Supply Chain Management-A Case of AmerTac Inc - Term Paper Example

Supply Chain Management-A Case of AmerTac Inc. Introduction In the modern business world where innovation, diversity and globalization are trends of the business, enterprises have stepped onto the Supply Chain Management Concept. The concept is on the highest proposition as it provides unified business solutions to international business organizations. Starting from procurement to manufacturing and endlessly to distribution, all comes in the vital managerial concept of Supply Chain. Based on how SCM is innovative and how it provides solutions to modern business enterprises, this paper is going to analyze a recent case study. The study will assert a position of a company oriented to supply chain management principles. The analysis will breach the concepts of supply chain including information flow management or integrated supply chain in order to evaluate the position of the company with respect to the SCM models. This is how a relationship will be established between supply chain models and their practical apprehension. Theoretical Background According to modern literature, supply chain management is the management of entire chain which includes organization’s inbound operations (procurement, manufacturing, servicing, materials handling, inventory) and outbound operations (distribution and transportation). It is a network which flows from one pattern to another in order to maintain customer value and relationship. SCM is the management of the demand chain, the chain which belongs to customer and customer oriented needs. According to Christopher (2005, as cited in Pryke, 2009, below), “SCM is the management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole” (Pryke, 2009) pp. 37. According to Blackwell, companies sustain competitive advantages via information flow management which is significant principle of supply chain as a system. There are three important flows within supply chain, information flow, material flow and flow of finance or capital. Similarly, as per Cooper and Lambert’s assessment, effective supply chain means integrated supply chain as integration is core element required in supply chain management system (Baihaqi & Beaumont, 2005, pp. 2). Collaboration and relationship are further essentials of supply chain. If there is not strong collaboration or relationship within supply chain partners (suppliers, manufacturers and distributors), it is impossible to sustain the entire system of SCM (Baihaqi & Beaumont, 2005). Critical Evaluation of a Supply Chain Case Company Overview AmerTac is one of the renowned companies in consumer electronics, based in New Jersey since 1937 (Bloomberg, 2013). The company offers wide range of products including decorative hardware, lighting fixtures, night lighting fixtures, in-house lighting and plant accessories. Moreover, it offers ceramics, mirrors, and accent lighting fixtures to meet the diversified need of customers. Being a well known company AmerTac distributes its products to almost all popular retailers including Wal-Mart, Lowe’s and The Home Depot (AmerTac, 2013). This gets possible by company’s wide ranging supply chain network which is channelized to all most all local pick points. The network supplies products to showrooms, supermarkets, home centers and merchandisers which receive AmerTac products with special supply chain service. Apart from all the company itself is an example of effective supply chain management as it distributes wide range of products with optimized distribution patterns (Lambert, 2008). AmerTac System and Challenges Information flow which is major part of integrated supply chain management has remained important for AmerTac. The company works on strategic IT systems which control and manage two of the IT operations, data flows and information flows. Within the company structure IT systems are centralized which is to link one activity and operation from next activity and operation. AmerTac implies the integrated supply chain management approach which to great extent has come out effective for company’s key internal operations (materials handling, manufacturing). Meanwhile, within AmerTac system information sharing is effective which smoothes up the entire functioning of the system. Likewise, when information is generated in the warehouse store it is suddenly passed on to the next level of operation “distribution” which integrates all departments in an sufficient manner. This is a great sign in respect of integrated supply chain management as when departments are linked together effectively it give deliberate results in the performance of the system. Meanwhile, the challenge lies in the decision aspect as departments in AmerTac gather information but are not authorized to take actions or decisions. Decisions are limited to specified authorities like top management or chief operators which if not present at the site delays the functioning of the department (Lambert, 2008). This has been a subjective problem in AmerTac as it contradicts company’s integrated supply chain management approach which talks about close integration (Handfield, 2002). Recommendations on Information Flow Management To replicate the concept of supply chain it is necessary that decision authority is transferred to the departments. Transferring information without the authority of decision is useless because it delays the time of operation as the decision has to be passed by specified authority (Handfield, 2002). When decisions