Logistics and Supply Chain Management - Essay Example

In the electronics industry flexibility, responsiveness to customer demand and product specifications and time management are important in the strategic management of the supply chain. Dell Computers is a typical example in the industry that manufactures as per orders received and its manufacturing schedule is changed every two hours (Chou, Tan & Yen, 2004). For Dell maintaining delivery schedules are more important than prices and they ensure that the entire chain is strategically managed. Their goal is to decrease inventory cost and match production to demand.

This is in line with the concept of JIT in inventory management. JIT reduces overall production costs by streamlining the products flow within the production process and improves information flow within business partners. In the manufacturing industry, JIT-driven processes can introduce small purchase lot sizes that can be delivered in exact quantities rather than traditional large batch delivery with 5 percent volume either way (Waters-Fuller, 1995). Multi-sourcing can be eliminated and manufacturers can stick to a few suppliers or ideally one supplier per component.

Supplier selection need not solely be based on price but quality and delivery performance can be used to assess the efficiency of the suppliers. JIT purchasing enables awarding long-term contract to the suppliers in return for the demand that buyer makes on the supplier. Long-term contracts not only eliminate the re-tendering costs but also reduce the prices for re-ordering. JIT further helps to strategically manage whether the supplier should supply directly or through a warehouse between the supplier and the customer.

While supplying directly is the ideal solution, the suppliers must receive comprehensive scheduling and planning data before production commences (Waters-Fuller, 1995). A warehouse on the other hand helps to provide a buffer stock and the warehouse can be