Supply Chain Management - Case Study Example

Supply Chain Management Student’s Name Institutional affiliation Course name Date of Submission Supply Chain Management Part I Introduction For a long time, businesses have used the traditional methods that do not require technological input to execute most of their activities. In fact, many businesses have used this method since it does not need colossal amounts of cash for execution. Apparently, the business environment is changing, and this has led to increased use of improved ways to manage activities in an organization. For instance, there is an implementation of improved supply chain management strategies so that the actions of a firm are executed accordingly. Evidently, most of the enterprises in the market have implemented technological advancements especially in supply chain management so that most of the customers are served within the time constraints. It is noted that most of the customers that are served by established companies such as Boeing have myriads of demands that ought to be performed in a period. Thus, they need to be served promptly to ensure high satisfaction level. Additionally, such large companies deal with suppliers that have connections in the market, and they need to serve a line of clients in a day. As such, they need accompany that has improved ways to serve their customers so that they manage time (Tang and Zimmerman 2009, p. 74). Thus, the introduction of supply chain management system is an appropriate inclusion in the businesses since they assist in the execution of tasks with precision. This paper will provide the importance of the supply chain management system in linkage with the various departments of the business with the primary focus on Boeing as a case study. The Rising Costs in the Market and the Recession In the year 2008, the United States faced one of the worst economic recessions, and this affected various economic, political and environmental activities. For instance, many people in the country were unable to pay their mortgages while many had to forego some of the services that are offered in the market (Plunkett 2009, p. 21). Nevertheless, many people had to reconstruct their budgets so that they can achieve their forecasts in the world. Through such actions, some of the services that are provided by established entrepreneurs may not be purchased since they are considered luxuries. Additionally, the fluctuating costs of commodities such as fuel have an impact on the large firms in the world since their economic forecasts are affected. Evidently, the recession led to a lapse in the consistency to use the services in many companies, and this led to low profitability. Apparently, some of the firms in the market had to foot their losses since the demand reduced drastically (Garg and Gupta 2012, p. 170). However, through the introduction of the supply chain management, such companies can deal effectively with the situation. For instance, when the economy is in a basin, the companies ought to reduce the expenses that are incurred in the supply chain is that they can reduce the costs of services. Due to such a reduction, the firms are in a position to make huge profits amidst the economic crisis. The supply chain management is an important since it can be used to reduce the costs that are incurred in an institution. In fact, this approach ought to be implemented in the market where the prices of commodities fluctuate over time. For example, the world has experienced a significant drop in the prices of oil and oil products. However, in the previous decades, the value of the oils products has escalated due to the inconsistencies in the demand and supply. Notably, when the supply is constant, but the demand is high, the worth of the commodities will rise significantly to contain the demand. On the other hand, when the demand is low but with high supply rate, the prices of the commodities are likely to fall. Thus, companies such as Boeing need to institute a supply chain management so that they can get the services at the low prices. In such a situation, the company ought to institute a manager that is committed to the implementation of change within the shortest time. For example, in this case, the company can use a supply management that will contact distributors immediately after the prices of the commodities have reduced. In such a case, the company will be supplied with products at a lower price, and this will increase the demand for the services. On the same token, the firm needs to consider a supply chain administration that seeks the shortest abut reliable supply method. For instance, long chains of distribution in the market attract higher rate of returns, and this is expensive to the organization. However, a supply approach that has a limited number of intermediaries attracts minimal returns, and this makes it cheaper for the organization (Blanchard 2010, p. 16). Thus, it is prudent for a company to consider a short chain of management so that they can attract higher rates of return. In this case, the company will be making more profits while paying for lesser expenses, which is preferred by the management. Examination of Raw Data Decisions in an organization are made after scrutiny of the market conditions as well as raw data. For instance, the management has to make the decisions about their pricing after they consider the value of their services vis-à-vis the worth of competitor pricing. Inconsistencies will, in fact, lead to uninformed decisions, and this can ruin the commitment of a company to profitability (Morris and Pinto 2010, p. 238). For example, the company can increase the pricing of some of the commodities whereas the competitors reduce the costs. Through such a decision, the company is likely to lose most of its clients, which could lead to significant losers. Contrastingly, inclusion of data evaluation methods assists the chain managers to make the right decisions and at the most preferred time. For example, businesses have to use