are decentralized, opened and segmental then information gathered is highly actionable. This reduces time of departmental operation which is very important for integrated supply chain management system (Lambert, 2008). All departments in AmerTac including procurement, manufacturing, warehouse and distribution should be authorized to take decisions. By doing so the bottlenecks in processes will be controlled and hindrances for meeting deadlines will be removed. Information sharing which is one part of decision making process will become effective by having decentralized decision making authority. This will systemize the departmental information as all departments will be linked and be proactive to response on the problems (Handfield, 2002). On further evaluation it has been noted that AmerTac production systems are weak. The problems are of manual materials handling, slow data transference and labor intensive operation especially at the picking lines which make the overall system less productive and inadequate. Due to the manual treatment of the production lines the overall output of the system is low (Handfield, 2002). The operation is time consuming and the company is not able to meet deadlines of the customer which are very important for maintaining the value of the customer. Apart from all, production being the central department of supply chain has direct consequences on supply chain activity. If production lines are not well organized or showing less productiveness it impacts overall system of supply chain. Hence, this is essentially required that the organization improves its production facility. This is important for supply chain and the integrated principle of supply chain which enjoins all departments together proficiently and effectively (Handfield, 2002). Recommendations on Integrated Supply Chain Management Following on the integrated principle of supply chain industrial engineering concepts are highly recommended. Concepts like lean manufacturing, six-sigma and Just in Time that assure automated manufacturing along with waste reduction are highly applicable (Taghizadegan, 2010). Companies like AmerTac which believe in integrated supply chain must adopt such modern engineering principles. By adopting such principles five types of waste can be reduced from company’s system including, over-processing, overproduction, excessive inventory, transportation, waiting, motion and defects. Such advanced engineering models are highly applicable to firms like AmerTac, which have the largest chain networks, big inventory models and extensive production lines to get managed and controlled (Taghizadegan, 2010). AmerTac facing challenges of large picking lines, intensive labor operations and growing customer demand can adopt the concepts of automated manufacturing. In recent times, companies have been adapting automated pick-to-light modules. These are subsequent for order placement and picking operation. Such automated pick-to-light modules bring sequential and simultaneous picking (BusEx, 2010). They are designed for high-tech manufacturing, automation and integrated order placement which rightly fits to the concept of integrated supply chain. When AmerTac will have such advanced engineering methods it will completely fall in the notion of integrated supply chain. By doing so, the company will have a technological way to move forward reducing the cost and time for production operation (BusEx, 2010). AmerTac distribution centre Pennsylvania has been facing the problem of disintegration. The center holds the largest warehousing system with inadequate warehousing performance (BusEx, 2010). The inventory models are effective but the material handling operation which is entirely manual is facing the challenge of low productive operation (Manhattan SCALE, 2012). The center requires the replacement of manual picking lines from automated assemblies which are already proposed site engineers and technological experts. The thought has been given to the suggestion but the decision to execute it has been pending since quite long. On further there is a problem of warehousing management functions especially managing the labeling task which is required by almost all customer population (Manhattan SCALE, 2012). The fact is that Pennsylvania center deals with major clients. The top 100 retailing compliance of the region are under the premises of Pennsylvania center. The retailers expect that the center fulfills their requirement of accurate labeling and real time order placement which requires the advanced warehousing software system. A software system which can assess, evaluate and integrate all warehousing activities is essentially required. Hence, enterprise based warehousing software is recommended to the managers. This is essential to maintain the value from the customers and the trust they keep in AmerTac services (Manhattan SCALE, 2012). Supply chain management is all about managing the demand chain, the chain which belongs to customers and their valuable perceptions. To manage the demand chain it is necessary that the company addresses each area of the supply chain. The section which is facing deep problems should be addressed first (Manhattan SCALE, 2012). This is to stream line the operation and to effectuate the chain which connects to the valuable customer perception. AmerTac being a trademark company in supply chain management should address its sectional problems. The problems which are lying in the departments, centers or any of its supply chain