Why Is Managing the Supply Chain a Very Complex Process - Coursework Example

SUPPLY CHAIN MANAGEMENT IN THE GLOBAL CONTEXT Contents Contents 3 Abstract: 4 Introduction: Supply Chain 4 Supply Chain: factors of success 5 Why is managing the Supply Chain a very complex process? In your answer explain the issues to 6 Dell : A case Study 7 Conclusion 9 Reference: 11 Baker, P, (2006). ‘Designing distribution centres for agile supply chains’. International Journal of Logistics Research and Applications. 9(3). pp207 – 221 11 CooperM. C, Lambart, G. M, and Pagh, J. D, (1997). ‘Supply chain management: More than just a name for logistics’. International Journal of Logistics Management. 8(1). Pp1-14 11 Disney, S. M, Naim, D. M, and Towill, D. R, (1997). ‘;Dynamic simulation modeling for lean logistics’. International Journal of Physical Distribution & Logistics Management. 27 (3/4).  pp. 174-196 11 Geiger, C, Honeymoon, J, Dooley, F, (1997) Supply chain management: Implications for small and Rural Suppliers and Manufactures. Upper Great Plains Transportation Institute. North Dakota State University 11 Supply Chain Management Abstract: In the following report one will outline first and foremost the theoretical outline that defines a supply chain and the nuances that characterize the long term impact of its management. Here the case study will focus on the various aspects of the process that characterized the management of the supply chain. In the second part of the report the idea will be to focus on the supply chain management strategy as utilized by Dell Inc in the management of its overall chain and logistics in light of the changing demand and supply patterns that characterized the changing nature of the business. The concluding remarks show that supply chain and an integrated system of its management are perhaps the most important elements in the modern day management the overall logistics in a global company. Introduction: Supply Chain Despite the popularity of the term, supply chain management there remains considerable confusion with respect to its meaning (Baker, 2006). There are those that defines the term in the context of its operational meaning like the flow of materials and products; yet others view it as management philosophy while the rest view it’s in terms of its being a management process La Londe, 1999). One of the best ways of discussing the concept of supply chain management is to break the outlook into three basic elements: those of supply, supply chain, and supply chain management. Supply could be understood to be the measure of goods obtainable for utilization in terms of actual, or planned, replacement of a product (CooperM. C, Lambart, G. M, and Pagh, J. D, 1997). A Supply Chain on the other hand is defined as a set of three or more companies (of a company, an immediate supplier and an immediate customer) directly linked by one or more of the upstream and downstream flows of products, services, finances and information from a source to a customer. Supply Chain Management (SCM) is the methodical, calculated management of the usual commercial tasks in a given enterprise and across production in the overall supply chain, for the reasons of affecting imporvment in the overall presentation of the individual companies and the supply chain as a whole. Supply Chain: factors of success In order to outline the positives of the supply chain management plan that needs to be followed to be successful, the following analysis will first and foremost outline the steps that need to be undertaken by a company vis-à-vis the theoretical requirements of an efficient supply chain management system. Good quality low priced product-the designers need to be made to work in a reverse manner given the fact that the target price of a commodity was decided before it went up for designing, so that the designs would be able to accommodate the price restrictions an integrate these within a product of high quality. The second most important aspect of a strategy should be arriving at strategic forecasts in all business areas-included strategic and tactical forecasts. Operational level forecasts were made at store levels based on the replenishment orders from the stores.-Long product life cycles, extending to 84 weeks which would give suppliers and designers time space to plan and supplies based on demand forecasts Use of Information Technology Why is managing the Supply Chain a very complex process? In your answer explain the issues to One of the most basic issues of effective supply chain management is the problem of consumer satisfaction vis-à-vis trade off inventory (Disney, S. M, Naim, D. M, and Towill, D. R, 1997). Assuming leads to be contant, one of the basic problems that face effective product management. The idea to be able to fill orders effectively. Given the fact that the need in the case of Mattel is to effectively manage the supply chain along with ensuring that low fill rates are dealt with, the idea should be that the process of sales and demand forecasting be integrated into the process of supply chain management so that there is a presence of the requisite order variables while compromising on oversized inventory levels. In most supply chains inventories, like the raw materials have indirect impact on consumer satisfaction. There are two most effective trade-offs available in the context of the supply chain: 1. Total logistic cost of the network; 2. Service level deliver to the final customer The idea should therefore be to ensure that service provided to consumer and relationship management is able to substitute for product fill-ins during times of short-falls. This would ensure that the management is able to cut back on inventory levels thereby reducing costs while not compromising on consumer satisfaction in the long run. This could be achieved in essence through a process of innovating, use of information technology (IT) developments and a process of cooperation throughout the supply chain. Delivery performance is an essential feature of efficient supply chain management. This needs to be measured in terms of the actual delivery date compared to the delivery date mutually agreed upon. Only perfect order fulfillment which is reached by delivering the right product to the right place at the right time and to the right consumer would ensure consumer satisfaction. Finally, responsiveness that describes the ability of the supply chain to react according to changes in market place would be a efficient supply chain management as well.   