Supply Chain Management
Operations Management
Supply Chain Management
Supply Chain Management
The flow of the supplies (in the form of materials, services, information and finances) is a long chain extending from the company to its supplier and further backwards and forwards both suppliers and customers.
15 examples of supply chain disruptions throughout history
15 examples of supply chain disruptions throughout history
15 examples of supply chain disruptions throughout history
15 examples of supply chain disruptions throughout history
15 examples of supply chain disruptions throughout history
15 examples of supply chain disruptions throughout history
Competition on the basis of time and quality makes a closer coordination essential
Today, as global business has become extremely competitive, companies are feeling the need to look at business and its processes in a different way.
Goods producing (manufacturing) companies and the services providing companies as well, are competing more today on the basis of time and quality which have become the prerequisites for running any business.
Hence a very close coordination with suppliers and distributors has become essential.
A Multi-tiered System
A supply chain is a multi-tiered system.
The supplier-buyer linkage is termed partnership. The chain up to the first tier is called an extended supply chain.
Even a traditional organization would be aware of its basic supply chain (supplier and customer). Of course being aware is not the same as being sensitive. It is easier to be sensitive to one’s customers than being sensitive to one’s supplier. So, even in the basic chain the mindset has to have evolved to a certain degree.
Core competence of companies, comparative advantage of nations and outsourcing
The reason as to why supply chain management has become popular is the phenomenon of globalization. Increased competition has made business look for competencies for enhanced performance.
This is called global outsourcing.
If a particular organization in some country has the core competence for a certain product / component / service, it will get the business for that product / service.
Marketplace uncertainties and channel relationships
Market uncertainty requires greater flexibility on the part of the business organizations and on the part of their distribution and supply channels. More the flexibility, more enabled is the organization to face uncertainty.
Such need for flexibility would necessitate a greater degree of coordination and cooperation from the various organizations in the market which encourages then to form a supply chain. Such coordination and cooperation, in turn, necessitates changes in the channel relationships.
How is Competitiveness Achieved?
Supply chains help to achieve competitiveness and deliver value to the ultimate customer. Performance of all units in the chain is important.
Actions to extend improvements beyond one’s company constitute the crux of supply chain management.
Reverse Logistics
Is the process of returning goods back up the supply chain to recapture value (reuse, recycling, etc.) or disposal. In other words, it’s the logistics activities after the initial sale of a product to potentially extract value or end the product’s life cycle.
This includes the physical transport of the goods as well as the organizational and administrative elements, such as managing returns, exchanges, and recalls. In short: reverse logistics is the collective term for moving goods in the opposite direction than usual, from customers back to retailers, suppliers, or manufacturers.
Building a Supply Chain
Building a Supply Chain
Two aspects are needed to build a supply chain
The organizations in the supply chain need to be aligned with respect to the ultimate objective of providing value to the customer.
Alignment is one important task in this management of supply chains.
Leader Company in the Supply Chain
It requires leadership to make two or more disparate organizations to work together closely. Generally, the leader organization or focal company is one that has the largest financial power or superior technological knowledge or is the one that generates greatest share of values among all the organizations that are in the supply chain.
Keiretsu
Is a group of business company that are mutually dependent.
What keeps them all together?
What is the binding factor for these independent companies to form a supply chain?
There is a pay-off for everybody.
The companies in the chain are all committed to the success of all the members. Commitment, trust, reliability and security are the biggest gains in belonging to a supply chain.
What keeps them all together?
Thus, in building a supply chain:
Mindset |
|
Coordination | Ensure coordination of the flow of materials, information and finance, the objective being to satisfy the ultimate customer and to do so with efficiency. |
Sharing of information | The information exchanged could be about:
|
Sharing of risk and rewards | The risks are to be shared amongst the members as equally as possible or if inequitable risk are unavoidable then the risk-taker has to be suitably rewarded. |
Joint problem-solving | All the relevant partners in the supply chain participate jointly on issues like the final product, the product design, the parts design, the production process design and the logistics design. |
What keeps them all together?
Management of flows in Supply Chain
1. Product flows: | Materials move from the supplier to the operations facility to the distributor to the customer or consumer. |
2. Information flows: | A variety of information flows: supplier information, purchase order with quantity, delivery dates and timing, pricing, customer order information, bill of materials, inventory status at distributor, cash flow information and financial information. The information will flow all the way from one end of the supply chain to the other and similarly in the opposite direction. |
3. Financial flows: | Cash or other funds flow from the customer to the operations and from the operating facility to the suppliers. |
4. Value flows: | There are a series of value creating process on the supply chain, ultimately providing certain value to the final customer. Value chain and supply chain are complimenting and supplementing each other. |
5. Risk flows: | Risk are due to the uncertainties in a number of aspects in a supply chain: availability of supplies, lead time of supplies, pricing; and there are also environmental factors outside the supply chain but that impinge on the characteristics and viability of the supply chain. |
POM Objectives and Supply Chain
The supply chain has the same objectives as the discipline of Production and Operations Management.
POM Objectives and Supply Chain
The very basis of supply chains has been to provide superior customer service. Service is all about the value that the customer gets, which in turn depends upon his own perception about what constitutes value.
The design, the alignment, the integration of the companies on the supply chain and the coordination between them are all for the customer, the ultimate customer, and these are performed as such.
Orientation and implementation of supply chain principles within a company
All the principles are equally applicable to and should be adhered to by the various functional areas of management within the individual organizations.
The pyramid of supply chain management with all its building blocks.
Purchasing function and Supply Chain Management
Purchasing is one of those functions that are visible to all, as it is at the interface between two organizations.
Traditional Role of Purchasing:
Single source versus multiple sources
Trust being the distinctive element in the relationships between the members of a supply chain, generally there is only one supplier for any item or category of items.
Concepts | Multisource | Single Source |
Basis | Customer lacks trust in any one supplier. | Full trust in the supplier. |
Volume of business for the supplier | Intentionally kept low in order to engender competition. | Large volumes (entire requirements) |
Economies of scale | May not be realized. | Present |
Special attention | May not be able to give special attention to a customer | Can provide focused attention to the customer. |
Quality | Cannot be expected to provide quality on his own initiative. | Supplier would be willing to provide specialised quality. |
Variability | Increases overall variability in quality. | Is due to one single supplier. |
Control over the supplier. | Difficult to control. | It is easier to control. |
Supply Chain Management
Bibliography
Chary, S. N. (2019). Production and operations management. (6.a ed.). McGraw-Hill Education.