Question:
Explain the Purpose of the Author or the Article ‘The 7 Principles of Supply Chain Management’.
The report aims at providing a critique to the article based on Supply Chain Management. The report therefore describes about the purpose of the article. There is an identification of the objective addressed by the author along description and supported arguments. The report also put forward an evaluation of inferences by the author that included line of reasoning and main assumptions underlying the thought of the author. The report also tries to explain the implications of the author’s position logically with a mention of the usefulness of the topic in practice and theory.
The case study article aims to explain ‘The 7 Principles of Supply Chain Management’. The aim of the article provided in the case study explains the initiatives undertaken for improving the supply chain (Pagell and Shevchenko 2014).
According to the article, most of the managers find themselves in a tug of war between the increasing demands of the customers and the company’s need for gaining profitability and growth. However, the managers have found it easier to maintain a profitable growth by treating the supply chain management as the strategic variable. The article also aims to put forward that managers recognize two things with the supply chain. Firstly, they consider the entire supply chain that involves every single link in managing the flow of product and service information from the suppliers to the customers. There are also certain tangible outcomes that are possible to achieve with the considerations of the supply chain. These include cost, asset utilization and revenue growth (Stadtler 2015).
The article also puts forward analysis of the initiatives for improving the supply chain management carried across more than 100 distributors, retailers and manufacturers. In this regard, there was huge progress for some while others failed terribly. The initiatives that led to success however included broad efforts and a combination of both tactical and strategic change (Golicic and Davis 2012). These initiatives also, follow a holistic approach in critically identifying the supply chain so that it helps in the improvement process in terms of cost, revenue and asset utilization. The article also identifies that issue of determining and executing a transformation plan for supply chain that will be able to move complex operating multiples opportunities in a particular direction. Thus, according to the article in order to enable the managers proceed with the idea of transformation plan of the supply chain, the initiatives undertaken by successful manufactures represented in the form of seven principles of supply management (Ahi and Searcy 2013.). These seven principles are the fundamental principles for supply chain management. Thus, the article provides substantial information and is interesting written by comparing the traditional techniques with the modern ones and their acceptance and implementation for a supply chain to function effectively.
The authors of this article are reputed logistics practitioner belonging to the company Anderson Consulting. They have pointed out the fundamental principles of the supply chain management used by most successful manufacturers (Wisner, Tan and Leong 2014). This will help in dealing with the issue of determining, developing and executing a transformation plan for the supply chain that will enable operation of complex and multiple entities. Therefore, the authors quite logically and conceptually described the seven fundamental principles that supported his argument (Christopher 2016).
According to the article, the first principle focuses on the segmentation of customers based on service requirements of specific groups and accordingly adapts the supply chain for serving the segments in a profitable manner (Hassini, Surti and Searcy 2012). The article also puts forward that the customer segmentation based on particular needs also equips a company in developing a service portfolio as per the needs of the various segments. The second principle focuses on customizing logistics network as per profitability and service requirements of the segments of the customer. Thus, according to this principle of supply chain management logistics network need to be more complex with alliance from third party logistics providers. This logistics is certainly more flexible than the traditional ones. The third principle however focuses on listening to the signals of the market and accordingly align the demand plan within the supply chain thereby ensuring consistent forecasting and allocation of resources that is optimal. According to this principle, when the sales and operation planning transcend the boundaries of the company for involving every like of the supply chain for the development of forecast and maintain required capacity across operations then it results in a supply chain management that is commendable. As per the article, the fourth principle focuses on the differentiating products in a manner that are closer to the customers that ensure speed conversion across the supply chain (Barney 2012). Initially, manufacturers based their goals on production by depending on the demand projections for goods and thus maintaining a stock of inventory to cope up with the existing forecasting errors. According to the authors of the article, these manufactures had a fixed lead-time in the system with a finite time for conversion of materials into products for meeting the requirements of the customers. According to the fourth principle of SCM, the authors mentioned that a newer strategy of mass customization also had a similar potential compared to the traditional means as they allowed the manufacturers to discover the value of postponement.
