Professional Documents
Culture Documents
Task Contents
Introduction
Supply chain management operates at three levels; strategic, tactical and operational. At the
strategic level, company management makes high level strategic supply chain decisions that are
relevant to whole organization. The decisions that are made with regards to the supply chain
should reflect the overall corporate strategy that the organization is following.
The strategic supply chain processes that management has to decide upon will cover the breadth
of the supply chain. These include product development, customers, manufacturing, vendors and
logistics.
Product Development: Senior Management has to define a strategic direction when considering
the products that the company should manufacture and offer to their customers. As product
cycles mature or products sales decline, management has to make strategic decisions to develop
and introduce new versions of existing products into the marketplace, rationalize the current
product offering or whether develop a new range of products and services. These strategic
decisions may include the need to acquire another company or sell existing businesses. However,
when making these strategic product development decisions, the overall objectives of the firm
should be the determining factor.
Customers: At the strategic level, a company has to identify the customers for its products and
services. When company management makes strategic decisions on the products to manufacture,
they need to then identify the key customer segments where company marketing and advertising
will be targeted.
Suppliers: Company management has to decide on the strategic supply chain policies with
regards to suppliers. Reducing the purchasing spend for a company can directly relate to an
increase in profit and strategically there are a number of decisions that can be made to obtain that
result. Leveraging the total companys purchases over many businesses can allow company
management to select strategic global suppliers who offer the greatest discounts. But these
decisions have to correspond with the overall company objectives. If a company has adopted
policies on quality, then strategic decisions on suppliers will have to fall within the overall
company objective.
Task 1: Understand the relationship between supply chain management
(SCM) and organisational business objectives
Companies must face corporate challenges that impact Supply Chain Management such as
reengineering globalisation and outsourcing. Why is it so important for companies to get
products to their customers quickly? Faster product availability is key to increasing sales, says R.
Michael Donovan of Natick, Mass., a management consultant specialising in manufacturing and
information systems. "There's a substantial profit advantage for the extra time that you are in the
market and your competitor is not," he says. "If you can be there first, you are likely to get more
orders and more market share." The ability to deliver a product faster also can make or break a
sale. "If two alternative [products] appear to be equal and one is immediately available and the
other will be available in a week, which would you choose? Clearly, "Supply Chain Management
has an important role to play in moving goods more quickly to their destination.
Task 1.2: Explain the link between supply chain management and business
functions in an organisation
Williams et al. (2002) stated organizational innovation would drive the changes of the whole
organizational framework and that of employees, which further affects the operation of the whole
supply chain. The increasing requirements for the cooperation and the connection between
buyers and suppliers would cause strong effects to the organizational innovation (Lee, 1995).
Atuahene-Gime (1996 a/b) also stated that supply chain management mainly concentrates on the
advantage and quality of the product innovation. As for service industry, the advantages of
innovation in both service and quality are subject to a good supply chain management. Athaide et
al. (1996) said that in the proceeding of both product innovation and technique innovation, the
supply.
The type of the corporate culture affects the possibility of the individual innovation and the
organizational innovation. The bureaucratic culture restrains the individual innovation and the
corporations ability to make any transformation against competition. The supportive culture is
easiest to encourage the individual innovation, and can also make corporations happy to change
for improving their competences. The effective culture can encourage the individual innovation.
However, its excessive emphasis on results will bring on the contrary conflicts among staff, and
becomes a big obstruction for the organizational transformation. Hurley and Hut (1998) said that
an organization would provide more resources to encourage more innovation and develop
competences if its culture stresses innovation.
Task 1.3: Discuss the key drivers for achieving an integrated supply chain
strategy in an organisation
As companies increasingly use their supply chain to compete and gain market share, spending
and activity in this area are notably on the upswing. Technology and process upgrades at
forward-thinking companies clearly show that supply chain excellence is more widely accepted
as an element of overall business strategy and that increasing value to customers is not just
managements, but everyones business.
The shift in how companies view their supply chain is taking hold. Examine how your company
views its supply chain and consider your answers to these basic questions. Does leadership view
your supply chain as a strategic competitive advantage? If not, are you considering outsourcing
your supply chain? Are the capacity strengths of your supply chain commonly known and
understood by leadership of the company? If so, how do they impact growth, profitability and
customer service?
Hitachi Consulting works closely with leading manufacturing and distribution companies and
helps them address their business challenges. From our experience working with key companies
in food and beverage, consumer products, high tech and industrial manufacturing, there are six
key trends causing significant impact and change to supply chain design and performance:
As firms try to increase their performance, the interface with suppliers has become a major point
of emphasis in the quest for additional efficiencies. This topic is enjoying increasing popularity,
especially in view of the differences in customer-supplier relationships between Japanese and
American firms. For instance, superior supplier relations have been estimated to provide a $300-
600 per car cost advantage to Japanese manufacturers. These trends are reflected in the
information technology (IT) literature as well, which has identified the impact of IT on supplier
relationships as an important area for research, and has discussed these relationships in an
institutional economics framework addressing the implications of firm size and the governance
structure of the relationship.
Task 2.3: Develop systems to maintain an organizations relationship with its
suppliers
A natural approach to determining the optimal number of suppliers is to start from the
assumption that a firm would benefit by increasing the number of its suppliers, thereby
broadening its choice, but that technological considerations constrain this strategy. In this
perspective, the number of suppliers is limited by considerations such as the cost of setting up a
relationship, search costs, and transaction costs, which can generally be summarized as
coordination costs.
