Supply Chain Management
Goal of a supply chain. According to Defining the Supply Chain, there are 5 specific goals of supply chain management. They are as follows:
1. Achieve Efficient Fulfillment – “the purpose of supply chain management is to make inventory readily available in customer facing positions to fulfill demand. The fresh produce business adage “you can’t sell from an empty wagon” highlights this fundamental purpose of supply chain management”. (Defining the Supply Chain)
Organizations must pursue the goal of matching supply with demand in a timely fashion through the most efficient use of cross-chain resources. Supply chain partners must work together to maximize resource productivity, develop standardized processes, eliminate duplicate efforts, and minimize inventory levels. Such steps will help the organization reduce waste, drive out costs, and achieve efficiencies in the supply chain.
2. Drive Customer Value - Cost efficient fulfillment and inexpensive products are important, but supply chain managers must also focus on value creation for their customers. Customers are the lifeblood of the organization and create the need for a supply chain. Hence, a fundamental objective in supply chain management must be to consistently meet or exceed customer requirements.
The goal of driving customer value begins with a market-driven customer service strategy that is based on clearly understood customer requirements. Supply chain strategies, design, and capabilities
The main elements of a supply chain include purchasing, operations, distribution, and integration. The supply chain begins with purchasing. Purchasing managers or buyers are typically responsible for determining which products their company will sell, sourcing product suppliers and vendors, and procuring products from vendors at prices and terms that meets profitability goals.
Success for many organizations depends on the firm’s ability to balance product and process changes while exceeding customer expectations for improved cost delivery and quality. In lieu of these issues firms have started to implement principles of supply chain management. Supply chain management mainly involves managing the flow of incoming materials, manufacturing operations, and downstream distribution has to be in alignment that is responsive to change in customer demands eliminating a surplus of inventory.
A supply chain is a net work of firms. Thus, each firm in the chain should build its own supply chains to support the competitive priorities of its services or products. Two distinct designs used to competitive advantage are efficient supply chains and responsive supply chains. Efficient supply chains work best in environments where demand is highly predictable. The focus of the supply chain is on efficient flows of services and materials keeping inventories to a minimum. The firm’s competitive priorities are low-cost operations, consistent quality, and on-time delivery. Responsive supply chains designed to react quickly in order to hedge against uncertainties in demand. Work best when firms offer a great variety of services or products and demand predictability is low. Typical competitive priorities are development speed, fast delivery times, customization, variety, volume flexibility, and top quality. Tables below show the environments and design features that best suit each design.
Supply chains manage the movement of products from the acquisition of raw materials through production and finally distribution to the end user. A properly designed supply chain can create many opportunities to drive down cost and increase revenue opportunities. In order to create a supply chain that is sustainable and flexible it is necessary to identify and align company goals and initiatives with the manufacturing and distribution of products.
The value delivery option is another component that supports the supply chain. Providing attention to the changes within consumer demands that will aid in rapid production of consumer products. In order to gain a larger view of the said component it is vital that the value-based method must be clearly understood. Based on the findings of (Feller, A., Shunk 2006).the ability to realign the structure of the supply chain, this process will allows the supply chain to sustain its effectiveness by adopting to changes in consumer necessities with merchandises of larger value. A diversified supply chain is constructed to match the overall components of the chain with customers need in mind. But if this construction of the supply chain doesn’t match the needs it will make nearly impossible for the organization to provide said products and services to the consumer.
In the San Diego distribution center (DC) information flow example, dealers not being notified automatically of order status would be classified as
• To achieve operational efficiencies in the supply chain by reducing product and inventory costs;
Effective supply chain management can be described as the efficient utilization of methods and processes that integrate manufacturers, suppliers, and distribution channels in a way that delivers product and/or services at the right time, in the right quantities, and at the needed location to minimize costs and maximize profit and customer satisfaction (Simchi-Levi, Kaminsky, & Simchi-Levi, 2005).
Some of the key points of the case related to Target’s supply chain is the inventory system; in other words, the store has implemented an inventory system in which the store never ran out of merchandise because it would result in losing sales and creates customers dissatisfaction. Target should not expand their operations by including meat, and dairy products knowing that they still struggle to manage their inventory, especially, those that are perishables. The problem is not reducing the number of different products. Instead, the store has to come out with a logistic strategic that can help them increase the different products that the store should have to sustain the competition among retail stores. When we refer to Supply Chain, we are pulling the active deals in the activities that the supply chains do to increase the value of the client and thus achieve a sustainable competitive superiority.
The Supply chain is another responsibility that requires skills and techniques to maintain. During the creation process, organizations are creative when it comes to gaining the attention of their customers. At the same time, organizations have to be just as creative to maintain those customers’ interests. Big Mac, gasoline, automobile repair, and even a textbook require supply chain management.
For Customer service, supply chain is all about proving the logistics of delivering the right products at the right time. Sounds simple but there are factors such as: reordering the product, supplier inventory is not enough, no consignment storage, delivery time not met, redesigning the planning. This challenge is effective and significant on both downstream and upstream of the process it affects the downstream as business partners are the one being effected upon the ordering and delivery of the product as without the product delivered they can’t start the next phase of their process; as for upstream this is extremely effective not just as revenue stream but to honor the continuous partnership shipping and delivering the product to customer is critical. Cost control of operating expense in direct and indirect commodity costs, logistic agile costs under pressure upon rising fuel/energy and freight cost, global business partners, technology investment, labor cost of recruits and manufacturing floor, and always the
It begins with the suppliers of raw materials and ends through direct retailers of finished products sold to consumers. Companies rely on effective Supply Chain Management to ensure that throughout the life stages of procurement, development, production and retail, all stages are handled optimally and that the best outcomes are achieved. to improve on Alpha's current supply chain management system they should focus on three key area's:
All supply chains are integrated to some point. One objective of increasing integration is focusing and coordinating the relevant resources of each participant on the needs of the supply chain to optimize the overall performance of the chain. The integration process, requires the disciplined application of management skills, processes, and technologies to couple key functions and capabilities of the chain and take advantage of the available business opportunities. Goals typically include higher profits and reduced risks for all participants, retailers, wholesalers, or manufacturers.
The simplest level of supply chain management is to make inventory readily available to meet customer demand. Without inventory, there is nothing available to draw customers in. Through their resources, organizations must meet supply with demand in a timely fashion. Supply chain partners should work together to increase resource productivity, develop standardized processes, and minimize the level of inventory. These steps will reduce an organization’s waste, costs, and raise supply chain efficiency.
Supply chain management plays a very crucial role in the success of any organization and how it can cater to a customer’s need and provide the maximum satisfaction. Supply chain management is essentially managing the flow of goods/services of an organization. It involves raw materials storage, transportation, inventory management, distribution and procurement.