According to this article, the manufacturers are gradually realizing that time is valuable and hence lead-time remains fixed in the supply management (Tieman, van der Vorst and Che Ghazali 2012). Thus, the manufacturers are trying to strengthen their ability of reacting to the signals of market through compression of the lead-time of the supply chain and speeding up the process of raw material conversion to the final products designed as per the requirements of the customers. The approach helps in enhancing flexibility for making configuration decisions to remain closer to the moment of demand occurrence. The timely product differentiation helps in locating the advantage point of the manufacturing process where configuration of the product designed for meeting the single requirements and in assessing options like modularized design, postponement and manufacturing process modification that helps in increasing flexibility. The fifth principle according to the article focuses on the strategic management of supply sources and in reduction of the entire cost in owning the services and materials. According to this principle, excellence in supply chain management requires a mindset where the suppliers needs to be forced for providing ninety days of consigned material instead of three days. This will help in pushing the cost of the inventory into the price of the supplier. According to this principle, although manufacturers should be placing their demands upon the suppliers and they must also realize that the partners should share goals for ensuring cost reduction across the supply chain for lowering prices in the market and thereby enhancing it margin. The sixth principle put forward in the article focuses on the development of strategy based on wide technology of supply chain that helps supporting numerous levels of making decision thereby ensuring clear flow of not only products but also the service and information. According to the article, following this principle the managers will develop an idea for running the business. The authors of the article, however emphasized that adoption of this principle will have different impacts for short term, midterm and long term (Seuring 2013). The short-term adoption will help in handling transactions on an everyday basis, handling e-commerce across the supply chain and helps in aligning demand and supply through information sharing on daily scheduling and orders. In the midterm, the principle helped in making decision and planning, supporting shipment and demand planning and mastering production scheduling of for effective allocation of resources. In the long term, the system will enable the managers for evaluating plans, help distribution centre, suppliers and enable service alternatives by the third party (Ashby, Leat and Hudson-Smith 2012). Lastly, the seventh principle focuses on the adoption of channel spanning measures of performance for gauging the collective success and thereby reaching end user efficiently and effectively. According to this article, companies are adopting measurement of channel spanning performance through development of common report cards. This enables the partners of the common in working towards the common goal.
According to Seuring and Gold (2012), managing risks have become quite challenging due to the uncertainties that prevail not in the demand and supply but also global outsourcing and existence of shorter product cycles. As per the author, today’s business environment in global perspective influenced by not only financial stability, timely outsourcing, existence of new technologies, company mergers and e-commerce business have forced the organizations in adopting newer means for doing the business. Moreover, the authors have observed that under the prevalence of such situations the existing supply chain also become more vulnerable due to external and operational disruptions. Vulnerability defines the exposure to disturbance that arises within supply chain along with external risk associated with the supply chain.
According to the author, there exists certain risk to the Supply chains due to any event that causes its disruption thereby affecting the overall management of the organization (Colicchia and Strozzi 2012). Thus, there is a need for efficiency in supply chain management that will enable effective functioning of the organizations. Therefore, academic literature prevalent in the supply chain domain have however, differentiated among the varied forms through focusing on information availability and their intensity. Therefore, a need to initiate measures for implementation of effective transformation plan of supply chain put forward by the authors. This initiated an explanation through the seven principles of supply chain management followed by the most successful managers.
According to the principles put forward in the paper, the organizations are able to undertake customer segmentation and at the same time listen to market signals that allow optimal allocation and consistent forecasting of the resources (Winter and Knemeyer 2013). The adoption of the principles also enabled the manufacturers in discovering the value that determined by postponement. The principles also enable reducing cost of the supply chain that helps in enhancing its margins. The managers will also be able to develop an idea for running the business and adopt means for performance that is channel spanning.
