Supply Chain Management is the process of managing the flow of products or services and it comprises of the storage and movement of raw materials, works in progress and finished goods from point of origin to the point of final consumption by the consumers. It comprises of interconnected channels, frameworks and businesses for combining the provisions of products or services required by the final consumers in the supply chain.
Supply Chain management also comprises marketing, transportation and warehousing channels which play a crucial role in sustainability and risk management of the entire processes. It comprises of active alignment of the supply chain of the business so that the value delivered to the consumers can be maximized (Brandenburg, Govindan, Sarkis & Seuring, 2014).
It also helps in gaining a competitive edge in the marketplace. It also represents an effort by the suppliers for developing and implementing a supply chain which is effective and economical. The supply chains attempt to regulate or manage the production, shipment and distribution of the products.
Through the management of supply chains, the companies are capable of cutting the excessive cost and delivering the goods to the consumers in a faster way. In this report, the issues confronted in the supply chain framework regarding the transportation of the starter motors from Bosch Germany to the consumers in New Zealand. It also states the importance of warehouses in the formation of an implementation plan regarding the supply chain design for the company. The financial effect of the supply chain options would also be assessed along with their environmental effect on the supply chain (Kurbel, 2016).
The issues faced by the company in its supply chain framework can be fuel costs. It is considered to be one of the serious issues affecting the delivery and transportation of goods in the international context. High costs of the fuel are likely to increase the transportation costs.
Due to the rise in the fuel prices, there are escalating surcharges which are being added to the rates of the freight. It is, therefore, cutting the revenue and earnings of the company.
The need for implementing a new technology has become a challenge for the company. It has created an impact on the facility layout and accuracy of inventory which in turn impacts the services provided to the consumers. The consumers demand full transparency regarding the information about the delivery of goods procured by them (Walker & Jones, 2012).
With the increase in the expectations of the consumers, there is a decreased willingness to pay for fast shipping charges.
Furthermore, another major issue confronted by the company is rising inflation which comes with high fuel prices. The company is also pressured by declining demand, increased compliances along with additional increased in the key cost centers (Bode & Wagner, 2015).
The company is also facing the issue of hiring and retaining adequate workforce . The carriers of the company face the compliance regulations which are imposed by federal, state and local governments. It also confronts the environmental issues regarding the anti-idling and other emission reduction compliances being imposed by state and local governments (Myerson, 2012).
Another issue faced by the company is globalization. It presents several challenges to the company as they expand their sales into the global markets. The localization of the current products requires a significant transformation in the supply chains as the company adapts its products according to various preferences and cultures (Kern, Moser, Hartmann & Moder, 2012).
So there is an integral risk of losing control, management and visibility over the inventory especially if the application of the enterprise is not integrated properly. The company may face the problem of inadequate inventory and poor layout of the design of their supply chain frameworks.
Another issue confronted by the company can be that the innovation can present a challenge in predicting of demands for new goods. Consistent invention is also necessitated by the ever-changing markets. It also means that the enterprise has to continually forestall the demand for new goods and services.
Quality and compliance are other great issues affecting the supply chain management. The enterprises need to make sure that they meet international and local standards regarding packaging, manufacturing, shipping and handling of their goods. The company faces the issue of passing safety tests and quality control. The enterprise are also required to make the compliance documents like permits, certification and licenses so that they do not face any fines and penalties (Wiengarten , Humphreys, McKittrick & Fynes, 2013).
Along with complying with various regulations and certifications, the company has to manage its suppliers. The supply chain managers are accountable for knowing the number of suppliers required and the handling of delays.
The company has to take care of safety and quality issues as well. The globalization of various supply chains also bring concerns about the quality of goods which are manufactured in other countries. It happens in the case when the parts of the goods are required to meet certain governing standards. It puts the companies at the risk of recalls.
It implies that the supply chain framework should ensure that the suppliers and their products sustain the safety and quality standards. The safety issues can harm the goodwill of the company and affect its cash flow ( Qiang, 2015).
The Lean Manufacturing supply can be applied to the supply chain framework for Bosch. Through the application of lean manufacturing, the manufacturing processes can be improved for the reduction of waste and resources by maintaining the operative performance.
Thus by having zero defects in the production processes, there would be an increase in the efficiency and reduction of waste in the overall organization. With greater quality, there would be fewer returns by the consumers which mean that fewer resources shall be needed for returns and issues regarding the quality (Seuring & Gold, 2012).
