Supply Chains in the 21st Century Essay Example
Supply Chains in the 21st Century Essay Example

Supply Chains in the 21st Century Essay Example

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  • Pages: 12 (3150 words)
  • Published: August 22, 2018
  • Type: Case Study
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a.              Identify the primary ways in which supply chain management has improved the order fulfillment process. Can you think of any additional improvements not described in this topic that are important?Two decades back, it was estimated that the activities associated with order preparation, transmission, entry, picking and packaging, represented 50-70% of the total order cycle time (Mentzer, 2001, p. 238).

Supply chain management has helped improving the process to a large extent. In fact the order fulfillment cycle is one of the two main metrics for measuring supply chain management performance. Effective management of order is necessary for maintaining good customer relationships.  Shortening the order cycle time and improving its constant predictability are important to customers and in turn lead to low inventory requirements.

Supply chain management has helped in reducing the order proce

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ssor errors as well as time by integrating and coordinating the efforts of everyone involved in the supply chain.Yet another effort of reducing the order processing time using the supply chain management process is the integration of the suppliers in the entire chain (Mentzer, 2001, p. 238). This helps in easier coordination of efforts of all parties involved.

An inherent part of supply chain management is the order tracking process which helps in seeing the real-time process though which the order goes, and predicts the approximate lad time. This also helps in finding sources of delay and errors at an early stage. The introduction to customer access to the order processing stage has improved the customer relationship with companies, but increasing on the trust factor.b.              Explain the relationship between supply chain management and logistics. Identify the differences and similarities.

Is one

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part of the other? How does one support the other?Supply chain management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. Supply management encompasses the planning and management of all activities involved in sourcing and procurement, conversion and all logistical management activities. Logistics is that part of supply chain management that “implements, plans and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and point of consumption in order to meet customer expectations” (Taylor, 2007, p. 10).

Logistics management activities typically include “inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply-demand planning and management of third party logistics service providers” (Taylor, 2007, p. 10). Supply chain management, as mentioned earlier, includes all logistics management activities, as well as manufacturing process and it drives coordination of process and activities with and across marketing, sales, product design, finance, and information technology.c.              Identify two competing enterprises and their supply chains (eg Dell versus Apple, K-Mart versus Wal-Mart, Toyota versus General Motors, UPS versus FedEx, etc.).

i.              Identify the elements of each chain from source of supply to final customer, and explain how the two chains meet (or do not meet) business objectives.Dell computer started its supply system by being a direct seller of computers via phone order and then transformed itself to harness the powers and advantages offered by the web (Kerin, Hartley, Rudelius, 2003, p. 296). Dell computer uses push-pull strategy to improve its supply chain performance.

The PCs made

by the company are built to order. The component inventory is managed based on forecast but the final assembly is in response to a specific customer request. The push portion of the supply chain is the portion prior to the assembly while the pull part of the supply chain starts with assembly and is performed based on actual customer demand. The boundary between push-pull is at the beginning of the assembly. The company achieves product variety and manufacturing efficiency by designing common platforms across several products and using common components (Kerin, Hartley, Rudelius, 2003, p. 296).

(Schniederjans, Olson, 1999, p. 91)Apple computers outsource most of its manufacturing activities. In fact about 70% of its components are outsourced. The company in mid-1990s was a classic case of supply chain disaster. The company was losing money despite having massive sales and most of the problem was related to poor demand forecasting. The strategy was aggressively programmed to be competitive compared to Dell.

The forecasts were improved and evaluated on weekly basis. The entire system was computerized with the access given to various suppliers, whose numbers were reduced drastically along with limited product line (Bovet, Martha, 2000, p. 10-11).(Schniederjans, Olson, 1999, p. 91)ii.

              Which supply chain appears longer?The supply chain of Apple is longer than that of Dell. This is despite not showing the manufacturing services outsourced/iii.              Does the structure of one appear simpler than the other?The dell structure appears simpler too s compared to Apple. In addition, Dell saves a lot in terms of component costs and continuous management of vendors and contract manufacturers. The product line offered by Dell is also much more varied than Apple.

