Supply Chain Management Response

1. Can a small business like a local sandwich or bicycle shop benefit from practicing supply chain management? What would they most likely concentrate on?

Yes, all small businesses can in one way or another capitalize on the benefits associated with employing supply chain management principles. Even market leaders such as Wal-Mart began operations as small businesses. The difference between Wal-Mart and other companies during their infancy is that it took full advantage of the benefits associated with utilizing supply chain management. A sandwich or small bicycle shop can employ SCM principles in a number of ways. They can create a strong working relationship with suppliers offering quality goods at affordable prices (Wisner, Tan and Leong 3). It can use the internet to reach out to customers by offering high value goods and services at affordable prices. Satisfied customers tend to refer their friends to places or organizations where services are of a desired quality. This can work well in favor of a small business like a local sandwich or bicycle shop.

2. How can purchasing help to improve the competitive edge of an organization?

Purchasing is a critical procurement function in supply chain management which has been overlooked in the past. However, it has now been highlighted as a means through which an organization can realize a competitive advantage over competitors. In the past, manufacturing organizations tended to design operational processes to capitalize on throughput while at the same time keeping costs at a minimum. A firm can realize a strong competitive advantage by negotiation for purchasing contracts based on access to vital market information as opposed to historical buying patterns (Hunt and Donna 16). This can ensure that an informed purchasing plan can enable a firm to realize a competitive advantage in the market through optimized management of material resources, material inventories as well as limiting material waste. This ultimately leads to huge savings by an organization by entering into information based contractual agreements with suppliers.

3. What are the benefits of sustainable sourcing? Can firms actually make money from sustainable sourcing? Do you think it is a good practice?

Benefits of sustainable sourcing include committing business to high organizational performance (Bush 3). Another benefit is keeping the negative effects of operations to a minimum thus appealing to communities and the environment while appraising value to business partners, customers and the shareholders. Another tangible benefit accruing to sustainable sourcing is that it influences for greater supply chain innovation resulting in sustainable design of goods and services as well as environmentally friendly manufacturing processes. Sustainable sourcing results in sustainable cost cutting strategies which enable for very effective marketing and advertising campaigns (Bush 3). Therefore, sustainable sourcing enhances the ability of businesses to lower production costs in the long-term while realizing significant revenue inflows as a result of greater appeal to customers, suppliers, shareholders. Sustainable sourcing as an organizational practice not only makes organizations a lot of revenue but also improves its competitive advantage over other players in a given industry.

4. What are the benefits of sustainable sourcing? Can firms actually make money from sustainable sourcing? Do you think it is a good practice?

Benefits of sustainable sourcing include committing business to high organizational performance (Bush 3). Another benefit is keeping the negative effects of operations to a minimum thus appealing to communities and the environment while appraising value to business partners, customers and the shareholders. Another tangible benefit accruing to sustainable sourcing is that it influences for greater supply chain innovation resulting in sustainable design of goods and services as well as environmentally friendly manufacturing processes. Sustainable sourcing results in sustainable cost cutting strategies which enable for very effective marketing and advertising campaigns (Bush 3). Therefore, sustainable sourcing enhances the ability of businesses to lower production costs in the long-term while realizing significant revenue inflows as a result of greater appeal to customers, suppliers, shareholders. Sustainable sourcing as an organizational practice not only makes organizations a lot of revenue but also improves its competitive advantage over other players in a given industry.

5. Why is demand forecasting important for effective supply chain management?

Demand forecasting is a critical component in the supply chain decision making process. Demand forecasting enhances the designing, planning and operational strategies relative to supply chain management (Singh 1). It is effectively applied in different subcomponents in a business’ supply chain such personnel, finance, marketing and production. In the production subcomponent, demand forecasting allows for inventory control, collective planning and scheduling. For the marketing subcomponent, it allows for optimized introduction of new products into a given market, product promotion campaigns as well as the appropriate allocation of a business’ sales force.

It is however important for organizations to critically comprehend that forecasting may not always play out as envisaged (Singh 1). Thus, it is prudent for organizations to factor in forecast errors to a forecasted value. Short term forecasts are more accurate compared to long term forecasts, thus, short term forecasts exhibit a lower forecast error parameter.

6. Why have so many firms rushed to implement ERP systems over the past ten years?

Many organizations rushed to implement Enterprise Resource Program system in the last decade in an effort to amalgamate diverse facets of enterprise under a single software application in an effort to realize associated benefits (Kim, Andreas and Miklos 67). These included minimizing inventory levels as well as warehouse space necessities, improved sales performance while depending on the same number of staff, minimizing lead times while ensuring punctual deliveries. In essence, ERP enabled businesses to successfully re-engineer diverse business process as opposed to automating processes which in most times turned out to be failures. ERP’s also allowed for internet enabled interfaces which enabled manufacturing processes to directly receive orders and more so allowed for quicker access to order status data as well as effective estimation of product delivery details (Kim, Andreas and Miklos 69). ERP’s also enabled real time communication among all players in the supply chain therefore appraising overall organizational performance.

7. Briefly describe how RFID can be used to manage inventory.

In manufacturing companies, RFID can be used to manage inventories in the following manner. In allowing for automated routing, control as well as tracking of received raw materials, work in progresses and finished product inventories (Ropraz 22). An RFID ticket with a unique set of digits is placed on finished products such that it can be recognized univocally through out the supply chain. Products are usually packaged in batches or as single items then moved along the supply chain on pallets. These pallets are also accorded an RFID ticket enabling product identification and for an automated production of the manifest. As these pallets move on the factory floor, integrated RFID readers integrated into factory doors and gates identify incoming as well outgoing products (Ropraz 22). This information is relayed and entered into the factory’s inventory system. At every instant the readers identifies the RFID ticket and the ERP synchronizes the factory’s inventory records.