To achieve a high degree of flexibility and customer responsiveness, manufacturers must blend a mixture of Lean values and new-fangled knowledge to swiftly design new rationalised operations, both within and beyond the shop floor. Dell : A case Study With advances in information technology (IT) computers allowed customers to customize their computers. Dell allowed customers to configure their own computers and track the same in their production and distribution systems. Unlike the Toyota supply chain, Dell did not believe in long term relationships with its suppliers. Dell believed in working with world-class suppliers who would maintain their technology and cost leadership in their respective fields. Dell maintained medium term relationships with suppliers where the suppliers were always on test. Because of advances in It, Dell could integrate the suppliers electronically even if they were partners only for a medium term. At Dell, the trigger for suppliers orders was the actual orders was the actual orders by customers and not forecasts. This helped Dell in reducing the inventory significantly allowing them to respond to any changes in the market place. Since their suppliers were electronically integrated and as they did not want rigidity in the chain, dell did not see any advantage in locating suppliers close to their assembly plants. With increased use of IT in supply chain management, it became possible to achieve operational integration even with those suppliers with whom a firm may not gave long term relationships. Essentially on the product variety front, firms have progressed from a single product to a wide variety and from a wide variety to customization. Similarly on the chain-ownership front, firms have progressed from vertically integrated firms to long term partnerships with chain partners and from long term partnerships to loosely held networks. Advances in IT have fuelled the third revolution, and the exact contours of the third revolution are still being defined. It will probably take a couple of years before one could arrive at the model which is fully integrated. For Dell, the operations strategy is based on a build-to-order production system. This would mean that Dell assembles computers only when they have actual customer orders. Supply chain management must be able to quantify a bottom line impact. A concern, however, is that some supply chains will quickly realize the "low hanging fruit,” and then neglect long term investments required to acquire the more difficult, but potentially larger gains. this concern is negated by a philosophy that seeks to orient product design and development within a cost bound method. This is evidenced by the fact that new product design happens only keeping cost considerations in mind, reducing costs of products while ensuring quality maintenance. v     The company also considered the production capacity and capabilities of the supplier before outsourcing so as to ensure no supply shortages in future. The governing principles that one understands from an interpretation of the given facts points to decentralization in principle. The idea here is that by moving the decision to the level of the customer instead of having department of paper pushers haggling with clients, a big part of bureaucracy can be eliminated. v     Good relationship management with suppliers. These assume importance in light of the fact that one of the prior requisites of a successful supply chain management process is the building of strategic alliances and partnerships, which serve to work toward the encouragement of a company to be able to lay focus primarily on every aspect of the entire chain so that the numbers of suppliers that the management has to deal with is kept to a bare minimum. This would in turn require that the suppliers that are a part of the process be efficient. The idea therefore is to have a well developed preferred vendor (supplier) programs. This ensures quality products receipt in the keeping with space and time requirements. It is also important to note that in this context that international alliances in distribution and marketing increase effectiveness of the company to deal with competitive rivalry within a market in response to the globalization of the world markets (Byrd, T.A. and N.W. Davidson, 2003). Through strategic alliances a firm is able to access technology, reach new markets more quickly, or manufacture efficiently without investing time and capital in building a new plant and setting up new operations. The main advantage of a semi-automatic approach is that sensors would be capable of assessing huge amounts of data and information quickly to respond to changes in the chain environment (supply and demand) without hindering human autonomy. Particularly e-sensors provide the real time information needed so as to prevent the bull-whip effect (Kock, 2009). Global companies like Cisco, IBM and Wal-Marts have led the development of global supply chains, having discovered the advantages of the ability to track real-time changes. By doing so, most companies are able to maintain low-inventories, ensuring the implementation of the process of value basic production operations, ensuring that there is a deference of building and assembly that results in the lowering of costs and rise of responsiveness to changeable customer demands.  This practice also in fact could be extended to incorporate e-sensors and human collaborators throughout the value-chain and perceive and rect to demands.             Cachon, G.P. and M. Fisher (2000) believe that global supply chain management ``allows corporations to take advantage of diversity in the international environment by recognising and exploiting regional differences’’ Similar arguments are advanced in applying systematic measurement business process management (Armistead, 1996). Fully or semi-automated warehouses/distribution centres may incorporate automated unloading and put-away, automated retrieval, hanging garment systems, auto-sortation systems and automated load-building Conclusion In conclusion therefore it could be reiterated that the fact that globalization is an everyday increasing trend along with the fact that this trend is representative of factors of market volatility poses major challenges the process of SCM, particularly those of distribution centres within them (Baker, 2006). There is research on the manner in which distribution centres are being designed to be agile and the need for this agility, despite the fact that distribution centres are by nature long-term fixed assets. It has to be understood backed by research that there are comparatively higher costs that are attached to the building and management process where warehouses are concerned. Distribution centres are a crucial part of the order-delivery process. The more automatic the centre’s functions become, the more challenges they set for reliable power. Reference: Baker, P, (2006). ‘Designing distribution centres for agile supply chains’. International Journal of Logistics Research and Applications. 9(3). pp207 – 221 CooperM. C, Lambart, G. M, and Pagh, J. D, (1997). ‘Supply chain management: More than just a name for logistics’. International Journal of Logistics Management. 8(1). Pp1-14 Disney, S. M, Naim, D. M, and Towill, D. R, (1997). ‘;Dynamic simulation modeling for lean logistics’. International Journal of Physical Distribution & Logistics Management. 27 (3/4).  pp. 174-196 Tyndall, G., Gopal, C., Partsch, W. and Kamauff, J. (1998) Supercharging Supply Chains: New Ways to Increase Value Through Global Operational Excellence, New York: John Wiley & Sons.  Geiger, C, Honeymoon, J, Dooley, F, (1997) Supply chain management: Implications for small and Rural Suppliers and Manufactures. Upper Great Plains Transportation Institute. North Dakota State University La Londe, B.J. 1999. Executing in the red zone. Supply Chain Management Review 35(2): 7–9 Byrd, T.A. and N.W. Davidson. (2003). "Examining Possible Antecedents of IT Impact on the Supply Chain and Its Effect on Firm Performance," Information & Management. 41(2), pp. 243-255.  Cachon, G.P. and M. Fisher. (2000)."Supply Chain Inventory Management and the Value of Shared Information," Management Science, 46(8), pp. 1032-1048.  Read More