Supply Chain Management Essay Example for Free

Supply Chain watchfulness Essay on the whole tack reach management sh bes one common, and central, objective to satisfy the end client. All stages in a twine must eventually include consideration of the final node, no issuing how far an individual movement is from the end- customer. Each operation in the chain should be satisfying its get customer, exactly also making sure that eventually the end-customer is also satisfied.Supply chain objectivesMeeting the requirements of end-customers requires the summate chain to achieve appropriate levels of the five trading operations performance objectivesquality, speed, depend major power, flexibility and cost. Quality the quality of a product or swear step up when it reaches the customer is a function of the quality performance of every operation in the chain that supplied it. Errors in each stage of the chain go off multiply in their nitty-gritty on end-customer service. Speed has two meanings in a show chain context. The depression is how fast customers screw be served, an meaning(a) element in any businesss ability to compete. However, fast customer response loafer be achieved simply by everywhere-resourcing or over-stocking within the preparation chain. Dependability corresponding speed, one can almost guarantee on-time delivery by keeping excessive resources, much(prenominal) as inventory, within the chain.However, dependability of throughput time is a much more desirable aim be author it rivets uncertainty within the chain. Flexibility in a supply chain context is usually featuren to mean the chains ability to cope with changes and disturbances. Very often this is referred to as supply chain lightheartedness. The concept of agility includes previously discussed issues such as focusing on the end-customer and ensuring fast throughput and responsiveness to customer needs.But, in addition, mobile supply chains be sufficiently flexible to cope with changes, either in the nature o f customer train or in the supply capabilities of operations within the chain. Cost in addition to the be incurred within each operation, the supply chain as a whole incurs additional costs that arrive from each operation in a chain doing business with each other. These whitethorn include such things as the costs of finding appropriate suppliers, setting up contractual agreements, monitoring supply performance, transporting products amid operations, holding inventories, and so on.5 factors for rating alternative suppliersShort-term ability to supplyRange of products or services put forwarddQuality of products or servicesResponsivenessDependability of supplyDelivery and volume flexibilityTotal cost of being suppliedAbility to supply in the required quantityLong-term ability to supplyPotential for innovationEase of doing businessWillingness to sh are riskLong-term commitment to supplyAbility to transfer knowledge as well as products and servicesTechnical capability action capabi lityFinancial capabilityManagerial capabilityChoosing suppliers should reckon evaluating the relative importance of all these factors.6 supply chain descentbusiness-to-business (B2B) relationships are by far the most common in a supply chain context and include few of the e-procurement exchange profitss discussed earlier. Business-to-consumer (B2C) relationships include both bricks and mortar retailers and online retailers. Consumer-to-business (C2B) relationships involve consumers posting their needs on the web (sometimes stating the toll they are willing to pay), companies thusly deciding whether to offer. Customer-to-customer (C2C) or peer-to-peer (P2P) relationships include the online exchange and auction services and file sharing services.7 types of supply chain relationshipThe very opposite of performing an operation in-house is to purchase beloveds and services from outside in a utter(a) securities industry fashion, often seeking the best supplier every time it is ne cessary to purchase. Each traffic matterively be heralds a separate decision. The relationship surrounded by buyer and seller, therefore, can be very short-term. erstwhile the goods or services are delivered and payment is made, there may be no further calling between the parties. The advantages of traditional market supplier relationships are usually seen as follows They check competition between alternative suppliers. This promotes a constant drive between suppliers to provide best value. A supplier specializing in a small number of products or services(or perhaps just one), but supplying them to galore(postnominal) customers, can gain natural economies of scale. This enables the supplier to offer the products and services at a lower price than would be obtained if customers performed the activities themselves on a smaller scale. There is inherent flexibility in outsourced supplies. If demand changes, customers can simply change the number and type of suppliers. This is a far faster and simpler alternative to having to redirect their privileged activities. Innovations can be exploited no matter where they originate. Specialist suppliers are more likely to come up with innovative products and services which can be bought in faster and cheaper than would be the case if the accompany were itself trying to innovate. They help operations to concentrate on their magnetic core activities. One business cannot be good at everything. It is sensible therefore to concentrate on the important activities and outsource the rest. There are, however, disadvantages in purchasing in a totally free market manner There may be supply uncertainties. Once an order has been placed, it is difficult to maintain control over how that order is fulfilled. Choosing who to buy from takes time and effort. conclave sufficient instruction and making decisions continually are, in themselves, activities which need to be resourced There are strategic risks in subcontracting ac tivities to other businesses. An over-reliance on outsourcing can hollow out the company, leaving it with no internal capabilities which it can exploit in its markets. Short-term relationships may be used on a trial keister when new companies are being considered as more regular suppliers.Also, many purchases which are made by operations are one-off or very irregular. For showcase, the replacement of all the windows in a companys office block would typically involve this type of competitive-tendering market relationship. In some public-sector operations, purchasing is dormant coarsed on short-term contracts. This is mainly because of the need to prove that public money is being exhausted as judiciously as possible. However, this short-term, price-oriented type of relationship can support a d confessside in name of ongoing support and reliability. This may mean that a short-term least-cost purchase decision will lend to long-term high cost.Virtual operationsAn extreme form of outsourcing operational activities is that of the virtualoperation. Virtual operations do relatively little themselves, but rely on a network of suppliers that can provide products and services on demand. A network may be formed for only one shed and then disbanded once that project ends. The advantage of virtual operations is their flexibility and the fact that the risks of investing in outturn facilities are far lower than in a conventional operation. However, without any solid base of