Maintaining the Continuous Supply Parts in Mining Industry - Coursework Example

Supply chain to ensure the continuous supply of parts, components and sub-assemblies for maintenance of expensive plant and machinery with very long operational life span in Mining Operation Student’s Name Course Code, Semester, Class Tutor 19 may, 2010 a. Problem discussion Supply chain is the mining industry deals with systems of organizations, technology, activities, people, resources and information involved to move a product or service from a supplier to the customer. To ensure there is continuous supply of parts, components and sub-assemblies for maintenance of expensive plant and machinery with very long operational life span, Supply chain activities changes the natural resources, components and raw materials into a final product that are delivered into the end customer. In complex supply chain systems, utilized products can re-enter into Supply chain at whenever point or level where the residual is recyclable (Chen et.al, 2004). The continuous supply of parts, components and sub-assemblies for maintenance, encompasses management and planning of the activities involved in procurement and sourcing, conversion, and logistics management activities. It crucially involves collaboration and coordination with the channel partners who can be intermediaries, suppliers, customers and third-party service providers (Anna, 2006). Essentially, the supply management integrates demand and the supply management within and across companies. The mining sector has the basic responsibility to connect the main business functions and businesses progression across and within companies into a high-performing and cohesive business model. Supply Chain Management involves all the logistics management activities listed above likewise to manufacturing operations and drives the coordination of activities and processes across and within marketing, product design, sales, information technology and finance. A standard supply chain starts with biological and ecological regulation of natural resources, preceded by human removal of raw material and involves various production links like assembly, merging and component construction before proceeding to various layers of storage facilities of ever-minimizing size and remote geographical locations and ultimately reaching the customer (Chen et.al, 2004). Most of exchanges come upon in the supply chain is thus between various different companies that aims at reducing their revenue in their interest sphere, though they could have minimal interest in the outstanding players in supply chain. Extended Enterprise is the name given to slightly coupled, self-governing network of businesses which come together to offer service and product offerings. b. How to go about the problem The production maintenance in the mining sector has to cater for varieties of supply chain model which deal with both the downstream and upstream sides. The Supply Chain Operations Reference (SCOR) model established by supply chain council determines the supplier of supplier’s towards the customer’s customer. It involves delivery and order accomplishment, warranty and returns processing costs, production flexibility, asset and inventory turns, among other features to evaluate the entire effective performance in the supply chain. The GSCF (Global Supply Chain Forum) initiated another supply chain model which is established on eight main business processes that are cross-firm and cross-functional in nature. Every process is coordinated by a cross-functional team to include representatives from production, logistics, finance, purchasing, research, marketing and development. As every processes interfaced with main suppliers and customers, supplier relationship management and customer relationship processes from the significance linkages in supply chain (Chen et.al, 2004). If the crucial information is reliable to any suitable company, all the companies in the supply chain retains the potential and can seek to assist the optimizing of the whole supply chain instead of the sub optimize focused on local interest. This guides into a better organized overall distribution and production which may minimize the costs and offer more attractive final product causing into better overall sales and results for the involved companies (Chen et.al, 2004). The incorporating SCM progressively leads into a novel kind of competition on global market where competitions are not based within the companies but takes the supply chain versus the supply chain form. The most important objective of the supply chain management is to cater for the customer demands via the most adequate utilization of resources, involving inventory, distribution capacity and labour (Chen et.al, 2004). As there is usually confusion over the logistics and supply chain terms, it is often admitted the logistics term applies towards activities in one organization or company concerning distribution of products whereas the term supply chain encompasses on the procurement and manufacturing and has a much wider focus as it engrosses various enterprises which include manufacturers, suppliers and retailers who work together to cater for customer’s requirement for a service or product (Chen et.al, 2004). The mining sector has to deal with network management of the interconnected businesses included in the eventual provision of service and product packages needed by the end-customers. Supply Chain management extents all the storage and movement of raw materials, finished goods and work in process inventory from the original point to consumption point. SCM can be defined as planning, design, control, execution and scrutinizing the supply chain activities with the aim of building a competitive infrastructure, coming with the net value, synchronizing supply with demand, leveraging worldwide logistics and measuring of performance worldwide (Anna, 2006). Its maintainers may entail the strategic and systemic coordination of traditional functions and tactics in those business functions in the certain company and transversely in businesses in supply chain with the aim of improving the lasting performance of individual companies and supply chain entirely. Global Supply Chain Forum: Supply Chain management, refers to incorporation of major businesses progresses in the supply chain for the aim of totalling value for stakeholders and customers (Chen et.al, 2004). According to CSCMP, the mining sector involves management and planning of the entire activities crucial in procurement, sourcing, logistics and conversion management. It also involves significant components of collaboration and coordination with channel partners which may