Supply chain management involves the movement materials in an organization from the point of origin which is the start point, to the end point where the raw materials reach the customer as finished goods. The supply chain will also involve all the activities that will have to participate in the manufacturing of the raw material brought in the company to finished goods that will be delivered to the customers. The activities that are involved in this chain are always seen always to use a different kind of strategies that will ensure a smooth, gradual and successful chain. Organization either small businesses or multinational corporations strive to have a reliable and robust supply chain management. Good supply chain management facilitates effective and efficient use of the company resources. Again, reliable supply chain ensures smooth flow of the production and distribution processes. Therefore, the success of the company can be highly attributed to its supply chain management. This paper will explore several case studies of different companies and address the key issues arising from their supply chain management.
The aerospace space industry in the United States has been seen to be a major employer in the country. It has been able to hire highly skilled labor in the country and at the same time create employment to the skilled labor. The industry has also been seen to be the backbone of the technology that is used in the manufacture of aerospace in America. The fact that it is the largest it has been in the position to create employment opportunities for the Americans (Sayed, 2016). The company has been able to manufacture large commercial airplanes that are nonmilitary. The planes are always used for transportation of both people and goods.
The lesson learned from the manufacture of the large commercial aircraft was that there was the need to assemble a management team that had a necessary expertise in traditional and dream liner supply chain management. This would be in the position to help in the administration of the unconventional supply chain. Another lesson was on the supply chain visibility. This was aimed at ensuring that issues that cropped up were well addressed and on the appropriate time.
The cost estimation of any project to be undertaken should be in the position to follow all the understandings that are put in place on the underlying cost. This was aimed at ensuring that estimations were not exaggerated. This will have to make sure that there is always an accurate estimate of cost that is imposed on a specified project. The relationship with labor unions was also seen to be a lesson that was to be taken into great consideration. The labor unions were able to impose penalties on them if they did not ensure that the rules of labor are not followed accordingly.
Economic order quantity is a strategy that involves the total quantity of units that a company has to add to its raw material inventory so that to reduce the attached costs. The model is in the position to ensure that the company is in the position to reduce the cost of production and increase the profit. This is in the sense that the model will have to ensure that the holding cost, transport cost, order cost and shortage cost are minimized.
Taking the example in the SILOG, which consists of three companies that are located in different cities, it will have to mean that the companies adopt a strategy that will help them on the storage of their inventory. The cost that is associated with the transportation of raw materials is seen to be high compared to the cost that is related to storage. This means that SILOG will have to adopt the criteria of asking for large batches of raw materials few times in a row. This would have to reduce the cost of transport that will have been involved in transportation if they had opted to small batches of raw materials more frequently.
SILOG will be in the position to reduce the cost of transportation of raw materials as this will only be incurred at the time of replenishing of raw materials. Despite the fact that the cost of storage will also have to increase, it will be moderate in a way that will not be the same as the combined cost of frequent transportation and storing of the raw materials. The cost will have reduced slightly such that it will be profitable to be ordering raw materials in bulk and storing, other than ordering and transporting frequently.
The EOQ model has been largely used by companies in the calculation of cost and also in the determining of the total inventory in stock. The meddling has also been seen to be having assumptions of which in the real sense may not stand to be as there are at times the assumptions are violated. In stock is the point at which there is a surplus inventory in the store that the company can be able to use when the goods are out of the shelf. The company is seen to keep the inventory for safety measures. Out of stock, on the other hand, is a point where the company has thoroughly exhausted the inventory. This is in the position that the company has no surplus inventory that can be used (Choi, 2014). The situation is in a way fatal as this is not in the store alone but also is out of the shelves. Safety stock level is the total amount of fixed inventory that a company prefers to keep or hold in the warehouse. The stock has been preserved to be used in times of crisis. The kind of crisis is when the supplier is not in the position to honor his call of supplying or when there is a shortage of the product in the market.
In calculating the order size Q by using a mean value of D units per month, there is a probability of incurring in stock-out if we do not use a safety stock level. This is in the sense that the mean value of D units in used will only be in the position to cater for the demand in the market. The quantity that will have to be ordered will only be catering for the amount demanded by the customers. It will not be able to give room for surplus. The fact that the company will be in the position to cater for the demand of the customers at all the time, it will also not be able to cater for the customer’s demand when it comes to appointing that the supply of the goods is insufficient (Muckstadt, & Sapra, 2010). This is a situation that will make the comp-any go out of stock as they were not ordering considering the safety stock. At this point, the company will not have a safety stock, and so this will make them not be able to cater to the demands of their customers. At this point is when the company will have to lose pits customers as they will not be in the position to honor the needs of their clients.
Beer game is an experimental learning business simulation game that is focused on supply chain management. The game is seen to be played by a total number of four participants. The game is in the position to try and exercise and demonstrate key principles in the supply chain management. The game illustrates a four stage supply chain that will involve the retailer, wholesaler, distributor and the factory. The task was to ensure that the supply chain is to produce and deliver units of beer (Kesici, 2012). The factory has the mandatory of producing the beer while the other three stages will have to ensure that they provide units of beer until it reaches the external customer at the end of the supply chain management. The aim of the players is to ensure that they fulfill the incoming orders of beer that are brought in.
The orders brought through are seen to be in the position to flow upwards from the external end customer at the end of the supply chain to the factory. Deliveries, on the other hand, are seen to flow downwards, that is from the factory downwards via the distributors to the external customer at the end of the supply chain. During this process there is always factors that are seen to be in the position to try and hinder the smooth functioning of the process, the delay time will at all point be in the position to also drag back the supply chain. This will at the end have to make the players in the chain to be a failure.
