At present, in this busy world Customers desire commodities at the exact place at the exact time. For this, there should be a tremendous harmonization among the producer and the consumers. This was the starting point of the “Barter system” as we all know. As belongings taking place becoming problematical, where one individual had to get in touch with lots of persons for his requirements, one of those going ahead management of gathering the commodities from dissimilar persons and supplying to persons who are in require and thus satisfying his desires in return. This was the revolutionized outline of the Barter system and at present it is famous as the supply chain management
So every business adopts various trade development methodologies to get better business performance. Researchers, manufacturer advocates the mechanized strategies similar to Quality Circles, (JIT) Just In Time, Parallel Engineering, (BPR) Business Process Reengineering,(TQM) Total Quality Management, and Six Sigma etc.It Depends upon the need of industry or the approach existing at the moment in favour of business performance enhancement.
Supply Chain Management
SCM is managing of material, wealth, men, and information inside and from corner to corner of the supply chain to make best use of customer satisfaction and to get hold of a boundary above competitors.
Objectives of Supply Chain Management
Enhancing consumer Service
Increasing Sales income
Minimizing Inventory Cost
Getting enhanced On-Time Delivery
Minimizing Order to Delivery Cycle Time
Reducing Lead Time
Minimizing Transportation Cost
Minimizing Warehouse Cost
Reducing / decrease Supplier Base
Increasing size / strength of Distribution
Scope of Supply Chain Management
Supply chain management which has to scrutinize and direct the performance spot on customer's customer to supplier's supplier.
Key Benefits of Supply Chain Management
Improve Supply Chain Network
With a good supply chain; users can supervise the position of all performance across all suppliers, manufacturing plants, storeroom facilities, and delivery canters. This enables more successful tracking and supervision of all associated process, from the ordering and purchase of raw materials, from first to last manufacturing and distribution of refined commodities to clients or retail outlets.
Logistical errors in supply channels are everyone's universal issue that can negatively disbelief a company's capability to satisfy customer require for its goods.
With good supply chain, every activity is able to be effortlessly synchronized and executed from begin to end, ensuring to a great extent higher level of on-time delivery across the board.
Good supply chain can assist to decrease overhead costs in a range of ways. For instance, it can.
- Get enhanced inventory management, facilitating the unbeaten operation of just-in-time stock models
- Facilitate more successful demand forecast, so production yield levels be able to be set to most efficiently deal with customer needs - exclusive of the shortages with the intention retain sales turnover.
- Get enhanced contact with suppliers and distributors.
Features that Give Competitive Edge
Due to Today's efficient supply chain management system companies accomplish and uphold a competitive edge by make powerful restructure and improve their most vital supply chain functions from begin to end. With good supply chain management organizations are able to make best use of cost-efficiency, amplify productivity, and furnish their foundation line a big boost.
Companies know how to radically get better the method they track and control their suppliers of raw material and equipment required for production
A company can noticeably speed up the implementation of the whole order-to-delivery cycle. Supply chain as well facilitates the energetic arrangement of merchant deliveries to more
Successfully meet up demand, and further speedy establishment of price tag and product configurations.
Every bit of activities and tasks connected with sourcing, procuring, and payables can be easily maintained by the company if the supply chain was fully automated from corner to corner a company's total supplier. As an outcome, businesses are capable of construct well-built relationships with vendors, enhanced asses in addition to deal with their performance, and get better negotiations to control quantity or bulk concession and other cost-cutting method.
As companies enlarge internationally; their supply chains turn out to be more and additional complex. This makes the harmonization of the several stockrooms and transportation ways mixed up reasonably an exigent endeavour without good supply chain management. With good supply chain, businesses are capable of advance on-time delivery performance and enhance customer happiness by accomplishing complete visibility keen on how finished goods are accumulate and circulated, in spite of the number of amenities or associates that take part.
Forecasting and Planning
With a good supply chain management, organizations know how to more precisely predict consumer requirement, and sketch their procurement and manufacturing procedures accordingly. As a effect, they be capable of keep away from redundant purchases of raw-materials, reduce mechanized over-runs, and put off the need to accumulate surplus finished goods, or else hack prices to shift goods decomposed of storehouse shelves.
Good Supply chain management can make things easier and go faster the examination and managing of imperfect or broken down goods
From beginning to end these features, bear a range of key methods such as bond management, product lifecycle management (PLCM), capital asset management (CAM), and more.
Logistics Balanced Scorecard Metrics outline
Well-organized and perfect supply chain metrics make powerful logistics in organizations to build more well-versed business resolutions. These metrics is in a straight line to functional performance and take account of time, rate, and changeability records.
MAIN LOGISTICS PERFORMANCE INDICATORS
The Key Performance Indicators (KPIs) naturally consist of the following measurement information:
* Order distribution performance,
* Order acceptance performance,
* Returns managing, Cycle Count (lead lime),
* On time delivery accuracy
* Freight claims,
* Freight billing,
* Quantity considered by the nature of orders,
* Dynamic miles driven,
* Count up of shipments,
* Counts of orders,
* Cost reserves for consolidations, and some previous metrics.
IMPORTANCE OF PERFORMANCE MEASUREMENT
Progress together information technology (IT) and the way of logistics performance dimension have facilitate firms to further in a straight line tie logistics feat measures to Customer satisfaction
Executing correct order measurement is lone advance for making this relationship. The great order rate is the proportion of orders that exactly meet up customer expectations. Determining just right order performance usually has need of synchronization from corner to corner a mixture of functional spots such as transport, distribution, and accounting
Logistics performance measurements have been a progressing dispute for all organizations for numerous reasons.
