Supply Chain Management Systems at PC World
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I would like to undertake the study of Supply Chain Management Systems at PC World, United Kingdom. The study covers the processes in the organization, the value chain in the firm and its analysis. I made an analysis of the ambiguities in the processes of the system and put forth recommendations needed for the improvements in future. Relationship Management at the value chain, the customer services in the organization, its impact, Information and Communication Technologies (ICT) was given concentration in the studies.
Objectives of the Study:
There are multiple objectives for my studies of research. Mainly the supply chain system in PC World is analysed in detail. Improvements for the development of the supply chain system in future is also aimed in my research as it has its own significance for a purchase led kind of business. Information and Communication Technology systems in PC World and Supplier Relationship Management in the work place are given importance as the secondary objective of the studies. An analytic thinking over the improvement of customer satisfaction with use of value chain has done as another objective of this research.
Why is this study important?
The economic crisis of 2009 was the most severe one after the Great Depression of 1929. The much expected GDP growth had not happened in the third quarter of 2009 and the growth was 0.3 in the last quarter of the year (statistics.gov, 2010). Most of other European countries have shown modest growth rates, UK is still in search of positive triggers. We have seen six consecutive quarters of negative growth and the crisis has affected the economy very dangerously. 5.7 per cent of the market capitalization has been wiped out in UK in the last 18 months. These numbers look worst when the economy faced inflation in the same time period. The doldrums in the job market and the virtually frozen consumer spending have affected many industries in the country (guardian, 2010). Still we are not at all survived from the crisis and waiting for much horrific double dip recession. So the organizations which have better operating systems only can survive in market. The organizations who serve an improved customer service will be benefited in this situation. So the organizations are trying to improve the satisfaction of customers, reduce costs and improve their profitability. Companies are in search of synergies and positive triggers with restructuring and reorganizing their strategies and operations. The Information and Communication Technology systems come across a lot of developments in this period. This is the real opportunity for the companies to come up in the market with ideal strategies and improvements in the operations. My research will be a benefit for the companies which are eagerly in search of ways to improve their efficiency as it is done in the wake of these tough situations.
I would be guided on mostly by the studies of Geoff Walsham, Professor in University of Cambridge. The series of publications of his works by University of Cambridge are well respected in this area of study. "Globalization and ICT: Working across culture" by Geoff Walsham would be the primary theoretical resources of my research. These works shows lights on the significance of Information and Communication Technology in the present status of the economies.
Another resource for my studies is "Supply chain management: more than a new name for logistics", by M. C. Lambert and D. M. Pagh. These works are published in IJLM (International Journal of Logistics Management). They formed a primary thought for the subject of my proposed study.
"Introduction to e-supply chain management: engaging technology to build market winning business partnership" by David Frederick Ross inspired me to work with the advanced methods of improvements for supply chain management systems and its operations.
Problem of Research:
The problem of the proposed research is insufficiencies and the opportunities of improvements for the improvements in the system of supply chain in PC World. Suggestions are made to improve the efficiency and productivity of the PC World as a part of this research. The research would be done concentrating on 3 dimensions. Implementation of Information and Communication Technology in the operations, customer satisfaction and Supplier Relationship Management are the three main points where the concentration has been given in this study. The main questions raised for the purpose of this research are listed below:
- How is the organisation of Supply Chain at P C World?
- How is the value chain organized in P C World?
- What role does the ICT system have in value chain?
- How does the ERP system work in P C World and what is the impact of it on value chain?
- How does P C World manage the supplier relations of it?
- In what way P C World manage the relations with its key suppliers?
- How does the supply chain affect the satisfaction of customers?
- What improvements can be made in P C World?
- How can the proposed changes be implemented in P C World?
- How will this change improve the efficiency of business?
In conducting this study, I would be guided by the Guidelines set out in the British Educational Research Association (BERA) 2004 ethical issues for Educational research. The guidelines state that the researches are wholly responsible to their sponsors, the research community and participants of the research.