Lean Supply Chain includes warehousing, transportation and distribution. The warehousing in lean supply chain pertains to having a clean and organized warehouse which helps in enhancing the efficiency of its operations, excelling in the training and encouragement in the communication.
A warehouse should be able to trace and manage the issues promptly so that their root causes can be addressed and their recurrence can be prevented. If some part is out of stock is replenishment can be done correctly and instantly. For example, if there is a leakage in a lift equipment hydraulic fluid, then the warehouse with an efficient 5S policy would identify and fix it off .
The first S is Sort. The managers of the warehouse of Bosch can sort the warehouse with the help of a type of objects, the chronology of the order cycle or on the basis of the most to least usage of the items. A supply chain engineer can be appointed to supervise the operations of the warehouses in association with the strategies adopted by the company to meet its goals (Sarkis, 2012).
Once the appropriate criteria are established, it is crucial to ensure that there is a place for every part of the motor in the warehouse. Everything in the distribution center should be kept with an intention and for a transaction.
The second component is Set. It is often interpreted as streamline or straightens. In this setup, the warehouse is arranged in the order according to the picking process. The third component is Shine. It is associated with cleanliness. Warehouses suffer when they are untidy.
On the other hand, clean warehouses provide free spaces thereby enhancing the productivity and profitability of the company. It also increases the security of the warehouse as it minimizes the risk of accidents and increases the efficiency of the equipment used in the warehouse.
The fourth component is Standardize. It pertains to affixing standardized labels in a lean warehouse. Labels should have all the information required for any container or product. With the help of the concept of elimination of waste, the standardized labels get rid of wasteful or inappropriate information or clutter (Chen, Sohal & Prajogo, 2013).
The fifth component is Sustainability. It suggests that the practices should be sharp and kept systematically. A successful warehouse should implement an effective process, take the ownership of the lean warehouse practice and have a visible and transparent way for measuring every transaction. The warehouses of Bosch must prioritize consistent improvements in their procedures.
The lean supply chain framework must alnew zeof lean transportation practices. They pertain to appropriate quantity, time, place, source, price, materials and services.The transportation practice must be consumer centric and they must bring value to the consumers (Govindan, Kaliyan, Kannan & Haq, 2014).
The transportation strategy of the company must not drive where and how the product is delivered. Rather than going beyond the expectations of the consumers, they should be fully comprehended. The transportation strategies must be developed on the basis of the expectations of the consumers.
The distribution strategy of the supply chain should pertain to several components. The satisfaction of the consumers is one of them. Comprehending the needs of the consumers is crucial for the lean supply chain of Bosch. The identification of the demand of the consumers will lead to leveraging of knowledge about the preferences of the consumers in New Zealand. It would, therefore, improve the accuracy of the forecast plans and level of service quality.
It also allows the distribution planners and decision makers to formulate more effective replacement strategies, item delivery schedules, distribution network structures and buffering control mechanisms. The management of consumer demands is an important component towards the enhancement of the value of consumers and service level of the company (Hugos, 2018).
When a supply chain plan is implemented, it is essential to recognize the partners and strategic alliance agreements with them in the supply chain. The key to identifying kind of partners is their importance to the value chain events and determination of various supply chain partners like suppliers, warehouse managers, third-party logistics companies who can be included in its implementation plan.
In this regard, the supply chain partners can be categorized into two parts. The primary partners are the strategic business units or the autonomous channel captains which perform the operational or managerial activities for creating starter motors for the consumers in New Zealand ( Seuring,2013).
On the other hand, the secondary partners are the companies which offer resources such as assets, software, real estate property, usefulness and knowledge for the supply chain. The supporting partners can be consulting firms, transportation carriers, IT service providers, third-party logistic providers, educational institutions and online brokers (Zailani, Jeyaraman, Vengadasan & Premkumar, 2012).
The implementation plan of the supply chain must include the supply chain drivers. They comprise of the formation of common goals which is critical for the successful strategic alliances. So, the setting of goals is an important step in the supply chain partnership. In order to set the common goals, the supply chain partners are required to figure out the main driving forces for the supply chain linkages. These driving forces comprise of monetary value, consumer service initiatives, information or knowledge transactions along with various risk elements.
The consumer services initiatives pertain to the satisfaction of the consumers depend upon the availability of the products and respond timings. The response time is a crucial indicator of the flexibility of the supply chain. For example, it may comprise time to market and on time delivery (Wisner, Tan & Leong, 2014).
