Quantitative Business Models For Supply Chain Management

Supply chain management

Discuss about the Quantitative Business Models for Supply Chain Management.

Supply chain management of the company is a best source for gaining the competitive advantage. The process of supply chain management includes all the processes from brining the product into the market to the satisfaction of customers. The supply chain activities include distributors, transportation, advertisement, wholesalers, retailers and customers. The supply chain management in the organization includes all the functional areas such as transportation, inventory control and warehousing. It is very crucial for the management of every company to provide deep focus on all the activities of the supply chain (Fawcett et.al, 2014). The whole process of supply chain includes the moving of goods from raw materials to the end users. The productivity of the company can enhanced if the underlying company focuses on the information, building strong relationships with the customers, suppliers, retailers and whole sellers. In the previous years, the supply chain management of the company did not include several responsibilities but in the present situation, the activities of the supply chain have increased which enhances the responsibilities of the supply chain management. These responsibilities enhances due to the increase in the line of the supply chain (Tayur et.al, 2012).

The paper under discussion provides the detailed information about the supply chain management and its importance. Also, the underlying paper has discussed the seven principles of the supply chain management.

Supply chain management

The supply chain management of the company helps in enhancing the operational efficiency of the organization. It helps in enhancing the success of the company and provides satisfaction to the customers. The supply chain management helps in improving the quality of life. SCM is very crucial for every organization and plays an essential role in the success of the organization. The employers demand from the employees that they must have high skills and knowledge about the supply chain management. SCM of the company identify the major issues of the company which includes the growth and partnership of the organizations, expansion in the business of the company and environmental issues. Total eight essential processes are included in the supply chain (Chopra and Meindl 2013).

Importance of supply chain management

The supply chain management strategy is very important for the organization. These strategies are the backbone of the organizations. Availability of the products, market coverage and the revenue of the company is fully dependent on the supply chain strategy. The company must have an effective supply chain strategy in order to become competitive in the market. When a new product is launched in the market so after the advertisement of that product it must be available in the sales units from where the customers can easily buy that product. If the product is not available in the market, the demand for the customers will switch to the other substitute products. Not availability of the product in the market results in dropping the demand of the customers and also dropping the interest of the customer related to that product. Transportation network plays a crucial role to support the sales of the company. This network helps in delivering the brands in the sales unit from where the customers can easily purchase the products of the company. Also, the marketing strategy of the company helps in enhancing the sales of the products. Through the marking, the company promotes their brand so that several individuals will become aware about the new brands of the company. Transportation network and the advertisement strategy of the company are very essential components of the supply chain (Dyckhoff et.al, 2013).

Importance of supply chain management

In order to lower down the cost of production, different companies setup their own production units where the cost of the raw material and the labor cost are very cheap. The company has to focus that the supplier must provide the best quality of the raw material, actual quantity and the reasonable price. Companies transfer this raw material into the production units located in different cities. In these production units, the goods have been made which than pass through a process of supply chain. The supply chain involves the distributors, wholesalers, retailers and the customers (Hult et.al, 2013).

There are several benefits of the supply chain management. Some benefits are:

• It reduces the cost of inventory
• It helps in providing the medium of communication between the partners
• It helps in improving the service and as well as satisfaction of customers
• It helps in increasing the cash flow of the company.
• It provides effective and efficient manufacturing strategies to the companies
• It helps in improving the quality of the product and provides higher profit margins to the companies.

The supply chain management provides different tools and techniques to the company so that the company can easily analyze and evaluate the problem. Also, it provides the solution of the problems faced by the company. The supply chain management helps in delivering the goods to the customers quickly. It helps the company in order to become competitive in the marketplace (Turker and Altuntas 2014 p.837)

1. The first principle of the supply chain management illustrates that the companies made a segment of the customers according to the service needs. After making the segment, apply the supply chain process in order to provide service to this segment and enhances the profitability of the company from this segment. Analysis of the value which a customers demand is very important. After making the segment of the customers according to their needs, the company can easily provide the services which the customers demand in the segment. In order to make the segmentation and evaluate the demand of the customers, the company has to conduct interviews, surveys and research (Wisner et.al, 2015). After analyzing the needs and demands of the customers, the company provides changing in their supply chain process and making the supply chain that is essential in order to fulfill the needs and demands of the customers. This ability of the company also helps in enhancing the profitability of the company. The company must evaluate the financial understandings of their customers. It is very essential for every company to identify and evaluate that which customers is most profitable for the company and from which customers the company can generate long term profit. The company must identify all the costs associated with the activities in the supply chain process. Several companies enhance their customers by providing services to the segments but their cost analysis showed the lost. So it is very essential for every company to identify the cost (Brindley and Oxborrow 2014 p.45).