E-Business and

Supply Chain Managementa.                  Identify at least three transactions that can be executed through e-Business. Identify additional transactions not discussed in this topic.The first applications of e-business to logistics were introduced in 1990s. The introduction of e-business changed the nature and objectives of logistics forever.

In the past logistics was primarily a back-office function concerned with day-to-day packing and shipment of products, rate calculations transportation routing and inventory chasing. Today logistics has become a strategic advantage. This means new challenges and chances for logistics at the same time. Following are three transactions that can be conducted using e-business that have been discussed in the topic:i.                    Customers can place orders for products online. This has begun the concept of shopping from home.

The fact that the customers do not need to go out anywhere to find the products they require and can shop form them instantaneously is probably one of the biggest achievements of e-businessii.                  Purchasing software orders can be done immediately. The concept of zero home-delivery times started with e-business. Customers can purchase e-books and  software online, and can immediately download them without waiting for the usual CD-ROM versioniii.

                Yet another application of e-business is the tracking of goods. This includes tracking, without incurring any additional cost, of not only the goods purchased online but also couriers that the customer sent or is to receive.The applications of e-business have affected every aspect of running an organization. Some of the aspects that have not been discussed in the topic are as below:i.                    The use of employee portals where the information regarding employee attendance, projects, performance & incentives etc. can be accessed by the employees in addition to

finding out about their company pension plans, vacation policies, benefits etc.

The burdens as well as the costs of the Human Resource division have been reduced to major extent especially for large organizations using (Gasós, Thoben, 2003, p. 221).ii.                  A specific use of e-business for supply chain is in case of agricultural and animal husbandry. The anima feed process is extremely complex and requires maintenance of large charts. E-business has helped in integrating the animal feed industry and food industry, which has helped in better and quality management of animals (Gasós, Thoben, 2003, p.

173).b.                  Identify ways in which e-Business impacts supply chain responsiveness. Identify additional changes to the supply chain offered by e-Business.E-business has emerged as a key enabler to drive supply chain integration.

In the present day world, much of the supply chain involves multiple companies and organizations. By using e-business, companies can realize greater value through efficiency improvements, better asset utilizations, faster time to market and reduction in total order fulfillment times, enhanced customer service and responsiveness (Harrison, Lee, Neale, 2005, p. 124). There are four key dimensions in which the impacts of e-business on supply-chain can be found:i.                    Information integration – This refers to the sharing of information among members along the supply chain. The system is transparent and there is direct and real-time accessibility for all partners involved.

This makes problem detection easier and possible at an earlier stage. Hence, response is faster for various contingenciesii.                  Planning synchronization – This refers to he joint design and execution of plans for forecasting and replenishment. The planning effort is collaborative and lowers cost in addition to optimizing the capacity utilization and improving

service (Harrison, Lee, Neale, 2005, p. 125).

iii.                Workflow coordination – This refers to highly streamlined workflow activities between supply chain partners. It leads to efficiency gains and earlier time to market and makes it possible for the product to reach a larger market (Harrison, Lee, Neale, 2005, p. 125).iv.                 New Business Models – This refers to the new ways of doing business in a supply chain.

An example is resource sharing between multiple companies of the supply chain, cretin joint products, pursue mass customization, penetrate new markets and customer segments (Harrison, Lee, Neale, 2005, p. 125).Logistics functiona.            Describe the chronology of the development of today's logistics concept. Explain the differences between military and business logistics.

Are there any additional differences not discussed in this topic?Before the words supply chain management became popular, most of the activities associated with these words were referred to as logistics and remaining others as production planning. The history of logistics can be divided into four stages:i.            18th century – Logistics is a term that has been historically related to military operations. Battles were won and lost because of this function, and the military leaders needed to be expert in logistics. The time division here is just mentioned as 18th century but logistics were a part of army even before this time. There was usually a separate officer assigned to oversee this part of the army who was responsible not only for the perishable and non-perishable items, but also the camping-quartering of troops (Brewer, Button, Hensher, 2001, p.

