Strategic Supply Chain Management - Term Paper Example

Table of contents Executive summary........................................................................................................................ 1 Effects of warehousing by use of 3PL........................................................................................... 4 Warehousing consolidation............................................................................................................ 4 Effects of mixed shipments............................................................................................................ 5 Impacts of the three alternatives..................................................................................................... 5 8 process table.................................................................................................................................6 Recommendations........................................................................................................................... 9 1. Executive summary Westminster Company is a large manufacturing company that manufactures consumer health products. The company has gained global recognition and maintains various offices in various parts of the world such as Europe, Latin America and the Pacific Rim in order to maintaining production in the overseas nations. The domestic operations of the company consist of three separate but fully owned companies that manufacture and distribute unique product lines. The company has a decentralized management system as suggested by Wisner et al. (2008). The management encourages the policy of being independent and unique by encouraging responsibility. The marketing process acts as an incentive for entrepreneurial management since its products are marketed through a network of diverse retailers throughout the region. The company has been experiencing pressure from domestic and global competitors forcing it to evaluate their traditional supply chain practices. The company has expanded through the introduction of aggressive new product development strategies into a global provider of health care products. The company should ensure timely delivery of quality goods to its customers. The location of its warehouse is affected by many factors including consumer locality, availability of trained labour and the costs incurred in form of rates, purchases and rent. The warehouse should be located in a place convenient to the suppliers and customers. Private warehouses are owned and managed by the company to store their own stock exclusively. This type of warehouse is cheaper and convenient since there are no costs incurred like rent and rates. The firm should use 3PL since it has a complex distribution network for efficient supply of products to their customers. 2. Effects of warehousing by use of 3PL The trend of the use of 3PL in warehousing has become popular in the manufacturing industry in recent times. This development comes as a challenge to the management since they have to perform the task of selecting the providers and evaluating the services provided. To solve this problem the management needs to analyze the casual relationship between logistics service quality and satisfaction. There are many benefits associated with the use of 3PL warehousing. The company reduces on costs based on the economies of scale as explained by Simchi-Levi et al. (2003). There is overall improvement on the efficiency of services provided by the company. According to recent reports there have been satisfaction and performance issues with the providers. This simply implies that the complexity of the needs of buyers has evolved calling for changes to be implemented. 3. Warehouse consolidation Consolidation aims to reduce the costs incurred in a distribution network and this is a strategy in the operations of the supply chain as explained by Blanchard (2001). The order fill rate is the rate per hour that a selector assembles in a warehouse. The order fill rate is made faster and more efficient by consolidation. Warehouse consolidation requires that a company takes many issues into consideration such as labour, technology, logistics and customer service. The consolidation has a positive impact on the customers since it enables them to accept fewer large shipments and this makes transportation to be more efficient. The company should have the correct strategy in order to execute consolidation properly. The company has to have the expertise to do the job, ensure analysis and justification of every step in the process and set goals to measure success. Consolidation helps minimize on costs incurred giving better customer service and assists in better management in the ordering system. 4. Effects of mixed shipment Mixed shipments from consolidated distribution centres have a positive impact on the company’s costs and performance. Consolidation is one of the ways of reducing procurement costs incurred in freight management. This increases the efficiency in all the operations surrounding freight management. This helps to improve the transportation and provides the incentive to use efficient mode of transport for different types of delivery. This reduces unnecessary shipping volumes and distances minimizing the costs incurred by the company. The company’s performance improves as the company is able to make efficient deliveries to the customer and this helps to increase the sales volume as explained by Cohen and Roussel (2005). This also minimizes on the company’s expenses leading to an increase in the overall profits made. 5. Impacts of the three alternatives POS refers to a point where a transaction takes place and it impacts on transfer and customer freight costs. If the transaction is carried out after a short period the freight costs incurred are less. Reduced order cycle times lead to lower customer freight costs for example warehousing costs as it leads to improved inbound freight volume. This also minimizes on the costs incurred to service the orders by a slight percentage. It leads to improved transportation of the available stock in bulk which is cheaper since the orders are less. The overall effect is a reduction of the total freight costs of all the three companies. Customisation affects transfer and customer freight costs while consolidators reduce on the costs as they offer lower consolidation rates and lower transportation costs. The overall effect of the three alternatives is minimized costs as explained by Blanchard (2001). 6. 