be intermediaries, suppliers, customers and third-party service providers. Significantly, the supply chain management incorporates demand and supply management across and within companies. Most recently the weakened coupled and self organized network for businesses that unites and offers service and product offerings and called the Extended Enterprise. c. Strategies of maintaining the continuous supply parts in mining industry The mining sector to maintain its Supply chain to ensure the continuous supply of parts, components and sub-assemblies for maintenance of expensive plant and machinery with very long operational life span in Mining Operation, it has to be connected by one or many downstream and upstream flows of services, products, finances and information from the source to the customer and thus managing the supply chain is the supply chain management (Anna, 2006). The maintainace sector in the industry, addresses various problems which involve distribution of network configuration, distribution strategy, trade-offs in logistical activities, information, inventory management and cash flow. Distribution network configuration deals with location, number, production facilities, and network missions of suppliers, warehouses, distribution centres, cross-docks and customers. Distribution strategy deals with decentralized, centralized or shared challenges, delivery scheme like pool point shipping, direct shipment, cross docking, closed loop shipping which involves the mode of transportation like motor carrier, LTL, truckload, and intermodal transport (Chen et.al, 2004). The mining sector inventory management helps in location and quantity of inventory, work in progress, including raw materials and finished good. The cash-flow deals with arranging of methodologies and payment terms for exchange of funds across entities in the supply chain. Thus, Supply chain execution means coordination and managing of material movement, funds and information across the supply chain, in a bi-directional flow (Anna, 2006). Organizations endeavour to focus on the core competencies and to become more flexible which minimize their ownership of distribution sources and raw materials sources. These functions are more and more becoming outsourced into other entities which may perform their activities better or in minimized costs. The purpose is to ensure the continuous supply of parts, components and sub assemblies of maintenance in the Mining Operation to enhance the number of organizations engrossed to satisfy the customer demand alongside bringing low the management control of the daily logistics manoeuvre. Less control and enlarged supply chain partners caused the creation of supply chain management impression. The aim of the Supply chain management is to come up with collaboration and trust within the supply chain partners thus enhancing the inventory visibility and velocity of inventory movement. d. Different ways of solving problem In mining operations, there are various models which got proposed for comprehending the activities required to organize material movements across functional and organizational boundaries. SCOR is the supply chain management model enhanced by supply chain council. Another model is SCM Model projected by the GSCF. The supply chain activities may be classified into tactical, strategically, and operational levels. The CSCMP adopted the American Productivity and Quality Centre model which allows organizations to view their businesses from the cross industry viewpoint. To ensure the continuous supply of parts, components and sub-assemblies, supply chain has basically three functioning ways. These entail strategic, tactical and the operational activities. Strategic functions deals with the following: Strategic network optimizations which include location, number and size of warehousing, facilities and distribution canters. Strategic partnerships by means of suppliers, customers and distributors, creation of communication channels for crucial information and progressive improvements like direct shipping, cross docking, and third-party logistics. Product life cycle management which enables new and existing products to be integrated into supply chain and its capacity in management activities. Information technological chain operations. The tactical functions deal with the following: Sourcing of the contracts and other buying decisions. Decisions of production which include scheduling, contracting, and planning of the process definition. It has inventory decisions, which include location, quantity, and quality of inventory. Has the transportation strategy which involves frequency, contracting and routes. The operational functions deal with the following: Daily distribution planning and production, which entails all the nodes in supply chain. It has production scheduling in every manufacturing facility in its supply chain. Demand forecasting and planning, coordinating of the demand forecast in all the and sharing of the forecast with all suppliers. It has the sourcing planning which include the forecast demand and current inventory in collaboration with all the suppliers. In the mining sectors, organizations have enhanced their finding on which they should rely on efficient supply chains and networks to compete well in the global market and in the networked economy. New management’s strategies show the concept of business association extends further than the traditional enterprise boundaries and finds to organize the whole business procedures in the entire value chain of several companies (Chen et.al, 2004). The business environment contributes to development of supply chain networks. Initially as the outcome of globalization and multinational firms, business partnerships and strategic alliance, joint venture, crucial success factors got identified to complement the earlier. Secondly, technological alterations especially the spectacular fall of information communication payment which are important component for cost transaction caused the changes in coordination within the members of supply chain network (Chen et.al, 2004). A successful supply chain in mining to ensure the continuous supply of parts, components it requires changes from management of individual functions to association activities into major supply chain processes. A good scenario is when the purchasing department puts orders as the requirements which became known. The marketing departments respond to customer demand and converses with various retailers and distributors as it tries to come up with ways to cater for that demand. Information shared within the supply chain partners is only fully leveraged via the integration process. The supply chain business