158)ii.            1960-1970 – This period saw the starting of the usage of logistics in business operations apart from pure military operations. However, at

this time, the logistics only meant the marketing, storage and distribution of goods to be sold. The engineering aspects of logistics were not considered during manufacturing (Brewer, Button, Hensher, 2001, p. 159).

iii.            1970-2000 – This period saw the involvement of logistics during the manufacturing process also. Later in 1900s, supply chain management came into existence involving the movement of goods through the entire organization from vendors to consumers (Brewer, Button, Hensher, 2001, p. 159).iv.

            21st century – Present day logistics is an inherent part of supply chain management which is used to plan, implement and control the flow of materials including their storage, from origin to destination, with the focus firmly placed on customer requirements (Brewer, Button, Hensher, 2001, p. 160).Differences between military and business logisticsThe main difference between military and business logistics is that the former involves the movement of materials as well as troops. The strategic placement of troops and looking after their needs is of paramount importance to the logistics in military. An aspect of logistics that has not been discussed in this topic is that the business or commercial logistics aim to reduce waste with the goal of saving costs at every turn. While the focus on customer expectations has brought the concept of reliability of the product, it is never at the expense of profit line.

Military operations concentrate on reliability and safety of both materials and troops. While the reduction of wastage is an aspect here, and they too are bound by budgeting constraints, the product reliability is the main issue here (Frohne, 2007, p. 29-30).­­­­­b.

            Explain the different types of utilities that add value to a product. Describe

the value added by logistics and explain how each utility affects other utilities.People do not value things for what they are but what they represent, and how they can use them. The usefulness of a product or service is what gives its value to people. There are four different types of utilities that add value to a product. These utilities help in understanding product value from the point of view of the customer.

These four utilities have been explained as below:i.              Form utility – This is the primary utility of the product, and is created with the manufacture of product itself from raw materials. Product are created either to solve a problem or to do it faster with lesser effort. As mentioned earlier, the form utility needs to be achieved without wastage, and at the lowest possible cost.

This is the function of the inward bound logistics (White, 2003, p. 44). Companies make themselves unique when they change the form of the product itself, many a times by integrating multiple functions on one product for instance the Apple I-phone.ii.

              Time utility – The goods must be available to the customers at a pre-decided point of sale in the required or promised point of sale. This is extremely important in today’s world because the customer can easily decide to choose another manufacturer if they have the product readily available (White, 2003, p. 45). A very common example of time utility can be seen when people purchase cars that are not readily available in a particular showroom. The lead time here needs to be the shortest possible, and is taken care by logistics.iii.

              Place Utility – This

utility is the actual place where the customers buy the products. There is always a balance required between increasing the customer base by increasing the number of outlets where the goods are available, and the cost involved in continuously replenishing the goods at these outlets (White, 2003, p. 44-45). The primary function of logistics is to take care of this aspect for instance the choice whether laptops are available only at the company outlets or at a common store with other company laptops.iv.              Possession Utility – Products can be of value to the company only when the customers purchase them.

This signifies the possession utility of a product and is taken care by the marketing and sales division of a company. This is where outbound logistics come, and efficiency in this part directly affects the profit line of a company. Customers have to feel the need for a product created by marketing, and must be able to buy the product without much hassles in the shortest time possible, which is the job of logistics (White, 2003, p. 46).Integrative role of logistics functiona.

                  Describe the integrative role of logistics. How does logistics accomplish its role?Logistics co-ordinates the flow of materials throughout the enterprise and the entire supply chain by providing time and place utility and responding to available information. In fact the essence of logistics and supply chain management is an integrative approach to the different processes and functions within a firm extending to a network of organizations for the purpose of cost reduction and customer satisfaction. Logistics involves a range of related activities including storage, inventory management, materials handling and order processing.