- Logistics is process-oriented moderately than functional (practical).
- Logistics service performance cover several outputs (e.g., order fill, on-time delivery accuracy) that are linked. Breakdown in any single measure results in collapse of overall logistics service.
- Lots of dissimilar organizations are mixed up in deliver logistics facility.
- Customer awareness of logistics performance many times different from those of the provider.
MANAGEMENT POINT OF VIEW
§ Profit margins
§ Capacity utilization
§ Km per day
§ Labour productivity
§ Turnover per km
§ Number of deliveries
§ Benefit per delivery
§ Trips per period
§ Perfect order fulfilment
§ Total number of orders
§ Number of customers
§ Number of new customers
§ Number of regular customers
§ Number of profitable customers
§ Continuous improvement, rate
§ Product range
§ Plan fulfilment
§ Total loading capacity (for trucks)
§ On-time delivery performance
§ Product variety
§ Amount of products
§ Separation of storage areas
§ Handling equipment (electric, gas and diesel/petrol forklifts)
§ Ventilation control
§ Long term plans availability / development
§ Market share width
§ Number of markets that have been penetrated
§ Successful contacts
§ % of successful deals out of the initial offers
§ Effectiveness of distribution planning schedule
§ % of orders scheduled to customer request
§ % of supplier contracts negotiated meeting target terms and conditions for quality, delivery, flexibility and cost
§ Certification (ISO 9001/9002, SQAS, HACCP)
§ Dangerous item storage possibilities
§ Total distribution cost
§ Labour utilization
§ Overhead percentage
§ Overtime hours
§ % Absent employees
§ Salaries and benefits
§ Controllable expenses
§ Non-controllable expenses
§ Customer service costs
§ Order management costs
§ Number of trucks in use
§ Total delivery costs
§ *Pallets per hour
§ Average fuel use per km
§ Average delivery re-planning time
§ Marketing costs
§ Failure costs
§ Prevention costs
§ Appraisal/Inspection costs
§ % of failed orders
§ % of realized km out of planned km
§ Performance measurements costs
§ Human resource costs
§ Variable asset costs
§ Fixed asset costs
§ Information system costs
§ Overhead/administrative costs
§ Quality of delivery documentation per truck/driver
§ Effectiveness of delivery invoice methods
§ % orders / lines received with correct shipping documents
§ % product transferred without transaction errors
§ Item/Product/Grade changeover time
§ Order management costs
§ Supply chain finance costs
§ Total supply chain costs
§ Total time in repair (for trucks)
§ Ratio of realized orders vs. requested orders
§ Average delivery planning time
§ Attrition of drivers
§ Morale, motivation of personnel
§ On-time delivery performance
§ Number of customer complains
§ Overall customer satisfaction
§ % of orders scheduled to customer request
§ Overall employees satisfaction
§ Overall society satisfaction
IT and innovation
§ Information system costs
§ Up-to-date performance information availability
§ Utilization of IT equipment
§ IT training costs
§ Number of new products in the range
§ % of information exchange through IT
§ % of employees with IT training
§ Availability of IT equipment
§ Use of RFID/Bar coding
§ % of information management assets used / production assets
§ % of invoice receipts and payments generated via EDI
§ Average time for new products development
§ Average costs for new product development
Business examples of logistical performance metrics
One separation of a big multinational company evaluates the logistical performance of its SCM systems and hence it manages through five key performance metrics. These metrics are measured each month for each specific product. The metrics are defined as follows
- Fill rate: The proportion of orders delivered ‘on time' that is, no later than the delivery day demanded by the customer.
- Confirmed fill rate: The proportion of orders delivered ‘as negotiated'; that is, delivered no later than the day agreed between the customer and the supplier
- Response delay: The difference among the requested delivery day and the negotiated day expressed in working days. Obviously, is a positive figure
- Stock: Total work in process (WIP). Noticeably, the material product transforms as it be in motion from workplace to workplace, where worth is added. The total WIP be able to be articulated as a percentage of total sales over the earlier months
- Delay: Definite delivery day minus confirmed delivery day. Here the management is interested only in the probability of exceeding a specific entrance value.
Emphasizes the significance of mutual performance metrics; that is, metrics united by all companies in the supply chain (SC).
More specifically, in their SCM case study at HP, Calliloni and Billington4 (p 38) mention three metrics:
- Fill rate: Percentage of demand filled from available stock;
- Sales/inventory ratio: Inventory turnover ratio;
From the above case studies we bring to a close that in practice managers use various performance measures; a single measure does not meet our requirements.
Economic theory on multiple performance metrics
In economics, usefulness is the final performance assess of a system (economic theory treat physical goods and services in the similar way). So, a product has several characteristics (attributes)
Bichou, K, Bell, M.G.H, Evans. A, 2007, Risk Management in Port Operations, Logistics, and Supply Chain Security, Informa, London
Hartmut Stadtler, Christoph Kilger, 2005, Supply Chain Management and Advanced Planning (3rd edition), Springer Berlin, Germany
Jhoshanah Cohen, Joseph Roussel, 2005, Strategic Supply Chain Management, The Mc Graw-Hill, United States
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