integration process includes the collaborative tasks amidst the suppliers and buyers, common systems, joint product development and shared information. The operation for an integrated supply chain needs a permanent information flow. However, in most of the countries, the management has got into a conclusion of maximizing its product flow which may not be achieve without implementing the process enhancement into business (Anna, 2006). The mining sector has to maintain its operations and its originations characteristics have to involve: Internal and external collaboration Lead time reduction initiatives Tighter feedback from market demand and customer Customer level forecasting There are other significant supply and maintenance processes in the business which include: customer service management, product commercialization and development, physical distribution, performance measurement, procurement, manufacturing flow support or management, and outsourcing/partnerships. The customer relationships management deals with relationship in the organization and the customers. The customer service is the origin of customer information. It offers customers with real-time data on product availability and schedule through interfaces with distribution operations and company’s production. Victorious organizations utilize following steps to establish the customer relationships: Establishment and maintenance of customer rapport Determining mutually satisfactory goals for customers and organization Producing of positive feelings within the organization and customer. Thus for continuous supply of parts, components and sub-assemblies for maintenance the procurement process, strategic plans are established together with suppliers to hold up for manufacturing flow management process upon development of novel products. In the firms where operations enlarge worldly, the sourcing ought to be managed on the world basis. The required results are the win-win relationship whereby the both parties gain and the time reduced for product development and design cycle. Likewise, the buying function establishes quick systems like the electronic data interchange and internet linkage to transmit the possible requirements more urgently. The activities concerned with getting materials and products from exterior suppliers engross resource planning, negotiation, supply sourcing, inbound transportation, negotiation, handling, storage and quality assurance most of which engage responsibility to associate with suppliers on issues of scheduling, hedging, supply continuity and the study into new sources or programs. For commercialization and product development, the suppliers and customers should be integrated into a product advance process for the sake of reducing market time. As the product life cycle reduces, the proper products should be developed and productively be launched with shorter time schedules to maintain its competitiveness. The manufacturing flow management supplies and produces the products to distribution channels on the basis of past forecasts. The manufacturing procedures should be adjustable to respond into the market alterations and accommodate its huge customization. The orders are the processes which perform on the just-in-time basis in the reduced lot sizes. Changes in manufacturing flow process causes shorter cycle times hence improved efficiency and responsiveness to meet the customer’s demand. The physical distribution concerns the movement of the final products and services to customers. In the physical distribution, customers are the final destination in the marketing channel and availability of service/product forms the crucial part for every channel participant’s marketing effort. It is as well via the physical distribution process that the space and time of customer service forms the integral part in marketing hence linking with the marketing channel to its customers like wholesalers, retailers and links manufacturers. Mining sectors ought to deal with not only the outsourcing of procurement of components and materials but outsourcing of the services as well which traditionally got offered with in-house. The logical matter in this trend is that the firm increasingly focus on the activities in value chain where it has recognized benefits and outsources everything else. The movement has been especially evidenced by logistics whereby the provision of transport, inventory control and warehousing has enhancing the subcontracts or the logistics partners. However, global supply chains facade challenges concerning value and quantity. The supply and value chains trends entail: globalization, collaboration for the value chain and low-cost providers, increased global operations which require increased global planning and coordination to get the global optimums, increased cross border sourcing, and shared service canters for administrative and logical functions, and complex challenges which include the midsized firms to enhanced degree. The trends have many advantages to manufacturers since they come up with bigger lot sizes, better environments, lower taxes, special tax zones for their products. e. Conclusions and Recommendations Supply chain sustainability in the mining sector shall ensure the continuous supply of parts, components and sub-assemblies for maintenance of expensive plant and machinery with very long operational life span in the business matter which affects organizations supply chain and logistics network and is usually quantified by comparison of SECH ratings. SECH ratings are described as ethical, social, cultural and health footprints. Consumers have become more knowledgeable of the environmental effects of the purchases and companies ratings along the non-governmental organizations (Anna, 2006). The level of management and integration for business process links is the function of level and number ranging from low to high. Consequently, addition of more management components increases the integration level in the business process link. These are: Planning and control, organization structure, information flow facility structure, power and leadership structure, culture and attitude, work structure, product flow facility structure, management methods and risk and reward structure. The emphasis on cooperation represents synergism causing into maximum level for joint achievement. References: Chen, I. J., Paulraj, A. (2004): Towards a theory of supply chain management in mining industry: the constructs and Measurements. In: Journal of Operations Management, 22/2: 119-150 Anna Nagurney. (2006) Supply Chain Network Economics: Dynamics of Prices, Flows, and Profits, Edward Elgar. 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