The process hence

needs to be integrative to optimize the flow of materials and supplies through the organization to the customer.As an example, if all the firms i.e. vendors involved in a particular supply chain optimize their logistics systems independently of other firms in that chain, the management of product flow across the whole chain would be sub-optimal. While such principles seem simple and very obvious, the concept of logistics as an integrative approach in business is just three decades old, as can been seen in the timeline.There are three strategies of how logistics can be integrated into business:i.

      Process Based or Integration with operation – This affects the organization workflow at the integration stage and the products are planned, hence inventories are maintained using available data such as seasonal demand and requirement by the production department. This process is committed to the cross-functional management of the business process where the emphasis lies in improving the efficiency of a broad range of logistical processes.ii.      Market based – This strategy is concerned with a more limited group of logistical activities often carried out by different business units and aims to facilitate sales and coordination by the market sectioniii.

      Channel based – Here the aim is to improve the management of logistical activities performed jointly by supply chain operationsb.                  Identify consequences of lack of logistics integration not discussed in the topic. Also, identify additional areas of potential inventory build-up not discussed in the segment.The problems arising from the lack of logistics integration are neither hypothetical nor theoretical in nature.

Logistics integration was a practical solution to the problems that the companies faced about four decades back, and the present logistics

and supply chain management principles have been a result of continuous refinement to these practical solutions. Traditionally the functions viewed as logistics were considered merely to be support activities and the responsibility for the same was divided throughout the organization. This meant fragmentation that led to performance of various aspects of logical functions without cross-functional coordination resulting into duplication and waste. Information obtained was either inaccurate or delayed and in order to have an effective cost control managers began to reorganize the combined logistics functions into single managerial group (Ross, 2000, p. 84-85).The movement towards logistics integration was driven by three converging factors.

The first factor was that inventory carrying costs started to skyrocket. The large amounts of production necessitated this, though the marketplace increasingly demanded smaller order quantities and more frequent delivery from the suppliers. In combination with product decreasing cycle times this signified the end of the old decentralized system. Second was the explosion in the product lines, which meant that there was a lot of pressure to deliver products on time, avert obsolescence and prevent channel inventory imbalances, all of which had increased dramatically. The third factor was that the market became customer oriented and hence the marketing, pricing promotion strategy changed.

This required massive changes in the cumbersome fragmented operations of traditional distribution functions. In addition to all this, the managers started to see logistics as a source of competitive advantage wherein the distribution channel costs, freight bills etc. could be reduced without affecting the product sales time (Ross, 2000, p. 84-85).

References

Bovet D, Martha J, (2000), “Value Nets: Breaking the Supply Chain to Unlock Hidden Profits”,             Published: John Wiley and

Sons, MassachusettsBrewer A, Button KJ, Hensher DA, (2001), “Handbook of Logistics and Supply-chainManagement”, Published: Emerald Group Publishing ; Elsevier, CaliforniaFrohne PT, (2007), “Quantitative Measurements for Logistics”, Published: McGraw-HillProfessional, New YorkGasós J, Thoben KD, (2003), “E-business Applications: Technologies for Tomorrow'sSolutions”, Published: Springer, New YorkHarrison TP, Lee HL, Neale JJ, (2005), “The practice of supply chain management: Where         Theory and Application Converge”, Published: Springer, New YorkKerin RA, Hartley SW, Rudelius W, (2003), “Marketing: The Core”, Published: McGraw Hill   Professional, New YorkMentzer JT, (2001), “Supply Chain Management”, Published: SAGE, CaliforniaRoss DF, (2000), “Competing through Supply Chain Management: Creating Market-winningStrategies through Supply Chain Partnerships”, Published: Springer, MassachusettsSchniederjans MJ, Olson JR, (1999), “Advanced Topics in Just-in-time Management”,     Published: Greenwood Publishing Group & Quorum Books, ConnecticutTaylor GD, (2007), “Logistics Engineering Handbook”, Published: CRC Press, FloridaWhite S, (2003), “The Complete Idiot's Guide to Marketing”, Published: Alpha Books ; CWL Publishing, New York

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