8. Explain why lean production and Six Sigma are so important to successful supply chain management.

Globalization has resulted in a highly competitive environment where organization seeks to lower overall expenditure on production processes; minimize lead times as well as improving product quality. Lean production and Six Sigma are so important to successful supply chain management since it improves on overall efficiency, quality and organizational capabilities while holding the need for additional capital investments at zero (Näslund 92). Organizations have endeavored to employ the six sigma problem solving methods while employing lean management principles which has translated to heightened levels of organizational efficiency and realignment of optimized business processes. Organizations have realized successful supply chain management outcomes from employing the lean management principles which have translated to significant waste reductions. Similarly, six sigma methods have allowed organizations to minimize the probability of process variations.

9. What are 3PLs and why are they used? What types of companies use them? Why is their use growing so rapidly? What are 4PLs and why are they used?

3PLs are third party logistics organizations offering businesses supply chain management services therefore adding value to an organization’s products (Chen, Luming and Baoquan 502). 3PLs are favored by organizations as they offer customized solutions encompassing such areas as product assembly, product packaging, warehousing requirements as well as product distribution. These 3PL organizations serve to offer businesses with an opportunity to access a trustworthy logistics advantage allowing for the maximization of profits with combined resources and information. Small and medium sized companies tend to favor 3PL companies as they add value to their business processes.

Fourth party logistics organizations offer guided transport operations, offer managements services with regard to product flow as well as offer services towards averting disasters (Saglietto 105). The demand for 4PLs has resulted from the need by organizations to adjust to global increase in fuel costs, capacity restrictions set by state governments as well as economic recession which bring about market volatilities.

10. Describe why CRM is so important in managing supply chains. What do firms with good CRM programs do? Can you cite an example aside from the ones mentioned in this chapter?

Strategies formulated and implemented towards successful supply chain management allow companies to ensure processes are well sourced with adequate materials, market information as well as financial resources needed for the production of the desired quality of services and goods with set time frames (Xu and Mohammed 125). Supply chain management enables the appropriate coordination of workflow from vendors to the manufacturer, to the distributing channels, the retailers and eventually the customers. Effective SCM allows for management protocols which serve to reduce inventory while guaranteeing product availability on demand. CRM programs on the other hand ensure that the customers receive products and after sale services as they demand them (Xu and Mohammed 125). Proper integration of CRM into SCM maximizes the effectiveness and efficiency of an organization’s business processes. Social media platforms are now integrated into CRM strategies in enabling manufacturers to produce goods which take into account the different tastes and preferences of different consumers.

11. What is the impact of facility decisions on a supply chain?

Facility location decisions are a critical process in any organization’s logistics activities relative to supply chain management. These decisions determine the effectiveness as well as the efficiency of an organization’s supplies chain networks. Facility decisions impact on other SCM decision making processes such as those relative to inventory management or transportation decisions (Manzini and Riccardo 253). One important issue that facility location decision making processes seek to answer revolves around the spatial distribution of an organization’s target customers as well as facilities aimed at meeting customer demand. Facility decisions thus play a significant role in impacting on which facilities an organization may capitalize on. At the same time, facility decisions determine the customers that would be targeted by a particular facility depending on cost.

 

 

Works Cited

Bush Craig. “Sustainable Sourcing: A New Approach to High Performance in Supply Chain Management.” Accenture. 2008. 3 Apr. 2015. Web. < http://www.cfsgs.com/uploads/3/6/0/1/3601225/sustainablesourcing_24.pdf

Chen, Liping, Luming Yang, and Baoquan Sun. “Operation Mode Selection of Fourth–Party Logistics in China.” Business, Economics, Financial Sciences, and Management. Springer Berlin Heidelberg, 2012. 499-506.

Hunt, Shelby D., and Donna F. Davis. “Grounding supply chain management in resource‐advantage theory: in defense of a resource‐based view of the firm.” Journal of Supply Chain Management 48.2 (2012): 14-20.

Kim, Jongkyum, Andreas I. Nicolaou, and Miklos A. Vasarhelyi. “The Impact of Enterprise Resource Planning (ERP) Systems on the Audit Report Lag.” Journal of Emerging Technologies in Accounting 10.1 (2013): 63-88.

Manzini, Riccardo, and Riccardo Accorsi. “The new conceptual framework for food supply chain assessment.” Journal of Food Engineering 115.2 (2013): 251-263.

Näslund, Dag. “Lean and six sigma-critical success factors revisited.” International Journal of Quality and Service Sciences 5.1 (2013): 86-100.

Ropraz Fabien. Using RFID for Supply Chain Management. 2008. 3 Apr. 2015. Web. <http://diuf.unifr.ch/main/is/sites/diuf.unifr.ch.main.is/files/file/courses/eBiz_fs08/fabien_ropraz_eBusiness_RFID_Paper.pdf >

Saglietto, Laurence. “Towards a classification of Fourth Party Logistics (4PL).” Universal Journal of Industrial and Business Management 1.3 (2013): 104-116.

Singh Rakesh. Demand forecasting in a supply chain. Business Standard. 18 Aug, 2014. 3 Apr. 2015. Web. <http://www.business-standard.com/article/management/demand-forecasting-in-a-supply-chain-114081700501_1.html>

Wisner, Joel, Tan Keah-Choon and Leong G. Keong. Principles of supply chain management: a balanced approach. London, UK: Cengage Learning, 2015.

Xu, Jun, and Mohammed Quaddus. “Using Information Systems for Improving External Relations: Customer Relationship Management Systems and Supply Chain Management Systems.” Managing Information Systems. Atlantis Press, 2013. 121-138.