Does Technology Solve the Problems of Supply Chain Management - Essay Example

Does technology solve the problems of Supply Chain Management Introduction Supply Chain Management in industries is replete with problems that takeup different shapes at different points in time. Supply chain is viewed as an art and a science. It is the way by which the company sources all its raw materials / components are sourced for its production and delivery to its customers. 3Ms of the business, Men Machine and Material all form an integrated part of the performance of any Supply Chain Management System. Modern management thought provide a number of alternatives and better SCM management techniques to ensure that the supply is stream lined and works in line with the needs of the company. However, this requires numerous other factors to work in sync to ensure that the results are at desired levels. This can be achieved through usage of technology. Many companies have leveraged technology to their advantage in enabling their Supply Chain management system to be a network of suppliers and the manufacturers. Even after installing the technology in place, it was found that these companies do have hiccups in their supply chain causing disruptions and delays in their production process. While some companies have reported gains due to technology others have not. This paper aims at studying the varying thoughts on the supply chain and whether technology adds to the solution or to the problem. Literature Review Most of the large companies in their initial product launch concentrate on their product performance and on the marketability of their products. Once the markets stabilise it is no surprise that the companies find themselves in the supply problem unless they have taken care of the production run and its requirements even while the marketing exercise was on. Once the production has to pick up, the company runs into the supply chain problems when the vendors do not meet the deadlines they supplied or the quality and quantity that they had originally committed. Secondly, in order to counter this, stocking of material was adopted which sent the inventory soaring. This again ushered in the Just-in-Time and Kanban systems for inventory management which worked in close association with the vendors of the company (D. Connors, et al, 1995). The stock held by the vendors was also taken into account when the overall inventory, supply and management of the material were done. Various technological advances took the status of these systems forward by implementing integrated Supply Chain Management which integrated the inventory of the company with its vendors. Thirdly, changes in the design of products were needed to meet the customer requirements faster. This meant that the designs brought into fore by the design department need to be enabled at the earliest point in time. This was made possible by bridging the gap between the design team and the procurement team (N. Viswanadham, 2000). The designs that were getting lined up at the company had to be brought into use at the vendor's production floor. This was made possible by employing appropriate technologies to enable smooth flow of design to the production floor, albeit with the vendor. Supply Chain is the entire process, involving the following components: 1. Plan 2. Source 3. Make 4. Deliver 5. Return. The process should take care of the complete process of planning for the requirements. This would involve Material Requirement Planning (MRP). This would indicate the quantity requirements, the quality requirements, time and financial requirements. All these integrate to make up the material requirement planning. The design of the systems would specify the quality and the quantity requirements for a specific production plan. The production plan would also mention the date and time when the materials would be required in line with the JIT management practices. The commercial implications of the procurement process will be decided by the marketing based on the final sale price of the product manufactured. All these factors would affect the initial plan for the supply chain. Technology aspects in making these decisions are present through out the process. In design and in process specifications, in identifying the suppliers and in JIT management; technology supports the planning process (W.J. Hopp and M.L. Spearman, 1996). However, most of the decisions during planning process is more of an art than that of science. Identifying the source of the supply in line with the plan that was already laid would form the next step of the supply chain process. In this process, technology does plan an important role and optimises the work of the procurement person. Production happens through its own process but then production planning and appropriate management of the production process is optimised using the tools that are available. Technology backing does play an important role in ensuring that production is optimised both on time and cost. Delivery of the product thus manufactured is done over a distribution network. The entire flow of the product through this network is optimised and the movement tracking is done using the latest technological advances. This movement of goods and services over the delivery stream would certainly impact on the efficiency of delivery. The process of delivery starts from packing and shipping. It also takes care of tracking the consignment till it reaches safely at the customer's hands. Subsequent to delivery, in case of rejections, taking back the material and re-working if needed all form part of the supply chain. Every one of this process can be automated and has been done to a great degree. However, the technology could impact the speed of operation and get the monotony out of the hands of staff. In most of the cases, the planning, making and the process of selection of the vendors become as much integrated as possible, resulting in better components and on time delivery. This also enables the company to monitor the status of production. Most of the supply chain software allows either an electronic document interface or a direct transfer of data from the vendor to the company's ERP software. This results in the company knowing the production status of everyone of the vendors; their internal stock for the items of interest (R.B. Handfield and E.L. Nochols, Jr, 1999). All this would help the company to make decisions and provides the company with a capability-to-commit on exact delivery dates for their products. In most of the cases, the capability-to-produce or the capability-to-commit will differ depending on the supply lead times for the raw material. Now by employing the automated Supply Chain Systems, it is possible to ensure that the capability is present and it is also possible to stick to the commitments made. The technology provides the manager with a bird's eye view of the entire supply chain enabling him to back informed decisions. Some of the Supply Chain products, allow the managers to find out what are the results of internal testing of components were. This would help them to surmise the possible failures that can happen during or after production and accordingly take remedial actions if needed (Y Narahari and S Biswas, Aug 2000). By enabling Just-In-Time and