Another important factor is a monetary value. It can be defined as the ratio of revenue to total cost. A supply chain can increase its monetary value by accelerating its sales revenue, the productivity of labor and market share. It should decrease its defects, expenses and redundancies in the products.
The monetary value can be categorized by the utilization of assets. It can be estimated by various factors like net asset turnover, inventory turnover and cube utilization.Another component are Return on Investment and cost behavior.
The other factors pertain to information transactions and risk elements. The information transactions comprise of real-time communication and technology transfers. The risk elements comprise of the risk of quality failures and risk of information failures (Zhu, Sarkis & Lai, 2013).
The lean supply chain practices is a set of principles which are directly associated with the upstream and downstream flow of activities related to product services, information and finances which aim at reducing the cost and waste in an effective manner.
The primary elements are having only required inventories as and when required and having Just in Time inventory. It would reduce the lead timings thereby revising the operations and accomplishing the activities at minimum costs.
It is a philosophy which is based on planned elimination of waste and consistent improvement in productivity . The supply chain system revolves around the attributes of reduction of cost and waste. The implementation of supply chain strategies lead to the success of Bosch by responding to the needs of the consumers, reducing the costs and improvement in the business procedures (Ahi & Searcy, 2013).
Lean practices result in flexibility, cost reduction, better services, quality and innovations. With the help of five principles of lean thinking, Bosch can be financially benefited in various ways. The value of the consumers can be enhanced considering the perceptions of the consumers along with the removal of the activities which does not add value.
The value stream can be identified and mapped with the help of lean supply chain principles. The value stream consists of various partners and alliances which are involved in delivering the goods and services jointly. Another component is the creation of flow by removal of waste. It involves mapping of the value stream in which only 5% value is added with the help of activities.
They can raise 45% value in the service environment. Thus elimination of waste thus ensures that the product or service shall flow without any hindrance, delay or waiting. Response to consumer pull is about comprehending the demands of the consumers and creating the processes in response to this.
So Bosch along with its strategic partners and alliances should produce only goods which are demanded by the consumers. The manufacturing of appropriate goods thus helps in minimizing waste and increase in profit and productivity as well (Gattorna, 2017).
With the help of lean manufacturing, the company can pursue perfection in its supply chain management. The flow and pull can be created by identification of the individual process steps but its importance enhances when the entire steps are associated together.
With its occurrence, more layers of waste become visible and the process is continued for attaining the theoretical endpoint of perfection in which every asset and actions add value for the consumers (Monczka, Handfield, Giunipero & Patterson, 2015).
Certain inventory control policies can be adopted for optimizing the performance of the company. The company can choose quality programs such as lean manufacturing, ISO, kaizen, Six Sigma and Total Quality Management.
It should be ensured that every manager in the company supports the program and applies it to the supply chain system. The company should first analyze the present inventory accuracy rate and then take steps to improve it.
Once the benchmark is established, then the improvement goals can be set which can be measured in percentages or dollars. The results should be checked in order to make sure that the improvements can be achieved and sustained (Jacobs, Chase & Lummus, 2014).
The inventory optimization process should be kept simple and least complicated. If the company is not able to explain the components of the process, then the process is inappropriate and unmanageable for the optimization of inventory.
The entire supply chain should be examined. The perfect order metric should be created and measured from the point of origin to the final destination. It would help in tracking the performance of inventory across the framework. It would also improve the accuracy in the supply chain.
The processes can be duplicated and improvement strategies can be implemented in all the areas of the organization so that the entire company can be benefitted. Furthermore, the product traceability can be established during the distribution life cycle of the product (Mangan, Lalwani & Lalwani,2016).
The entire inventory pipeline can be included along with the inbound and outbound shipments. The product should not be transported until the action is authorized and recorded properly. Moreover, appropriate technology should be selected which suits the need of the company.
A continuous cycle counting program should be implemented so that a high level of accuracy can be maintained. It is one of the best ways to identify the problem areas and also helps in eliminating the requirement for expenses of physical inventory.It should also be made sure that the employees are t properly trained and informed regarding the inventory management techniques (Christopher, 2016).
Conclusion
Hence this report can be concluded by saying that an efficient supply chain system can help in aligning the flow of money, materials and data which are circulated amongst the consumers and the various partners and alliances of Bosch. Supply chain management helps in keeping the flow of resources up and down the supply chain.
It also helps in increasing the profitability of Bosch by coordinating various procedures by aligning them by planning, sourcing, making and delivering its various products and services. It is therefore accountable for utilizing the people, processes and technology so that the needs of the consumers can be met.
References
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