For example, in trying to determine the optimal number of suppliers for a given input, it may be
assumed that suppliers' product offerings are substitutes for one another, except that they differ in
some desirable feature, such as price, fit, or product characteristics. Interacting with each
supplier entails a coordination cost. After surveying some number of suppliers, the buyer selects
the product offering that provides the best value according to its set of criteria. The optimal
number of suppliers is determined by trading off the cost of further searches against the expected
benefit from identifying a better supplier. To illustrate these trade-offs, in this section we offer a
model for the optimal number of suppliers in the neoclassical tradition of Stigler (1951).
For example, Consider a two-period setting with a buyer firm and N risk-neutral potential
suppliers with identical production technology facing the same marginal cost, assumed to be
zero. Supplier offerings differ in a product characteristic, which, without loss of generality, is
assumed to be one-dimensional, providing to the buyer firm utility e distributed in the interval
[0,1] according to a known density function fe; e can be thought of as a "fit" indicator. Suppliers'
e can be discovered only after a relationship has been established between the buyer firm and the
corresponding supplier. The buyer firm faces an irreversible cost K for each supplier it does
business with, which can be thought of as a coordination cost. In the first period, the buyer firm
selects n suppliers from the N available suppliers as the suppliers it will do business with. In the
second period, the buyer discovers the values of the fit parameters i.e. for the suppliers and
purchases from the supplier whose offering provides the "best match" (i.e., the highest e).
Task 3: Understand the role of information technology in supply chain
management
Bi-directional arrow reflects the accommodation of reverse materials and information feedback
flows.
Managers need to understand that information technology is more than just computers. Except
computer, data recognition equipment, communication technologies, factory automation and
other hardware and services are included.
Logistics management is that part of SCM that plans, implements and controls the efficient,
effective, forward and reverse flow and storage of goods, services and related information
between the point of origin and the point of consumption in order to meet customer requirement.
Logistics involves getting in the right way, the right product, in the right quantity and right
quality, in the right place at the right time, for the right customer at the right cost.
Getting some of these 'Rs' right may be easy for many, but getting all correct can be quite a
challenge. For example, in both retail distribution and in high-value manufacturing, it is now
quite common to offer suppliers quite specific and narrow time windows within which to deliver
freight.
Worldwide competitive pressures require greater contribution from the purchasing and supply
management functions, procurement practices and suppliers to improve the organizations
relative position on quality, price, technology, and responsivenessthat doesnt mean sitting
around and waiting for it to happen!
Here are some interesting general observations based upon recent purchasing analyses:
Each day, buyers spend hundreds of millions of dollars which can account for anywhere
from 20-70% of an organizations revenue, budget, or sales dollar.
An analysis of payments has shown that, in most companies, 50-60% of the numbers of
checks to vendors are of payments of less than $500.
These payments often represent less than 5% of the annual material expenditures.
The payments under $1,000 represent the disbursements and approximately 10% of the
dollars.
Task 4.3: Discuss the factors that must be considered when improving logistics
and procurement practices in an organisation
Procurement is a key activity in the supply chain. It can significantly influence the overall
success of an emergency response depending on how it is managed. In humanitarian supply
chains, procurement represents a very large proportion of the total spend and should be managed
effectively to achieve optimum value. Procurement works like a pivot in the internal supply
chain process turning around requests into actual products/commodities or services to fulfill the
needs. It serves three levels of users:
In collaboration with the warehouse function, products/commodities are mobilized and delivered.
Task 5: Be able to plan a strategy to improve an organisations supply chain
This draft was then subjected to an extensive review process involving internal staff across the
Department, interagency reviews with non-DHS agencies, consultation with the private sector
through advisory committees, including: the National Maritime Security Advisory Committee
and the Commercial Operations Advisory Committee, and consultation with international trade
partners, principally selected by volume of trade with the United States (e.g., APEC).
After a final round of corrections, taking into account the recommendations and requests of the
reviewers and consultants, the strategy subject to a formal review by DHS components and
submitted for formal Department review.
Following initial release, further consultation in developing the final strategy is anticipated with:
The private sector through formal trade organizations (e.g., the World Shipping Council
and Port Authorities, including coastal and inland ports).
State and local stakeholders.
International organizations, including the IMO, the WCO, the International Labor
Organization, and the International Organization for Standardization.
Task 5.2: Assess how a supply chain improvement strategy will benefit overall
business performance in an organisation
It helps in the following ways:
Companies can use the IBM Cognos SCPM solution to connect supply chain data to other
enterprise applications, including finance, HR, CRM, and external data. In this way, IBM
Cognos SCPM not only improves the performance of a supply chain, it integrates an entire
company into a single source of mission-critical information, effectively increasing not only
performance, but the value of existing IT resources. Employees throughout the organization can
access IBM Cognos SCPM for accurate and current data needed to collaborate on issues and
make better business decisions. The benefits of IBM Cognos SCPM thereby become those of the
entire organization.
References
1. Burgess, R. (1998), Avoiding supply chain management failure: lessons from business
merge-in-transit: A step by step process for supply chain managers, International Journal