailing phase that influences the level of sales. Retailing creates a huge amount of value that influences sales since it popularizes the product. Production commands very little power given the trend that companies in the sector have adopted. Electronic entities have outsourced production as means of cost cutting while they are expending massive amounts of resources on retailing, which is an indication of where the power lies in the supply chain. Supply chain management is a vital aspect in the management as it helps a business add value to its operations. In addition, an entity can also undertake cost-cutting measures, which will improve profitability. An analysis of a supply chain reveals where the power lies which is an indication of the point at which the entity or organization creates a huge proportion of value in the entire supply chain. In the automobile and food-production supply chain, the power lies in the manufacturing phase while in the electronic supply chain the power lies in retailing. References Ballou, R. H., & Srivastava, S. K. (2009). Business Logistics/ supply chain managemnet: Planning, organizing, and controlling the supply chain. New Delhi: Pearson. Chan, C.-K., & Lee, H. W. J. (2005). Successful strategies in supply chain management. Hershey, PA: Idea Group Pub. Kim, B. (2005). Supply chain management. Singapore: John Wiley & Sons (Asia. Read More