Kanban pull or push systems, the companies could realise greater advantage by optimising the stock on hand and working on the other factors that would reduce the cost of the inventory. Supply Chain also helps in optimising and appropriately laying out the work shop / factory so that there is no loss of time during internal transit of material and the time during the production run is kept to the minimum. Effectiveness of supply chains are measured using both financial and non-financial measures (R.B. Handfield and E.L. Nochols, Jr, 1999). Non-financial measures are typically, Cycle time, Customer service levels, inventory levels and Resource Utilisation factors. In addition to these, other Key Performance Indicators (KPIs) are identified and would help in monitoring the efficiency of the supply chain. These can occur in any of the activities from the time taken to raise a purchase order to processing for a payment. All the internal activities / jobs could also be monitored by identifying a suitable KPI. Similar KPIs are also defined for financial measures. Supply chain modelling would help in identifying the right kind of decisions that has to be made (Jeremy F. Shapiro, 2000). A number of optimisation models are available. Typically successful models include multi-echelon models (Vollmann, et al., 2004), Supply network model (Ettl et al., Mar-Apr 2000) and Global supply chain model (Arntzen et al, Jan-Feb 1995). Since these models are theoretical and take in a large number of parameters, it is very cumbersome to reach at conclusive decisions using these models without the help of appropriate software. Most of these models, also have lacuna that are identified and documented. Though most of the factors that impact the performance of the model are identified and empirically defined, it is found that there are other factors that could impact from time to time. The impact also is not of fixed intensity but varies with the factor, with the time and the nature of the product and environment. The impact of multitude of factors is so vast that this is considered a typical example of a fuzzy behaviour. Though, to as great an extent as possible the models are visualised and presented. Hypothesis Based on the literature review and on the analysis the following hypothesis is framed: Technology helps in augmenting efficiency of supply chain management, particularly on the Global scale. However, SCM is not all technology but also an art. Careful work execution is as much important as technology for a successful SCM. Project Plan The project will follow the methodology indicated below: 1. Study of the existing systems and the theory behind Supply Chain Management. This would involve going through the available literature in order to identify the various factors that make up the Supply Chain. Impact of every one of the factors is ascertained and the technology solution for every one of the factors is also identified, if available. Once these are identified, then the work in the case progresses with more clarity added to the nature of factors that influence the technology changes. Available literature is exhaustively collected for this purpose and the same is documented and referenced. 2. Once the literature review is done, appropriate analysis is done to ascertain the impact of technology on supply chain. This would help in understanding the success of the technological innovations in this field. In addition to that, the effectiveness of such technological innovations and the extent to which they are trustable is also identified from the analysis. The analysis of the literature will also throw up other issues that have come up because of technological application on the supply chain. The advantages will also be discussed in short and the disadvantages along with issues that need to be countered or remain unsolved are also listed down. 3. An industry visit is done to identify the type of usage that exists in the industry in terms of supply chain. The practical issues that come up during the course of normal work and the methodology adopted by the industry's managers to counter these issues are also identified and taken in for consideration. One or two managers of the company are requested for an interview and then a set of qualitative questions are posed to them on the success of Supply chain management tools. The extent of success is then ascertained and points are allocated on a Likert Scale from 1 to 8. Based on this, another set of analysis is done and its closeness to the theoretical study is identified, if available. Secondly, during the course of the work, other targets listed are also met. 4. A final conclusion is drawn based on the literary review, the short survey that was taken from the company and its managers. Finally, the objective of the work, whether the technological application favours the supply chain and whether it has optimised work is done and identified. The company will be selected in such a way that it would be one using the Supply Chain to a great extent. Ideally this would be an electronics or an engineering company fabricating engineering components. Conclusion Based on the points listed in the earlier sections, the following conclusions are drawn: 1. The work will involve using the literature that is available. This would be through further reading in the same lines as that for this introductory work. 2. The work would throw out a concluding answer to the question whether the supply chain management issues could all be sorted out using appropriate technology. All the successes and the failures of employing technology will also be listed. 3. In the course of this work, it will also be identified where technology has not made up to meet the requirements of the people. The methodology for getting over these issues will also be discussed after suitable study. All these requirements will be met based on the study that has been done and the final target will be met. The final conclusion is expected to be an Yes for the question whether the technology has helped optimise Supply Chain management or not. References 1. Arntzen, B. C., G. G. Brown, T. P. Harrison, and L. Trafton, Jan-Feb 1995, Global Supply Chain Management at Digital Equipment Corporation, Interfaces. 2. D. Connors, D. An, S. Buckley, G. Feigin, R. Jayaraman, A. Levas, N. Nayak, R. Petrakian, R. Srinivasan, 1995, Dynamic modelling for business process reengineering. IBM Research Report 19944. 3. Ettl, et al, Mar-Apr 2000, A supply network Model with Base-Stock Control and Service Requirements, Operations Research, Vol 48, Issue 2, Pages: 216-232. 4. Jeremy F. Shapiro, 2000, Modeling the Supply Chain, Duxbury Thomson Learning 5. N. Viswanadham, 2000, Analysis of Manufacturing Enterprises, Kluwer Academic Publishers. 6. R.B. Handfield and E.L. Nochols, Jr, 1999, Introduction to Supply Chain Management, Prentice Hall. 7. Vollmann et al, April 2004, Manufacturing Planning and Control Systems For Supply Chain Management: The definitive Guide for Professionals, McGraw Hill. 8. W.J. Hopp and M.L. Spearman, 1996, Factory Physics: Foundations of Manufacturing Management, Irwin McGraw-Hill. 9. Y Narahari and S Biswas, Aug 2000, Supply Chain Management: Modelling and Decision Making, available at: http://lcm.csa.iisc.ernet.in/scm/coimbatore/index.html Read More