The participation in the beer game will not be in the position to count on the overall grade as the game is not in the position to incorporate all the activities that take place in a supply chain. The game is also seen to apply to certain products. This limits the game to only certain goods and so limiting the skills of an individual in supply chain management. The game may also not count in the overall performance as the skills learned are not sufficient to make an individual gain experience on the learned skills in class. It is only seen to be able to introduce a person to the exact thing that is always done in supply chain management.
Push and pull factor has been seen to be the basics that supply chain management has been able to develop from. The two factors have been in the position to adequately function over the past years and have been able to record positive results when it came to supplying chain. With time and evolution, it has been noted that the two factors are slowly being faced out as they are becoming kind of irrelevant in most of the companies and organizations. The strategy has long stopped to be used as a hybrid of the two has been developed. A hybrid strategy has been able to be developed from the two factors which have been seen to be more efficient than the two factors used separately.
The reason as to why the strategy is no longer being used is because of the poor timing and speculative nature that it has. The strategy is seen to be in the position to study the trends and history in the market which they use in deciding on the level and intensity of producing an item. Studying trends and history is important, but it will not be in the position to help an individual speculate accurately, and so this will in a way endanger the company.
The pull and push strategy is no longer being used as in the modern days predicting and forecasting has become difficult. The strategy is also not in the position too well adapt with the current trends that move fast. The type of speed requires a hybrid strategy that will have to be dynamic and be able to move with the trend. This will be in the position to ensure that the companies supply chain is always at that position of taking care of the customers’ demands and ensuring that it cuts on the cost.
The fact that 7-Eleven deals with fresh foods which are perishable, it has been in the position to ensure that it minimizes the losses that are related to their food wasting. The company has been able to make sure that they reduce the loss by installing new machinery that is used to preserve their food products. This is in the sense that they adopted the use of cold temperatures that has been able to preserve their food products. The same cool temperatures are used while they are delivering the foodstuffs to their customers. The technology has been able to save the company from the unnecessary loss of delivering food products to their customers that are not fresh.
The company has also been able to install technology that is used in the monitoring of all the transactions that are taking place in the stores and also while delivering and the time of paying. This is in the position that the company can monitor the store and be able to know when to replenish their inventory (Earle,& Earle, 2008). The same is also seen at the point when the customers pay. All these transactions are monitored in one system. The system and how they operate has been able to motivate other companies who have also been seen to opt for the same system. The system can reduce cost and also ensure that there is no room for loss.
We also learn that it is also economical when transporting or delivering items to customers to be done in one pack. This is in the sense that all the orders are to be collected and then packed in one luggage. Transporting will have to involve the dropping of the package at the specified customer’s location at the same time. This will have to save on the transportation cost and also time.
The main lesson learned was on time saving and speed. This is whereby time will have to determine the pace that one will have to work with. Time is an essential commodity that is not replenished, and so it has to be utilized. Time will be at all point delay all the transactions that were set to happen. It will also be in the position to deny an individual a contractor an opportunity. In a supply chain, time is essential in a way that when delayed it may lead to the breakdown of the chain thus the flow will have to be distorted.
The relationship one has with the customers should be a trustworthy one. This is in the sense that, we should be in the position to ensure that we honor our pledges and deliver. Honoring of a promise will have to create a good bond between the customer, distributor and usually the factory. The whole chain is seen to be improved and maintained by the kind of relationship that the full participants have. The relationship will always be mutual in that all the participants will be benefiting from each other.
SILOG has been able to teach us about the importance of not emptying the warehouse before restocking. This is in the sense that, when the store is empty, it will have to take the company sometime in restocking. The fact that the company will be restocking their warehouses at the point which it is empty, there may happen that the raw materials or the finished goods will not be available in the market and thus the suppliers are also unable to honor their pledge. The situation will have to make the company run into a state that it will not be in the position to meet the demands of their customers. It will have to make the company to either lose its customers because they are unable to meet the demands or make the company incur an extra cost of sourcing the same commodity at a higher price (Christopher, 2016). It tells us that we should not clear our warehouses completely before replenishing the stock.
SILOG also has been able to teach us on the way we can be able to reduce cost in the supply chain. This is in the sense that, a company should be able to calculate the cost that is involved in the transportation of the raw materials and also the cost of storage. This will have to help the company be in the position to either know if they will be ordering a lot of raw materials at a specified period instead of ordering small bits of raw materials frequently. If the cost of storage is higher that the transportation cost, the company should opt for the ordering of raw materials in small quantities frequently. This will be in the position to help the company save on one of the costs associated with transport and storage.
Conclusion
In conclusion, the supply chain is one of the important activities in any company or organization. It is an activity that has to be taken with a lot of seriousness as it involves the preparation of the company’s goods from the beginning to the end product and will also ensure that the product reaches the target customer. A company with good supply chain management will create a strong competitive advantage. This is because there with be continuous production goods and services as well constant supply of the finished product to existing and newly open markets without delays.
References
Choi. (2014). Handbook of EOQ inventory problems: stochastic and deterministic models and applications. New York: Springer.
Christopher, M. (2016). Logistics & supply chain management. Harlow, England New York: Pearson Education.
Earle, M. & Earle, R. (2008). Case studies in food product development. Cambridge: Woodhead.
Kesici, K. (2012). Beer-Game: Der Bullwhip-Effect in der Supply Chain – Ursachen und Gegenmaßnahmen. Mu?nchen: GRIN Verlag GmbH.
Muckstadt, J. & Sapra, A. (2010). Principles of inventory management: when you are down to four, order more. New York: Springer.
Sayed, A. (2016). Fundamentals of aircraft and rocket propulsion. London: Springer.
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