Strategic Supply Chain Management
In the end, business strategy (Which must adapt to changing customer preferences and nominative environments etc. And supply chain strategy must match and support each other.
The article presents a survey that the authors did where they asked a large number (259) of manufacturing firms two questions: What major improvements or changes were implemented for the underlying supply chain of your manufacturing firm’s main product line in the past two years? What major improvements or changes will be implemented in the next two years? Answers for the upcoming supply chain challenges in 09-10 are: Demand planning and forecasting improvement:
Key capability for manufacturers is to be able to respond rapidly to changes in demand Need to transition from a supply chain driven strictly by forecasts to a demand-driven one -> customer-focused mindset Rationalizing and optimizing what firms are best at selling, making and delivering ? and aligning the sales force with that mindset ? will help a manufacturing firm to create a more customer-focused mindset without sacrificing operational efficiency New standard reporting systems based on consolidated data for demand planning are needed Cost reduction:
Process efficiencies drive costs down as teams find best practices and streamline the end-to-end system of supply and delivery Shorter cycle times and visibility across the supply chain increase responsiveness and customer satisfaction, reduce customer turnover and help to retain valuable customers Lean techniques reduce waste and non-value-adding steps, assuring best processing across the enterprise Asset utilization and elimination of unnecessary assets reduces the need for working capital Lower inventory levels that more closely meet the actual demand will reduce irking capital needs and minimize carrying costs Sourcing optimization: Manufacturing companies realize that outsourcing non-core products and activities to suppliers creates synergies that can reduce costs, shorten lead-time or improve service Outsourcing comes with a big risk without the right systems, processes and supplier management competencies Needs to put more (IT) systems in place to compensate for the fact that they can no longer control the entire operations inside the firm boundaries. The need for excellent inter-company and intra-company information flows becomes a high priority Inventory reduction:
Inventories are needed as buffers due to a non-perfect match between demand and supply -> Inventories can also be essential for maintaining a steady flow of production and high capacity utilization Can reduce inventory by using Just-in-time deliveries, vendor-managed inventories (VIM) as well as Just-in-time production High inventory levels prevent the discovery of problems in the supply chain and on the shop floor and can be detrimental to productivity Reduced inventory levels lead to reduced costs, expose defects in the manufacturing process -> forcing managers to eliminate rather than accommodate (anabas/till¶test) sources of process variability. Productivity gains etc.
Customer service improvement: Customer service levels directly depend on the performance of the logistics system of the firm Excellent customer service helps to achieve a close interaction with customers to fulfill specific requirements and in reverse to be able to penetrate higher margins and achieve higher customer loyalty Network optimization: Value creation occurs in networks consisting of suppliers, manufacturing sites and logistic service facilities As a consequence, a precise management of the global apply chain network is a prerequisite for a timely market introduction of new products, smooth product ramp-ups, high delivery capability and quick response to customer demand Consolidation of facilities as well as inbound and outbound optimization: Closely related to network optimization Know-how enhancement of employees: The right employee training, development and education within supply chain understanding provides significant payoffs for the employer Basis for supply chain innovations, increasing process efficiencies, ability to adapt to new technologies, Geiger Job satisfaction, reduced employee turnover Reverse logistics optimization: Stands for all operations related to the reuse of products and materials New laws in many countries forces companies to implement reverse logistics systems Consists of three different entities; assembly plant, disassembly (dismantling) plant and the recycling plant -> collecting, dismantling and reusing Example; green supply chains, Zealand, repairing products (e. G.
Electronic products) Understanding Supply Chains, Module 1 (140917) Supply Chain Entities and Processes The supply chain includes: All functions (intra-organizational, I. E. Thin focal firm), that are involved, directly or indirectly, in fulfilling a customer request R and engineering – Marketing and sales – Advertisement: Local manufactured, no child labor, can promise the product to be delivered at a certain point in time Operations (logistics, manufacturing, assembly) Purchasing and supply – Information affecting when the company need to purchase material but also how long the lead times are etc. Finance – Allocate money for supply chain investments, payment activities (invoicing etc. ), the SCOFF is interested in educing the inventory levels, work-in-capital etc.
Customer service – After-service supply chain (reversed logistics), e. G. Zealand Stages (inter-organizational, I. E. Cross firms) that are involved, directly or indirectly, in fulfilling a customer request Customers Intermediaries (retailers, distributors) Manufacturers Suppliers Logistics service providers Flows (From suppliers to customers in both directions) Information – Demand, quantity & quality (inventory level), safety instructions, responsiveness Products Funds (cash) – General payment terms influences the work in capital Probably more accurate to use the term “Supply Network” or “Supply Web” Supply Chains simplify reality where supply networks prevail (order) Talking about supply networks (suppliers to a company) the strategic question often arises whether the MEMO (An original equipment manufacturer manufactures products or components that are purchased by another company and retailed under that purchasing company’s brand name.
MEMO refers to the company that originally manufactured the product) e. G. Wants suppliers to provide customers with spare parts or if the MEMO want to handle hat -> an alternative is to sign a contract. Dual suppliers can decrease the risk of disruptions in the supply chain in case one supplier has problem delivering parts in time etc.
Other issues for the focal firm regards how far up in the supply chain the companies have to take responsibility for ethical but also environmental matters. E.
G. Apple-Foxing case which truly affected Apple’s reputation. Example 1: Supply chain of a car seat: 4th tier supplier: farmer, 3rd tier supplier: tannery, 2nd tier supplier: leather firm, 1st tier supplier: seats, MEMO, Dealer, Customer Example 2: A DVD player manufactured in different places in the world and components distributed around the globe. Key learning: Supply chains are increasingly complex and global due to global manufacturers with plants all around the world supplying the MEMO (focal firm).
Challenges due to this: Different cultures, legal risk, work ethics but also political risk (Russia etc. Nature disasters Transporting issues with overcoming the distance between the plants.