various theories and models to ensure they are dominant in the market. However, the success rate of the strategies lies in the devotion of the supply chain management. For instance, some firms use scalping approach to enhance their profitability in the market. Principally, the approach defines the strategy where the organization makes limited profits on a single unit, but the firm gains colossal revenue from the sale of a lot of commodities. For instance, the firm can decide to reduce the pricing of their flights, but hopes to make additional profit by offering the services to many people in the market. Such a plan is productive if the management works in liaison with the chain management team so that they can supply additional airplanes to offer the services. However, a delay in the introduction of a new fleet may lead to the dismal performance of the firm, and this may need a change of plans. Thus, it is important to consider the association between the chain management group and the overall leadership so that all the activities in the firm are executed as planned. For instance, Boeing has in the past years hired more data analytics so that they can effectively make decisions in the supply chain and logistics. Real-time Supply Chain In order to serve customers successfully with high-quality services, the supply chain management system needs to work properly so that there is a limited time lag. In fact, the company states that the service to customers through real-time supplies is mainstream, and it need precision so that the customers are satisfied with the services that are offered. In fact, the firm has cited that it needs to use cloud data management tools so that they adopt new strategies that will assist serve customers within a short period. Evidently, the use of software platforms to cope with the market needs is an appropriate institution since the company is in a position to serve most of the clients. According to research, it is conceived that the analytic tools give a company advantage in that the company can serve myriads of customers in various geographical locations. Additionally, the complexity of the tools allows the analysts to define the role of the supply chain in that they can reach out to many customers. Through such advances, the firm achieves the objectives that have been mentioned. Nevertheless, the tools assist the individuals to make predictions and forecasts that can be used to manage the company. Although they may seem simple supply chains, they are important as they help the management to have an open mind about the future. Thus, it can make various corrections in places that seem to have difficulty. Improved Collaboration with the Suppliers A business is dependent on the suppliers as they provide the inputs that are used in the production process. In fact, the quality of the resources has a direct effect on the services and products that are provided. For instance, Boeing is dependent on companies that provide high-quality engines and spare parts so that the comfort of customers is guaranteed. Evidently, the customers may not be satisfied with substandard supplies because they may not get the value for their money, and this could reduce the repetitive customers (Sople 2012, p. 220). Thus, dialog and a rapport with the distributors through a supply chain management system allow the company to make a progressive movement in profit making. Product Quality Supply chain management in an organization ensures that all the involved parties execute their responsibilities at the appropriate time. Additionally, professionalism is enhanced in that all the responsible parts have to conduct their work with focus on the ethical and moral standards. For example, the individuals that supply jet fuel have to consider the behavioral standards so that they can supply the standard inputs (Rogers 2009, p. 144). On the other hand, some unscrupulous suppliers can provide adulterated fuel, which can jeopardize the service provision of the airline. Thus, it is important to engage the supply chain management so that such consequential advances are avoided. Compliance with Customer Expectation Customers are the integral part of a business as they dictate the amount of revenue that is collected by a business. With an increase in the number of customers, the company is likely to increase its profitability. Contrastingly, a reduction in the demand will expose a drop in the sales, and this will lead to losses. However, with the use of supply chain management, the company seeks to satisfy the customers through fulfilled expectations. For example, customers need products and services in a specified condition, and this should be delivered promptly. For example, customers expect a flight to take off at a specified time, and this should be done effectively (Tang and Zimmerman 2009, p. 75). On the contrary, consistent flight delays due to issues with the supply chain management lead to dismal service provision, and this will affect the clientele base. Reduced Negative Public Relations The relation with the public is important since it has a direct effect on the number of customers that are served by the company. For example, a reputable company will attract myriads of customers from different markets since they have a positive perception about a company. Thus, the company will be in a position to make additional revenue. In fact, many companies use their supply chain management as a guarantee that the services that customers need will be delivered at the appropriate time. Contrastingly, some of the firms have a negative reputation, and customers may not appreciate the services that are provided. For instance, a company that has consistent delays due to the concerns with the supply chain management may not lure many customers to use their services (Olson and Business Expert Press 2012, p. 22). Nevertheless, Boeing has been instrumental to perfect its service provision in the market through indulgence with competent personnel in the supplies chain. For