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Task
1
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.
Manufacturing: At the strategic level, manufacturing decisions define the manufacturing
infrastructure and technology that is required. Based on high level forecasting and sales
estimates, the company management has to make strategic decisions on how products will be
manufactured. The decisions can require new manufacturing facilities to be built or to increase
production at existing facilities. However, if the overall company objectives include moving
manufacturing overseas, then the decisions may lean towards using subcontracting and third
party logistics. As environmental issues influence corporate policy to a greater extent, this may
influence strategic supply chain decisions with regards to manufacturing.
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.
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:
the increasing rate of technologies. In the integrated supply chain model (Fig.1) bi-directional
arrow reflect the accommodation of reverse materials and information feedback flows. Manager
needs 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.
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.
infrastructure capabilities provide a competitive positioning of business initiatives like cycle time
reduction, implementation, implementing redesigned cross-functional processes. Several well
know firms involved in supply chain relationship through information technology. Three factors
have strongly impacted this change in the importance of information. First, satisfying in fact
pleasing customer has become something of a corporate obsession. Serving the customer in the
best, most efficient and effective manner has become critical. Second information is a crucial
factor in the managers' abilities to reduce inventory and human resource requirement to a
competitive level. Information flows plays a crucial role in strategic planning.
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:
1. The internal customer.
2. Programs in response to emergencies and ongoing programs.
3. Prepositioning of stocks, for both internal customers and program needs.
In collaboration with the warehouse function, products/commodities are mobilized and delivered.
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:
1. Improved Supply: Chain Network: Supply chain management software provides
complete, 360-degree visibility across the entire supply chain network. It allows users to
monitor the status of all activities across all suppliers, production plants, storage
facilities, and distribution centers.
2. Minimized Delays: Many supply chains particularly those that havent been enhanced
with a supply chain application are plagued by delays that can result in poor
relationships and lost business. With SCM software, all activities can be seamlessly
coordinated and executed from start to finish, ensuring much higher levels of on-time
delivery across the board.
3. Enhanced Collaboration: This type of instantaneous, unhindered communication and
data-sharing will help keep all key stakeholders informed, so that supply chain processes
can run as smoothly as possible.
4. Reduced Costs: Supply Chain Management software can help reduce overhead expenses
in a variety of ways.
References
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process re-engineering, International Journal of Logistics Management, Vol. 9, No. 1,
pp. 15-23.
2. Kanji, G. K. (Ed.). (1995). Total quality management proceedings of the
first world congress. Boundary Row, London: Chapman & Hall.
3. Kanter, R. M. (1989). When Giants Learn to Dance. (W. D. Hitt,
comp.) New York: Simon and Schuster.
4. Sink, D. S. (1985, January). Strategic planning: A crucial step toward a
successful productivity management program. IE, 52-60.
5. Sink, D. S., Morris, W. T., & Johnston, C. S. (1995) By What Method?
Norcross, GA: Institute of Industrial Engineers.
6. Ala-Risku, T., Krkkinen, M. and Holmstrm, J. (2003), Evaluating the applicability of
merge-in-transit: A step by step process for supply chain managers, International Journal
of Logistics Management, Vol. 14, No. 2, pp. 67-81.