Benefits of supply chain management

2. The company must modify their logistics network according to the service requirements. Several companies use the monolithic approach in order to modify the logistics network design. The company modifies their logistics network design according to the service requirements of the customers. This modification helps in completing the toughest requirement of the customer.  In every company, there are specific essential logistics are required for the successful supply chain (Ross 2015). Differentiated product industries can easily modify their logistics as compare to undifferentiated product industries. Modification in the logistics network helps the company to serve the segment of the customers and helps in achieving the growth. The logistics network of the company must be flexible. In order to provide efficient services to the customers and to become competitive in the market, the company has to modify the logistics network. The company must make a plan to modify the logistics network in order to make realistic decisions and to easily manage the transportation (Bowersox 2013).

3. Several companies make the forecast of their products by using their own assumption. Different measures and details also help the company in making the forecast. Sales forecast of the companies help to predict the growing demands of the customers. It is very essential for the company to make prediction of their production that customers wants i.e. what amount of products is necessary and demand by the market. The supply chain management of the company helps in making the independent forecasting (Ellram et.al, 2014 p.8). The company used the demand planning software in order to implement the planning process. Forecasting helps in reducing the cost of the company. The company can take an advantage of the lower inventory and warehouse cost by using the forecasting. This will help the company in enhancing the profitability of the company. (S&OP) sales and operations planning helps in all the activities of the supply chain process i.e. from the suppliers to the customers in making the forecasting. The manufacturer forecast the demand of the distributors. The distributors forecast the demand of the end users which are also called the customers (Ramanathan 2014 p.210).

4. The company must differentiate the products that are highly used by the customers. The company must convert the material into those products of having higher demand in order to meet the requirements of the customers. The company must cut down the cost of the products having low demand. Also, the technique of just in time helps the company in reducing the cost of the product. The companies using the just in time inventories are competitive in the marketplace. Several companies used the Mass customization in order to meet the needs and demands of the individual customers (Yinan et.al, 2014 p.171). Product differentiation helps in enhancing the demand of the customers and increases the profitability of the company. The company uses different ways in order to meet the needs and demands of the customers. It is very essential for the company to forecast the demand of the customers. Stable demand of the customers is very easy to predict. Several companies used SKUs strategy. This strategy helps in enhancing the sales of the company and reducing the inventory level by 50 percent. Time is very essential to analyze in the supply chain management. The company must maintain the supply chain process and provide the product to the customer according to the prescribed time. The company must improve their capability and speeds up the process from the raw material to the finished goods in order to fulfill the requirements of the customers. This approach improves the flexibility of the company so that the company makes the products according to the demands of the customers. Also, just in time inventories in the product differentiation help the company from postponed and helps in enhancing the flexibility of the company. The manufacturers must maximize their flexibility to provide the products according to the changing demands of the customers (Winter and Knemeyer 2013 p.18).

Principles of supply chain management

5. The company must manage all the sources of supply in order to reduce the cost of materials and services. The company has to pay the lower prices of the materials in order to reduce the cost of the product. The manufacturers must maintain the strong relationships with the suppliers. The company must have several suppliers of the material so that the company chooses the supplier having the lower cost of material. If the company is more progressive, the supply chain of that company will be excellent (Prajogo and Olhager 2012.p.514). The company must think that the supplier cost is the own cost of the company. For example: if the company needs only 30 days raw material but it forces its supplier to provide 90 days material so that it will impact on the cost of the supplier and the overall cost of the supplier will be enhanced. The company must collaborate with the suppliers in order to reduce the cost of the product and increases the profit margins. Several companies provide maintenance and repair cost to the material which overall impacts on the cost of the material and enhances it. Before approaching to the suppliers, the company has to focus on its structure and position in the marketplace. The company must maintain the strategic relationships with the suppliers. Strong relationships with the supplier strengthen the supply chain of the company (Hoejmose et.al, 2013 p.589).      

6. It is very essential for every company to develop a technology strategy in the supply chain process that will help the company in decision making process and the company will become aware of all the products, services because all the information will become available for the company. In order to become successful in the market place, several companies replace their poor systems with the new enterprise wide systems. By making their system effective and efficient, the company has the knowledge about all of their customers, products and services. New technological systems are very powerful and help the company in their supply chain process. This new technological strategy helps the company to run their business effectively. Information technology system is very essential for every company and helps in evaluating the capabilities of the company which a company performs in the supply chain process (Fourie 2015). The underlying technological system helps the company in their day to day operations. The company can make a daily schedule of the orders by taking help from the underlying technological system. Also, the underlying system helps the company in planning and decision making process. The company can easily allocate all the resources by using the underlying information system. By using the information system, the managers must become aware about the suppliers, distributors and their customers in the supply chain process. The information technology system does not require a lot of investment. The underlying information system helps the company to enhance its supply chain management by providing information to the companies. The information technology system of the company enhances the operations of the supply chain. In the current era, every company handles the orders electronically (Paladini and Douglas 2013).