example, the company uses CSR campaigns to guarantee that it is committed to serving its customers with the optimal services. Evidently, the success of the company is attributed to its commitment to offer high-quality services for research by the supply chain management. Part B. Boeing Case Study The airline industry has attracted numerous competitors that struggle to maintain their market share, and this has led to the introduction of sophisticated methods of service delivery. For instance, Boeing noted that its growth in the market was stagnant, and it needed to introduce additional approached that would augment its market dominance. Thus, it led to the development of the Dreamliner 787. Although the Dreamliner 787 aircraft is revolutionary, the company seeks to enhance its performance through reduction of the time and costs (Chakravarty 2014, p. 75). Evidently, it led to the introduction of the unconventional supply chain that reduces the period and expenses used in the production process. Apparently, the Dreamliner service provision has faced a number of challenges, but the management has adopted various avenues to ensure the situation does not affect the profitability. For example, it is noted that the series of delays especially in the maiden flights has affected the reliability of the services. Additionally, the delays in plane delivery to the reliable customers has affected the reputation of the company, although it seeks to implement new easy to ensure the circumstances do not affect the commitment of the company to dominate the marketplace. Thus, the highlights of the various approaches that are used by the organization will expose the various strategies that are used in the supply chain to contain the problem. Similarly, focus on the development of new products in the airline industry will highlight the commitment of the firm to serve its customers accordingly. Supply chain sustainability Accordingly, Boeing has engaged a number of strategies to reduce its costs in concern to their relationship with suppliers. Evidently, the firm has engaged various tradeoffs, supplier development, product development, packaging and design to reduce the expenses. First, the firm has distinctive strategies that are used in the 737 and 787 programs, which limit their costs. For example, the firm outsources 35-50% in the 737 program and outsources 70% in the 787 program. Notwithstanding, the suppliers in the 737 program are engaged in contracts while those in 787 are indulged in the tier – 1 basis. Additionally, the suppliers in both projects are instrumental in development of the parts that are used to manufacture the aircraft so that the company uses limited time. Similarly, the suppliers in the 737 program are engaged in fixed contract whereas they are fined for delays in supply of materials, while the individuals in the 787 program share risks with the company. To ensure the supply is not delayed, the firm operates with thousands of suppliers and has over 50 tier-1 partners in the 787 program. Thus, the firm can assemble the Boeing 737 in 30 days while the 787 takes 3 days to assemble complete sections. Notably, the assembly of the Boeing can take a long time, and this creates a need for distinctive groups of suppliers. In the world of specialization, various companies are competent and effective to produce many parts in a limited period. For example, the parts of the Boeing aircraft are realized from different countries so that the assembly will take minimal time. Illustratively, the forward fuselage is imported from Japan, wing tips from Korea, horizontal stabilizers from Italy, main landing gear from Japan and passenger entry doors from France. Additionally, the engines are manufactured in England, landing gear doors in Canada, wing body fairing in Canada and the center wing box from Japan. Through the outsourcing, the company reduces the supply time as the aircrafts are delivered within the stipulated time frame. Additionally, the firm has reduced the risks because it pays the manufacturers after they deliver the Boeing to the customers. In fact, this incentive encourages the manufacturers to engage collaborative efforts so that they can deliver the aircraft in short period. Nevertheless, the firm seeks to decentralize the manufacturing process so that they can outsource some of the processes that are not critical. Thus, there is reduced lag time to deliver the assembled parts. Airbus A380 versus the Dreamliner 787 The biggest challenge to an airline company is to serve all the customers that request for the services at the right time. In fact, most of the customers travel to different places at different time schedules, and this complicates the service delivery criteria. Additionally, the firms seek to introduce a supply chain that will limit its costs so that they can make additional profits (Li 2007, p. 37). For example, the airline industry has started to use economies of scale through the provision of services to many customers in a single flight. Illustratively, there has been the introduction of the Airbus A380 that has a capacity of 850 passengers. Evidently, it is noted that the passenger plane has wingspan length of a football field and is considered the largest plane. However, the companies that operate such a plane may need customers to demand the services in numbers, and this may be a difficult operation (Thomas 2010, p. 185). For example, many of the passengers may have different travel schedules, and this might influence negatively on the airline, as it may not achieve the optimal number of customers. Under such circumstances, the companies have opted to include an option where a standard plane, such as the Dreamliner 787 is used to carry passengers to specified destinations (Tang and Zimmerman 2009, p. 77). In this approach, the airplane carries a limited number of customers, and this ensures the company carries the maximum number of customers. In order to increase the profitability in the industry, the passenger planes are