resources, a company may find it difficult to hold onto and develop a unique core of technical expertise. The resources used by virtual companies will almost certainly be available to competitors. In effect, the core competence of a virtual operation can only lie in the counsel it is able to manage its supply network.Partnership supply relationshipsPartnership relationships in supply chains are sometimes seen as a compromise between vertical integration on the one reach out (owning the resource s which supply you) and pure market relationships on the other (having only a transactional relationship with those who supply you). Although to some extent this is true, partnership relationships are not only a simple mixture of vertical integration and market trading, although they do attempt to achieve some of the closeness and coordination efficiencies of vertical integration, but at the same time attempt to achieve a relationship that has a constant incentive to improve. Partnership relationships are defined as relatively enduring inter-firm cooperative agreements, involving flows and linkages that use resources and/or governance structures from autonomous organizations, for the enunciate accomplishment of individual goals linked to the corporate mission of each sponsoring firm.11 What this means is that suppliers and customers are evaluate to cooperate, even to the extent of sharing skills and resources, to achieve joint benefits beyond those they ould have achieved by acti ng alone.At the heart of the concept of partnership lies the issue of the closeness of the relationship. Partnerships are close relationships, the degree of which is influenced by a number of factors, as follows Sharing success. An attitude of shared success means that both partners work together in order to increase the total amount of joint benefit they receive, rather than manoeuvring to maximize their own individual contribution. Long-term expectations. Partnership relationships imply relatively long-term commitments, but notnecessarily permanent ones. Multiple points of contact. Communication between partners is not only through formal channels, but may take place between many individuals in both organizations. conjunction learning. Partners in a relationship are committed to learn from each others experience and perceptions of the other operations in the chain. a few(prenominal) relationships. Although partnership relationships do not necessarily imply single sourcing by customers, they do imply a commitment on the part of both parties to limit the number of customers or suppliers with whom they do business. It is difficult to maintain close relationships with many different trading partners. Joint coordination of activities. Because there are fewer relationships, it becomes possible together with to coordinate activities such as the flow of materials or service, payment, and so on. randomness transparency. An open and efficient information exchange is seen as a key element in partnerships because it helps to build confidence between the partners. Joint problem-solving. Although partnerships do not always run smoothly, jointly approaching problems can increase closeness over time. Trust. This is probably the key element in partnership relationships. In this context, trust means the willingness of one ships company to relate to the other on the understanding that the relationship will be beneficial to both, even though that cannot be guarant eed. Trust is widely held to be both the key issue in successful partnerships, but also, by far, the most difficult element to develop and maintain.8 Matching the supply chain with market requirements. The supply chain policies which are seen to be appropriate for functional products and innovative products are termed by pekan efficient supply chain policies and responsive supply chain policies, respectively. Efficient supply chain policies include keeping inventories low, especially in the downstream parts of the network, so as to maintain fast throughput and reduce the amount of working capital tied up in the inventory. What inventory there is in the network is concentrated mainly in the manufacturing operation, where it can keep utilization high and therefore manufacturing costs low.Information must flow quickly up and down the chain from retail outlets back up to the shaper so that schedules can be given the maximum amount of time to adjust efficiently. The chain is then manag ed to make sure that productsflow as quickly as possible down the chain to fill again what few stocks are kept downstream. By contrast, responsive supply chain policy stresses high service levels and responsive supply to the end-customer. The inventory in the network will be deployed as closely as possible to the customer. In this way, the chain can still supply even when dramatic changes occur in customer demand. Fast throughput from the upstream parts of the chain will still be needed to replenish downstream stocks. But those downstream stocks are needed to ensure high levels of availability to end-customers.9 The bullwhip effectThe bullwhip effect, is used to describe how a small disturbance at the downstream end of a supply chain causes increasingly large disturbances, errors, inaccuracies and volatility as it works its way upstream. Its main cause is an understandable desire by the different links in the supply chain to manage their production rates and inventory levels sensib ly.Miscommunication in the supply chainWhenever two operations in a supply chain arrange for one to provide products or services to the other, there is the potential for misunderstanding and miscommunication. This may be caused simply by not being sufficiently clear about what a customer expects or what a supplier is capable of delivering. There may also be more clear-sighted reasons stemming from differences in perception of seemingly clear agreements. The effect is analogous to the childrens game of Chinese whispers. The first child whispers a message to the next child who, whether he or she has heard it clearly or not, whispers an interpretation to the next child, and so on. The more children the message passes between, the more distorted it tends to become. The last child says out loud what the message is, and the children are amused by the distortion of the original message.Reducing bullwhip effect sink lead timeInformation sharingOne of the reasons for the fluctuations in out put described in the example earlier was that each operation in the chain reacted to the orders placed byits immediate customer. None of the operations had an overview of what was happening throughout the chain. If information had been available and shared throughout the chain, it is unlikely that such wild fluctuations would have occurred. It is sensible therefore to try to transmit information throughout the chain so that all the operations can monitor true demand, free of these distortions. An obvious improvement is to make information on end-customer demand available to upstream operations.Inventory poolingStable prices10 time compressionOne of the most important approaches to improving the operational efficiency of supply chains is known as time compression. This means fastness up the flow of materials down the chain and the flow of information back up the chain. The supply chain dynamics effect was due partly to the slowness of information moving back up the chain.