7. The company must make the successful measures in order to reach the end users effectively. Companies used different measures to reach their customers in order to broadly understand their demands. First of all the company has to focus on its services which is provided to the customers (Albert and Tullis 2013). The orders must provide on time, on the agreed price and without having any damage. The managers in the supply chain process identify the revenues and cost of the company in order to analyze the profitability of the company. The company has to focus on their product packaging and the shipments in order to provide the high quality products to their customers and must maintain strong relationships with their customers. Several companies use the activity based costing in order to generate revenue (Davis 2014 p.189).

Conclusion

It is concluded that the supply chain management plays a vital role in enhancing the performance of the organization. It provides help for the company in reducing the cost of the product and increasing the profit margin. It is an essential element that helps in enhancing the efficiency and productivity of the organization. It helps in providing the satisfaction to the customers and is essential for the success of the company. It is like the backbone of the organization because it manages the critical issues of the company. It helps in creating the customer value and helps the company in building the competitive infrastructure. In order to become competitive in the global market, supply chain management is very helpful. Supply chain management of the company helps in making the organizations operationally efficient. The supply chain management is very effective and provides different alternatives in order to manage the competition exists in the market place. It is very beneficial and important for every company.

References

Fawcett, S.E., Ellram, L.M. and Ogden, J.A., 2014. Supply chain management: from vision to implementation. London: Pearson.

Tayur, S., Ganeshan, R. and Magazine, M. eds., 2012. Quantitative models for supply chain management (Vol. 17). Springer Science & Business Media.

Chopra, S. and Meindl, P., 2013. Supply chain management: strategy, planning, and operation (global Ed.). Boston [etc.: Pearson.

Dyckhoff, H., Lackes, R. and Reese, J. eds., 2013. Supply chain management and reverse logistics. Springer Science & Business Media.

Hult, G.T.M., Closs, D. and Frayer, D., 2013. Global supply chain management: Leveraging processes, measurements, and tools for strategic corporate advantage. McGraw Hill Professional.

Turker, D. and Altuntas, C., 2014. Sustainable supply chain management in the fast fashion industry: An analysis of corporate reports. European Management Journal, 32(5), pp.837-849.

Wisner, J., Tan, K.C. and Leong, G., 2015. Principles of supply chain management: a balanced approach. Cengage Learning.

Brindley, C. and Oxborrow, L., 2014. Aligning the sustainable supply chain to green marketing needs: A case study. Industrial Marketing Management, 43(1), pp.45-55.

Ross, D.F., 2015. Distribution Planning and control: managing in the era of supply chain management. Springer.

Bowersox, D.J., 2013. Logistical excellence: it’s not business as usual. Elsevier.

Yinan, Q., Tang, M. and Zhang, M., 2014. Mass customization in flat organization: The mediating role of supply chain planning and corporation coordination. Journal of Applied Research and Technology, 12(2), pp.171-181.

Ramanathan, U., 2014. Performance of supply chain collaboration–A simulation study. Expert Systems with Applications, 41(1), pp.210-220.

Winter, M. and Knemeyer, A.M., 2013. Exploring the integration of sustainability and supply chain management: Current state and opportunities for future inquiry. International Journal of Physical Distribution & Logistics Management, 43(1), pp.18-38.

Ellram, L.M. and Cooper, M.C., 2014. Supply chain management: It’s all about the journey, not the destination. Journal of Supply Chain Management, 50(1), pp.8-20.

Prajogo, D. and Olhager, J., 2012. Supply chain integration and performance: The effects of long-term relationships, information technology and sharing, and logistics integration. International Journal of Production Economics, 135(1), pp.514-522.

Hoejmose, S., Brammer, S. and Millington, A., 2013. An empirical examination of the relationship between business strategy and socially responsible supply chain management. International Journal of Operations & Production Management, 33(5), pp.589-621.

Fourie, L.E., 2015. The role of social media as an information source in the decision making of students when selecting a university.

Paladini, P. and Douglas Gimenez, E., 2013. New Information and Communication Services Companies. Global Journal of Management and Business Research, 13(4).

Albert, W. and Tullis, T., 2013. Measuring the user experience: collecting, analyzing, and presenting usability metrics. Newnes.

Davis, K., 2014. Different stakeholder groups and their perceptions of project success. International Journal of Project Management, 32(2), pp.189-201.