scheduled to travel to different destinations in the world while they carry the maximum number of customers. Nevertheless, it is started that they can connect to different destinations in a single flight since they are flexible. Thus, most of the customers that are served are satisfied with the services that are offered. The oil crisis that has been an experiment in the past has affected the airline industry, and some of the companies have made colossal amounts of losses. Due to an increase in the pricing of the commodity, the organizations in the division have to incur additional costs so that they can serve the customers that have already enrolled for the services. Apparently, the companies are not compelled to increase the price of the tickets since this will affect the demand for the services. Thus, it will affect negatively on the demand rate, and this can lead to unreliability on the services. Thus, the introduction of a supply chain that will produce the Dreamliner 787 is an appropriate commitment by the company as it seeks to enhance the customer base. Evidently, the firm states that the Dreamliner is a fuel-efficient aircraft that consumes limited amount of fuel in a single flight (Gansler 2004, p. 142). In fact, when compared to the Airbus, this is an ideal option for the company as it is in a position to make additional profits. Therefore, the supply chain management has effectively reduced the expenses of the company through the introduction of new airplanes that serve the customers accordingly. Manufacture Ring Aircraft by Use of Composite Materials It is important to consider a supply chain management system that will define the most appropriate production method so that the firm, customers and the stakeholders have mutual benefits. In fact, this approach has been instituted by Boeing so that it has relevant rate of returns to most of the partners (Kouvelis, 2012, p. 12). First, with composite material in the manufacture of the aircraft, the customers benefit because the cruising speed is improved. In such an aspect, the customers are transported to their destination in a minimized period, and they can move from one city to another in a short time. Secondly, the management of the company spends reduced amounts of cash due to the limited consumption of the fuel. Evidently, the composite materials are light, which reduced the weight that is carried by the engines. Thirdly, the introduction of the process enables the supply chain management to use materials that resist corrosion. Due to use of such materials, the company spends limited amounts of cash used to maintain the aircraft. Thus, they have to reduce the maintenance costs that eventually reduce the profitability levels of the industry (Gattorna 2009, p. 320). Fourthly, the use of the new materials enhances the humidity levels in the aircraft, and this enhances the comfort that customers receive (Tang and Zimmerman 2009, p. 76). Thus, the process is objective as it enhances the contentment of all the individuals that are connected by the airlines. Lastly, it is noted that the introduction of the new manufacturing technique has reduced the manufacturing costs that are incurred by the organization. Evidently, the competent are stronger and require limited fasteners. Due to the limited joints, the company saves a significant amount of cash as it avoids the purchase of bolts and nuts. General Electric and Rolls-Royce Engines Reliability of the engines is a critical perspective in the airline industry as it defines the quality of services delivered to the customers. Importantly, the Boeing Company has initiated the use of engines manufactured by Rolls-Royce and general electric at reduced costs, and this leads to higher profitability. Evidently, the simple design of the engine allows the company to change the engines easily, which reduces the time spent to maintain an aircraft (Harrison, Lee and Neale 2005, p. 312). Additionally, the limited time used to service the engines allows the customers to be served within a short time. Thus, it is prudent to consider the change in the production method. Three Tier Supply Chain The three-tier supply chain management is an appropriate avenue that a company has been instituted to reduce the time used to manufacture an aircraft. Evidently, the firm approaches multiple suppliers in the third tier so that they can provide the different parts that are required. Thereafter, they have to provide the materials to a limited number of individuals in the second tier, who are the system and structure partners. Eventually, the materials are delivered to an entity in the first tier, which is the pre-assembly. Lastly, the Boeing assembly plant assembles the parts to provide a complete aircraft. Thus, the company reduces the time it uses to manufacture the airplanes through introduction of new suppliers in a complex supply chain. Conclusion Conclusively, the supply chain management criterion is an important aspect as it defines the profitability levels. For instance, a supply chain management system that takes a limited time to supply resources to a firm is appreciative as it ensures the company serves many people for a limited period. On the other hand, some delays lead to adverse service provision since the customers are not contented with the services. Evidently, Boeing has involved a critical supply chain that ensures the suppliers provide the needs of the company for a limited period. For example, introduction of the Dreamliner is an appropriate encounter as it has reduced the costs incurred by the industry. For example, the Dreamliner has efficiency in consumption of fuel and leads to minimal expenditure. Illustratively, the indulgence of more supplies to reduce the time used to manufacturer an airplane has enhanced the commitment of the firm to provide additional aircrafts to the company. References Blanchard, D 2010, Supply chain management best practices. John Wiley & Sons, Hoboken. Chakravarty, A. 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