The guidelines states that all research work must be conducted at the highest levels of honesty. Research findings are to be published without falsifying and misstating the work done. The guidelines set out the responsibilities of the researcher to participants of the research, sponsors of the research and the research community. (BERA, supply chain management is important to deliver the products and services to end customers. However, it appears that the notions on supply chain management may only be indirectly associated with the issues surrounding consumer behaviours toward maintaining and/or otherwise pushing customer satisfaction. As referenced in many publications, undoubtedly, the role of supply chain management is an important factor in boosting the organizational success. On a separate perspective, consumer behaviour is also an essential factor toward organizational viability into years to come.
Qualitatively, preliminary studies have been undertaken concerning the connection between supply chain management and customer satisfaction, as well as the connection between consumer behaviour and customer satisfaction, in trying to recognize the clear distinctions of each topic toward ensuring customer satisfaction. This paper attempts to bring out the significance of both issues combined in relation to customer satisfaction. If the preliminary studies emphasized in automotive and food industries, this paper attempts to analyze the small and medium enterprises in service industry. It is expected that the increasing roles of supply chain management and consumer behaviour in small and medium enterprises are able to improve the overall organizational performance.
A cluster sampling methods is incorporated in this study to note the characteristics of those small and medium enterprises in certain locations. Variables chosen in this study are mainly covered the traditional SERVQUAL dimensions of tangible, reliability, responsiveness, assurance, and empathy. Aside from the qualitative analyses, which are based on interviews and field observations, a combination of statistical software packages are utilized as tools toward building quantitative analysis of the study. Research is conducted by gathering data from primary and secondary sources in service industries in Jakarta, and Bandung. As stated, it is expected that such studies would reveal the significance of supply chain management and consumer behaviour in boosting the customer satisfaction level toward organizations' products and services. It is expected that such issues are mostly true for small and medium enterprises, perhaps.
I would be attempting the research in a much comprehensive way as possible, following limitations may be underlying in the research
- Time Constraints: A detailed and exhaustive study was not allowed by my course semester as few significant areas are there where I was forced to leave out. However, most of the significant disciplines would be covered in the research.
- Security Issues: a supply chain in an organization, information on ERP and key supplier contracts are very sensitive kind of company information and it would be too tough to reproduce them. So I foresee myself as not being capable of publishing a few of my findings. The support of management which I had secured beforehand for the research would allow me to bring most of the findings out in the studies.
- Financial Constraints: Some suppliers of the organization are located overseas. So it would not be feasible for me to cover all major suppliers of the organization financially. Thus the major suppliers who have their physical operations in UK are confined in my research.
Contributions of the research
A dynamic and innovative concept of Supply Chain Management systems are anticipated as my study is chiefly a research led exercise. Fast growing systems of ICT in Supply Chain and management of Supplier Relationship would be invaluable resources academically. Different paths would be shown for P C World to strengthen their existing not so good supply chain, consolidate their supplier relations and to construe its customers' needs in the research as a sense of business, for increasing the efficiency of processes and profitability of business.
Project Plan of Research
The proposed work for research would be conducted within a period of ninety days. The studies for research have being got worked since mid December and would be finished by March. The first month of my studies has been utilized for background studies and literature review. Over the next two months, twenty hours a day would be allocated for my work of research. The SCM systems and various practices in the work place, the Information and Communication Technology systems used, will be analysed in the actual company locations. Structured questionnaires would be prepared for the empirical studies of my research and to interview the customers of P C World and the suppliers of it. The last month of research would be used to analyse the findings and data, bring up recommendations for the improvements of supply chain and to get it slimmer and efficient, and to report the entire studies of research.
Other than the theoretical resources we discussed above, the following resources are also added to the knowledge related to this study. "Transition to B2B e-Market place enabled supply chain: Readiness Assessment and Success Factors" by Movahedi B., Lavassani, M K, Kumar V would be the principal resource material of the research. A great gamut of management of supply chain, role of information technology and recent development in the area of supply chain management, and numerous case studies are discussed in the book. This book allowed me to grasp a clear picture on the subject of research. "Knowledge management systems: information and communication technologies" by Ronald Maier provided more detailed technical aspects for the research. The latest developments and happenings in the field of research are updated with the Journal of Supply Chain Management and Journal of E Commerce.
