The Supply Chain Process - Essay Example

Supply Chain Management Introduction Organisations, resources, activities, and people participating in the process of moving goods and services from manufacturing areas to points of consumption are referred to as the supply chain. Participants in the supply chain perform effectively when they are properly managed. Chopra (2010) defines supply chain management as a process that involves deigning, planning, monitoring, controlling, and effective execution of activities in supply chains with the aim of creating net value, building a competitive advantage, measuring performance, and synchronising supply with demand. Logistics deals with controlling and coordinating the flow of goods and services from production points to consumption points (Grant, Trautrims & Wong, 2013). Organisations need to understand the critical aspects of supply chain management in to help them design and select supply chains characterised by efficiency and effectiveness. The Supply Chain Process The integration of activities and users from the production point to the consumption point of goods takes place in eight complex processes. These processes enable organizations to provide customers with the highest value and to increase their competitive advantage in the market (Hugos, 2011). The first process in this field is the management of relationships with customers. This procedure involves identifying customers for various goods and determining their demand and product specifications that they require. This means that this process is the most critical and it has to be carried out before other procedures. For example, the military identifies its customers as soldiers who require physical tools, uniform, and food to undertake their roles efficiently. The second process, known as customer service management, involves providing consumers with information about the products they purchase. Necessary information may include status of order, quality and quantity of goods. The third process known as demand management, on the other hand, entails finding out the demand in the market and informing suppliers, distributors, and the procurement department. The US military carries out demand management by identifying the total number of soldiers and their needs for each product. The military then estimates the total requirement for all products by summing up the demand of all individuals (Ross, 2011). Order fulfilment and manufacturing flow management are the fourth and fifth processes of supply chain management. These procedures involve taking orders from customers, recording them, and giving this information to all departments. The departments then analyze the orders and determine the tools and other inputs required to fulfil the orders. The logistics department carries out most of the manufacturing flow activities. The sixth process of supply chain management is referred to as procurement; procurement enables organizations to acquire goods from suppliers. Companies place orders of the right quantity to suppliers at the right time so that the producers may then deliver the products early. This process is critical especially in the military where a delay in provision of goods may lead to disasters; for example, if soldiers involved in a war run out of arms, they may die because they may not have the ability to attack the enemy. The military places its orders early before the existing stock runs out and it allows sufficient time for delivery of goods in its warehouses (Ross, 2011). After receiving goods, organizations then distribute them to outlets where final consumers may find them easily. The distribution has to take place early to avoid customer dissatisfaction that may be caused by scarcity of goods. The military distributes its products in three chains according to the urgency of goods. The first chain contains clothing, food, and medicine and it takes place fast because these products are critical. The second string of goods consists of weapons while the last one is made up of soldiers who are deployed to various work stations. The breakdown of distribution into three chains enables the military’s supply chain to be efficient. The seventh process is the development of new products and the last one is the measurement and analysis of returns. These involve measuring returns from current products and finding out the improvements that may be made on existing products (Grant, Trautrims & Wong, 2013). Organizations then develop new products based on the improvement specifications. This process is critical to the military because soldiers require new tools constantly so that they may carry out their activities more efficiently. Significance of Supply Chain Management Supply chain management enables organisations to focus on a few strategic areas that are crucial to organisational performance. According to Hoon, David and Matt (2009), electronic companies such as Samsung, Dell and Hewlett Packard have successfully integrated their supply networks. Hugos (2011) acknowledges the inter-organisational supply chain as a new form of organisation. Production efficient approaches such as agile manufacturing, just-in-time and lean strategy have been made possible through the development of supply chain networks. The rapid rising of strategic alliances, multinational companies, business partnerships, and joint ventures are succeeding because of effective supply chain management. Effective supply chain management maximizes added value and minimises the costs of operation. Supply chain management emphasises the necessity of timely response to the needs, preferences and requirements of markets (Jaccard, 2013). Companies such as Samsung, Sainsbury’s and Toyota have a clear and strategic objective for delivering their organisations’ visions. The vision of Sainsbury, for example, is to be the most trusted retailer providing the safest conditions for working and shopping. The areas of focus of contemporary organisations are underpinned by the values and operational excellence; these include compelling consumption of their goods and services, developing innovative businesses, and adding value to property. Ross (2011) contends that the increasing trend of re-engineering, globalization and outsourcing have increased challenges to companies while at the same time providing solutions to other challenges. The primary responsibility of supply chain management is maximising on the effectiveness of the supply chain to prevent the ramifications associated with the complexities and dynamisms of the market arena. Supply chain management enables companies to redesign and restructure their entire operations. Contemporary enterprises recognise that they cannot withstand competition without maintaining focus on the core competencies. Supply chain management is the primary key for organisations’ ability to select the right business partners, human resources, and production facilities (Jaccard, 2013). Even the military and not-for-profit organisations depend on properly managed supply chains for identifying partners and felling their goods to areas of use. Additionally, supply chain management ensures accuracy in market positioning and informed decision-making processes; these are critical aspects to consider for companies seeking organisational prosperity (Hoon, David & Matt, 2009). Ensuring customers get the products faster than competitors do can improve the company’s competitive advantage. Role of Information Technology in Supply Chain Management Advancements in information technology have really transformed the nature of supply chain management. Chopra (2010) asserts that organisations need to use information technology to manage integration processes and enhance the efficiency of the supply chain. Forms of technology such as project coordination and in-transit delivery consolidation are used to track and coordinate goods during transportation. Military companies have begun using Radio-Frequency Identification (RFID); RFID system tracks items using intelligent bar codes attached to goods. Companies use the internet to communicate as they monitor supplies. Currently, businesses do not have to worry about the dispatch and delivery of goods because drivers, suppliers and customers can communicate using mobile phones, emails, instant messaging, and social media as pertains to the status of goods (Ross, 2011). Buyers can view the goods before buying online through technology forms such as Skype, picture messaging and video conferencing. Using the same forms of technology, it is possible to hold discussions concerning goods between business partners operating from distant places. Conclusion The success of any business is determined by the effectiveness of its supply chain management. The areas covered by supply chain management process include information technology, operations management, procurement, and logistics. Supply chain management is significant to modern organisations because enables organisations to concentrate on a few strategic areas that are crucial to organisational performance, improve added value and reduce the costs of operation, and redesign and restructure their entire operations. Information technology has enhanced supply chain management through introduction of communication and monitoring devices that streamline the supply chain process. References Chopra, S. (2010). Supply Chain Management. Publisher Pearson Education India. Grant, D. B., Trautrims, A., & Wong, C. Y. (2013). Sustainable logistics and supply chain management. London: Kogan Page. Hoon, S. C., David, E. P., & Matt, E. T. (2009). A Learning Model of Information Technology Outsourcing: Normative Implications. Journal of Management Information Systems, 26(2), 147-176. Hugos, M. H. (2011). Essentials of supply chain management. John Wiley & Sons. Jaccard, M. (2013). The objective is quality: Introduction to quality, performance and sustainability management systems. Boca Raton, Fla. : London: EFPL ; Taylor & Francis Ross, D. F. (2011). Introduction to supply chain management technologies. Boca Raton: CRC Press/Taylor & Francis Read More