8 process table Strategic supply chain management concerns decisions made at the enterprise level to determine the advantages of the supply chain and its effectiveness. This system ensures network optimization, including the location, number, size of distribution centres, warehousing and facilities. This equips the management with information concerning make or buying decisions and helps the company to develop an organizational supply strategy. This helps the company also to develop strategic partnerships with third parties including customers, suppliers and distributors creating proper communication channels for the flow of critical information for third party logistics as explained by Cohen and Roussel (2005). The system also facilitates integration of new and existing products into the capacity management activities and the supply. The three new alternatives have a positive impact on transfer and customer freight costs though the adoption of the system requires some changes and may even be expensive on the company. The company should ensure implementation of the system in its daily operations as it minimizes on the freight management costs and improves on customer service. The system plays a major role of the daily operations of activities carried out in the business from the initial stages of production to completion. Manufacturing facilities should ensure maintenance of the equipment to ensure that the production goals are achieved as stated by Brewer et al. (2001). This process is referred to as Total Productive Maintenance (TPM) whereby organizations spend most of their resources and time maintaining their equipment using a preventative maintenance plan. The company also implements the Overall Productive Maintenance (OPM) which ensures improvement of the overall facilities and evaluates the success of the procedures. This improves production in the organization leading to efficient manufacturing which saves the company’s time and resources. The company is in a position to apply different production methods and assess the impact of any changes on the overall production. Through the process of Quick Response Manufacturing (QRM) analysis can be made on the lead time and determine the time when to increase or decrease productivity. These are the major processes involved in the process of strategic supply chain management. The eight supply chain processes affect customer classification and degree of centralization and decentralization of the required functionality as explained by Wisner et al. (2008). The first step in the chain analysis is demand and planning responsiveness. The main objective of this step is the assessment of demand and strategic design in order to achieve maximum responsiveness of the customer requirements. This can be achieved through decentralization of distribution functions to the various departments involved in freight management. The second step is customer relationship that helps the company to facilitate strategic information that can be used in planning and all other integrated operations. Thirdly, the company should have a customer order fulfilment system or service systems to enable the company execute sustainable order delivery to all their customers. The company should decentralize its operations to ensure that it achieves quality customer services and minimizes on freight related costs. This helps to improve the overall performance on the company since there are increased sales hence increased profits in the long run. The company should launch product or service development as this acts as a marketing strategy that helps to boost the overall sales of the company as stated by Cohen and Roussel (2005). The company should set up a marketing department specially delegated with the role of promotion of the company’s products. The other step involved is manufacturing customization that supports the strategy and facilitation of delays throughout the supply chain. The other is supplier relationship collaboration that dictates the involvement with suppliers to facilitate sharing of information and other operations. Life cycle support repairs products in the period of existence and it mainly handles matters relating to warranty, maintenance and repair. The last step in the supply chain analysis is reverse logistics that involves the return and disposition of inventories in a secure and cost effective manner. The evaluation of the eight supply chain processes in terms of the degree of centralization or decentralization can be shown using the matrix below.   Key: Dec- decentralized Cen - centralized After an in depth analysis of the company’s activities it has been established that the company needs a logistics system that focuses on cost reduction, service improvement and capital reduction. The company is experiencing major problems when dealing with their customers and needs a logistics system that can handle such issues. The specific objectives of the recommended logistics system should be ensuring a constant supply of goods to the buyer in the right quantity, quality, location, cost and condition as explained by Brewer et al. (2001). The system should basically aim at maximizing on customer service and minimize on the distribution costs. The logistics system should ensure fast response of the customer requirements in a timely basis. The system should also generate more sales for the company. The system should ensure movement consolidation to regulate one of the most significant costs which is transportation. The system should be innovative and its working is facilitated by operations that transcend the supply chain. 7. Recommendations Warehouses should be located in a place convenient to the suppliers and the customers. A company should consider the locality, availability of trained labour, customer locality to the warehouse and the costs incurred in form of rates, purchases and rent. Private warehouses are owned and managed by the company to store their own stock exclusively. This type of warehouse is cheaper and convenient to the company since there are no costs incurred in form of rent and rates. The firm should use 3PL since it has a complex distribution network for efficient supply of products to their customers. References Blanchard, D 2001, Supply chain management best practices, 2nd edn, John Wiley and Sons. Brewer, A, Button, KJ & Hensher, DA, 2001, Handbook of logistics and supply-chain management, Emerald Group Publishing. Cohen, S & Roussel, J 2005, Strategic supply chain management: the five disciplines for top performance, McGraw-Hill Professional, 2nd edn, McGraw Hill Professional, Simchi-Levi, D, Kaminsky, P & Simchi- Levi, E 2003, Designing and managing the supply chain: Concepts, strategies, and case studies, 2nd edn, McGraw Hill Professional. Wisner, JD, Tan, KC & Leong, GL 2008, Principles of supply chain management, 2nd edn, Cengage Learning. Read More