Things Learnt from the Article
Thus, paper is worth considering as it allows one to understand the needs for adopting the supply chain by following the seven principles put forward by the authors. They not only prevent any kind of disruption to the supply chain but also makes sure that the plan for transformation is undertaken effectively keeping in terms with the modern changes in the organization.
Already Know Fact along with the Surprising Fact
I knew only about the supply chain management but what has surprised me is that the authors have put forward its seven principles. Further, the authors have left further scopes for research in this field (Heckmann, Comes and Nickel 2015). The holistic approach followed by the authors provided critical insights into the supply chain management. The transparent and scientific process adopted has helped the author enables the reader to understand the difference adopted from the traditional views.
The Missing Information in the Article and Further Additions
The article however mentions all probable things that are necessary for explaining the seven principles of supply chain management. There is enough information provided so there is no need for coverage of other things.
Learning Outcome
The concept of the article not only accepted theoretically but organizations have also started implementing it in practice with three percepts in mind. The first involves orchestration of improved efforts by the managers and the organization. This not only requires assessing the entire supply chain rigorously but at the same time ensuring setting of explicit target outcomes for asset utilization, revenue growth and cost reduction (Seuring 2013). The second involves implementation of the gradual process. Since the change will involve huge financial impact, therefore it is necessary for the management in balancing the long-term promise against any immediate business needs. The third percept deals with acceptance of change. For most companies there exist difficulties in implementation and acceptance of that change. However, the best way to ensure success and minimize the resistance is not only extensive involvement visible in participation but also effective communication amongst senior executives. This enables in successfully achieving the cause thereby resulting in removal of any managerial obstacles.
Conclusion
The critique to the article written by following a research methodology that is systematic. Through the methodological process, one can develop a strong evidence base about supply chain management. The authors tried to discuss about the principles of the supply chain management that for enabling the managers in adopting a transformation plan for better organizational effectiveness.
References
Ahi, P. and Searcy, C., 2013. A comparative literature analysis of definitions for green and sustainable supply chain management. Journal of Cleaner Production, 52, pp.329-341.
Ashby, A., Leat, M. and Hudson-Smith, M., 2012. Making connections: a review of supply chain management and sustainability literature. Supply Chain Management: An International Journal, 17(5), pp.497-516.
Barney, J.B., 2012. Purchasing, supply chain management and sustained competitive advantage: The relevance of resource?based theory. Journal of supply chain management, 48(2), pp.3-6.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Colicchia, C. and Strozzi, F., 2012. Supply chain risk management: a new methodology for a systematic literature review. Supply Chain Management: An International Journal, 17(4), pp.403-418.
Golicic, S.L. and Davis, D.F., 2012. Implementing mixed methods research in supply chain management. International Journal of Physical Distribution & Logistics Management, 42(8/9), pp.726-741.
Hassini, E., Surti, C. and Searcy, C., 2012. A literature review and a case study of sustainable supply chains with a focus on metrics. International Journal of Production Economics, 140(1), pp.69-82.
Heckmann, I., Comes, T. and Nickel, S., 2015. A critical review on supply chain risk–Definition, measure and modeling. Omega, 52, pp.119-132.
Pagell, M. and Shevchenko, A., 2014. Why research in sustainable supply chain management should have no future. Journal of supply chain management, 50(1), pp.44-55.
Seuring, S. and Gold, S., 2012. Conducting content-analysis based literature reviews in supply chain management. Supply Chain Management: An International Journal, 17(5), pp.544-555.
Seuring, S., 2013. A review of modeling approaches for sustainable supply chain management. Decision support systems, 54(4), pp.1513-1520.
Seuring, S., 2013. A review of modeling approaches for sustainable supply chain management. Decision support systems, 54(4), pp.1513-1520.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.
Tieman, M., van der Vorst, J.G. and Che Ghazali, M., 2012. Principles in supply chain management. Journal of Marketing, 3(3), pp.217-243.
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.
Wisner, J.D., Tan, K.C. and Leong, G.K., 2014. Principles of supply chain management: A balanced approach. Cengage Learning
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