units should be addressed at the first managerial level. This is what integrated supply chain is all about as if one section is down the other is automatically disrupted. Hence, AmerTac should work on its sectional problems to improve its entire supply chain efficiency and productiveness (Manhattan SCALE, 2012). Recommendations on Supply Chain Relationships Management Above all, relationships have a fundamental role in strengthening the supply chain system. When relationships are stronger among supply chain partners (vendors, suppliers) and workmen (managers and operators) then there are chances of excelling and growth within the system (Handfield, 2002). Efficiency is derived through people as it is the workforce which plays a partial role in strengthening the supply chain system (Lambert, 2008). AmerTac which operates on the integrated supply chain management philosophy should work on the relationship aspect. Improving coordination and communication among the employees is essentially required to develop the relationships (Lambert, 2008). When people are found connected like in the top, mid and lower management, they are more determined to accomplish their tasks. Meeting the functional tasks means organizational goals are achieved (Lambert, 2008). Meanwhile, within AmerTac system it is necessary that people be brought closer to each other. Information sharing and assigning tasks should be collaborative and integrated. It has been seen that when organizations are more flexible and have people oriented systems, they are more into the concept of integrated supply chain. All the respective flows such as information flow, material flow or financial flows are streamlined because the people who are managers are at the best of collaboration (Lambert, 2008). According to the Vice President (Fortune 500), “sub-optimizing people’s functioning areas optimize the entire supply chain system” (Handfield, 2002). This indicates that performance of each area of supply chain is based on the workforce performance which eventually comes through coordination and understanding (Handfield, 2002). AmerTac which effectively place thousands of workers at one time of operation should imply team leadership and relationship management concepts. These are important for individual level of grooming and efficiency of the supply chain system (Handfield, 2002). When team effort is there in each of the functioning area then results are positive and optimum in the final stages of supply chain. The whole network is in the flow as their will is team leadership, coordination and trust to maintain a higher course of action. Meanwhile, for establishing relationship it is necessary that AmerTac adopt the approach of continuous improvement which works out gradually but at the persistent level to establish the notion of “relationship management” (Handfield, 2002). Conclusion In the modern business world where there are challenges of globalization and diversified customer needs, enterprises have stepped into the vital concept of supply chain. Supply chain management is the management of demand chain- a chain which is associated to customers and customers’ preferences. It is the management of three types of flows, information flow, material flow and financial flow respectively. AmerTac is one of the renowned companies in supply chain services. It is a consumer electronics firm that works on integrated supply chain management concept. There are certain major flaws found in the company’s internal supply chain setup. The flaws are at the managerial side (centralized decision making), at production (labor intensive operation) and at the warehousing section (inadequate inventory models). Based on the problems, automated manufacturing is highly recommended to the AmerTac system. Such systems will increase the efficiency of the production areas along with the reduction of cost and time at each operation. In admiring integrated supply chain management AmerTac has to correct its decision making system. The system is centralized and limits the power of departments to take actions. In a centralized system information sharing becomes a waste because the information collected cannot be processed and executed. This creates bottlenecks within the supply chain system as departments lag and are not ready to take action on some occasions. A decentralized system is recommended instead. The system is effective as the department pace is allowed to evolve in executing the jobs and maintaining the integrated supply chain discipline. Reference List AmerTac, 2013. About AmerTac. [Online] Viewed at: [Accessed 21 February 2013]. Baihaqi, I. & Beaumont, N., 2005. Information Sharing in Supply Chains: A Literature Review and Research Agenda. Research Report. St. Louis: Monash University. Bloomberg, 2013. Company Overview of AmerTac Inc. [Online] Viewed at: [Accessed 20 February 2013]. BusEx, 2010. Supply Chain: Picking Strategies. [Online] Viewed at: [Accessed 21 February 2013]. Handfield, R., 2002. Managing Relationships in the Supply Chain. [Online] Viewed at: [Accessed 21 February 2013]. Lambert, D., 2008. Supply Chain Management: Processes, Partnerships, Performance. Jacksonville: SCMI. Manhattan, 2012. AmerTac speeds operations, increases accuracy and provides top-notch service with Manhattan SCALE. Case Study. Atlanta: Manhattan Associates. Pryke, S., 2009. Construction Supply Chain Management. Oxford: John Wiley & Sons. Taghizadegan, S., 2010. Essentials of Lean Six Sigma. Oxford: Butterworth-Heinemann. Read More