Supply Chain Management
Submitted by Bertrand Olivier Lesly Durand
Problem Statement
The term supply chain management was developed in the 1980's. Keith Oliver a senior vice president with Booz Allen Hamilton (now Booz & Company) was the first one to used it as a term in an interview for the Financial Times (Heckman,Dermot and Harriet). According to BMGI, Supply Chain Management is one of the top ten business issues because of the loaded investment in time, money, and resources needed to apply and to have a view on the supply chain. In other words the Supply Chain Management creates issues in globalization of manufacturing operation, safety and quality products; and access to latest technology (BOSSARD).
Sub-Topic #1- Recognize the Supply Chain Management
Supply Chain Management (SCM) is the management of the flow goods. Technically it refers to all activities that must take place in order to get the right product into to the right consumers at the right time and the right quantity requested. According to Rob Handfield require skills such as Cost accounting skills, project management, business ethics and foreign language skills can be valuable because most companies are expanding operations globally. Supply Chain Management pin points itself on planning and forecasting, purchasing, product assembly, moving, storage, distribution, sales and customer service. The Supply Chain Management faces challenges such as not being unable to apply the right metrics to manage supply chains effectively, difficulty prioritizing supply chain improvement efforts, performance is lagging and Finding and holding on to supply chain talent (SCC). 71% of executives said that supply chain risk is important in strategic decision making at their companies. Meanwhile the most common and the most costly outcomes of supply chain disruptions are erosion of margins and an inability to keep up with sudden changes in demand (Holbrook, 2013).
The uncertainty in demand and supply make management really challenging. These uncertainties brings issues such as the need to continue to reduce costs while improving customer service and supporting expansion in new markets and product lines. The need to manage the “complexity of ‘Omni channel’ selling and customer fulfillment”. Safety and quality incidents are at the top of the risk index and developing new production skills and demonstrating a return on investment is a further issue (Degun, 2013). Such issues need to be solve in other to avoid losses and to satisfy consumers.
Sub-Topic #2- Improve SCM Performance
Ritu Jain,Industry Marketing Manager for Manufacturing and Supply Chain, SAS stated, "When it comes to supply chains, most managers aspire to achieve too many objectives simultaneously without accounting for inherent trade-offs." This is why managers need to measure what really matters. In order to measure what really values, make the effort to measure the quality of the data in any objective or quantitative way, even though it is too difficult or overwhelming as a task (Vitasek). It is really important to know how data quality is, because according to Kate Vitasek formerly the Founding Partner of Supply Chain Visions (through October 2013), "it is information and the flow of data that is at the heart of today’s extended supply chains."
There are decision levels that needs to be followed perfectly in the supply chain management. According to Julsi Halme, there are three decision making levels which are strategic that has a long lasting effect of three to ten years. The second level is tactical which the timeline could be from three months to two years and the last is operational which is day to day. Each decision level has a type of decision that are taken within. For example within the strategic level the creation of a logistics network and material flow or decisions regarding product design.
Sub-Topic #3- Collaborate Value Chain
The Nestlé Professor and head of the Department of Marketing and Logistics at the University of Tennessee-Knoxville, Matthew B. Myers declare that, "The best supply chains have buyer-supplier relationships that are based on value and consistent delivery of this value." By collaborating value chain there will be more advantages. If the collaboration timeline is long the cost will be driven down. By collaborating the value chain, not only the cost will be lower, but it will give visibility and planning responsibility to the buyer, the seller, or both.
If companies can't make collaborations work, they will not only fail to achieve the potential benefits that supply chain collaboration can provide, but they will also risk destroying the enthusiasm for further attempts, both inside their own organizations and with their trading partners (Benavides). The SAP NetWeaver establish that, leveraging collaborative technologies, The Kanban process allows customers to electronically issue the Kanban replenishment signals to suppliers in time. The supplier can quickly and accurately determine requirements and be proactively alerted to expectation situations such as a new or empty storage location.
Sub-Topic #4- Improve Inventory & demand
Inventory is the life blood of the supply chain. It’s what flows from node to node. And at each node it’s critical to figure out that perfect balance of supply and demand, or else suffer dire consequences (Napolitano, 2013). Inventory is an issue that is really complicated. Having too much inventory brings the need for more things—more space, more transportation, more handling, more labor, and more money. While having a low inventory you might lose sales and customers. Companies try their best to have a good inventory for their business and in other for them to do that they follow some steps. According to CSCO (Chief Supply Chain Officer) some of those steps are: get much more Granular with safety stock management, make regular use of supply chain network optimization tools for tactical planning etc.
The law of supply and demand states that, "you've got to have a market and demand for your product in order to sell it and make a profit" (Baldween). There are simple ways to improve demand. Demand can improve by enchancements, promotions, in-store demonstrations and price reductions (Kokemuller). Aside from that there is a new demand-driven process which was introduced by Gartner as the “Demand-Driven Value Network (DDVN),” which is based on a single sales forecast that drives the entire supply chain – from “suppliers’ suppliers to customers’ customers” (Tyndall). According to Gene Tyndall a lot of companies become demand-driven in the new ways which require a transformation. This transformation includes changes to operations strategies that will include its trading partners, as well as changes in practices and knowledge that supply chains should be driven by SELL and not simply by sales or purchase orders.
Sub-topic #5- enrich Transportation & Logistics
Transport and logistics is a sector in which global value chains (GVCs) play a vital role in connecting countries, spreading technology, and promoting best practice around the world (OECD). There are quite a few areas that influence the performance of the transport and logistics value chain. Those areas are infrastructure, customs and other border procedures, private services and regulation, etc. (OECD). Enriching this sector in supply chain means an increase in perfect orders, increased profitability, raised inventory accuracy up to 99.8% and reduced transportation costs up to 30% for inbound, outbound and inter-facility moves (Logility).
According to a transport logistics expert, Stallard B. Mpata and a transport economist, Bo Giersing, in order for them to improve transportation logistics for competitiveness of Swaziland they had to promote improved balance of traffic flows for both road and rail services, create strong public and private sectors consultative forum and establish high level working relationship with whoever's authorities particularly concerning customs and other regulatory requirements and application thereof. As Sreenivas states "Transportation and logistics systems have interdependent relationships that logistics management needs transportation to perform its activities and meanwhile, a successful logistics system could help to improve traffic environment and transportation development."
Sub-topic #6-The importance of customer service
According to a recent Manufacturing Insights survey of 800 companies, over 70 percent of responding businesses said that their most important business objective is to increase customer loyalty and satisfaction, yet customer service rarely wins the battle against the supply chain mandate to reduce costs (Busch, 2011). A program director, Brent Proud states that, "Customer service shouldn’t be seen as a nicety. It should help attract new prospects, build customer loyalty and create a competitive advantage." In order to leverage the supply chain to enhance customer service levels and improve brand equity, companies could put this steps to applications: customer service as a cost saving strategy, integrate customer service and the supply chain and reverse logistics as a customer service practice (Busch, 2011).
Technology now-a-days makes giving a customer service more complicated which is offering second-to-none customer service which could help businesses to succeed no matter what economic climate or latest techonology craze (Steinkirchner, 2012). Sunday Steinkirchner says always be available when the customers is in need, let the customers to know you, give special service/ VIP, offer knowledge and community. If all these actions are put into applications, your customer will be incredibly satisfied with your service. Companies need to know that their reputation is only as good as the customer service it provides (Yahalom).
Works Cited
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