There is a drastic development in the use of information and communications technology (ICT) in logistics and supply chain management. ICT is today being applied in many organisations in a wide range and operations areas. It has provided new ways to store, process, distribute and exchange information both within companies and with customers and suppliers in the supply chain. ICT used to exchange information in the supply chain is often named inter organisational ICT or inter organisational information systems (IOIS).In supply chain management, ICT has especially been recognised as an enabler for information sharing which companies in the supply chain can use for eliminating the so called bullwhip-effect (Lee et al., 1997). Information-sharing is also a key component in many of the recent automatic replenishment programs (ARP) (Daugherty et al., 1999). Initiatives such as vendor managed inventory (VMI) and collaborative planning, forecasting and replenishment (CPFR) are based on an increased level of automation in both the flow of physical materials and goods and the flow of information between companies to improve the efficiency in the entire supply chain. In a operations management perspective, companies seek to further improve the efficiency in the supply chain by sharing information related to matching demand and supply such as short- and long-term production planning, demand forecasting and materials and capacity planning. Information that can be relevant to share between customers and suppliers typically includes point-of-sales data, forecasts and inventory levels. There is a significant amount of research demonstrating a positive impact of ICT in the supply chain. As companies seek to improve the efficiency in the supply chain through increased integration, ICT can be considered as a key enabler for supply chain management through its ability to support information sharing and shortening information processing time. Supply chain integration can however be expressed in a wide range of dimensions such as integration of processes, information, organisations and systems (Bowersox et al., 1999; Mouritsen, et al., 2003). Similarly, the impact of ICT can be demonstrated in terms of for instance changes in relationships, interorganisational changes and performance (Wilson and Vlosky, 1998). The many dimensions in which supply chain integration can be expressed and the wide variation of factors in which the impact of ICT can be defined in terms of integration indicates that previous researches have been limited to studying a few dimensions and variables relationships at a time. The aspect of how to control and coordinate the activity between the companies in the supply chain, and how ICT affects the level of control integration in the supply chain is a poorly developed area. We propose in this paper a research model for further research exploring the impact of ICT on integration in supply chain control. The model is primarily based on theory within supply chain integration and the impact of ICT. It also incorporates the supply chain control perspective, which defines the scope of application of the model. In contrast with previous research, this model does not intend to limited to a few pre-defined dimensions or variables for investigation but can be used to examine situations involving any type of integration dimension and influencing factor.
Supply Chain Management
Supply Chain Management is effective management by planning, implementing and controlling the activities in the supply chain system in an organization. Activities from warehousing the inventory to movement of products to the consumer are controlled and co-ordinated by the supply chain management.
"Supply Chain Management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities, it includes coordination, cooperation and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers" - APA (American Professional Association).
Characteristics of Supply Chains
- The management of supply and demand in and across the companies are integrated by supply chains
- It coordinates the network of business operations which provide the products and services.
- The logistics and supply chain management are distinguished by some researchers. At the same time some of them consider them as similar terms.
- The management of supply chain can be used as a software also
- A study on supply chain event management allows knowing how the system of supply chain is coordinated in an organization and how resolutions are produced for the problems that occur during the effectuation of supply chain in an organization.
Issues in Supply Chain Management
Following limitations must be dealt with the management of supply chain:
- Configuration of distribution network is the main limitation of the management of supply chain. It implies the supply chain is bore on by the number of suppliers, their locations, and missions of network of customers. The facilities for production, centres for distribution, cross docks, ware houses etc influence the supply chain management.
- The supply chain is also affected by the strategy of distribution. Replacement strategy and transportation is the other concerns for the management of supply chain.
- The total supply chain management is affected by the sharing of valuable information on the demand signals, inventory, transportation and the forecasts.
- The location and quantity of inventory which include finished goods, work in process goods and raw materials influence the supply chain.
- The cash flows in each and every level of supply chine will also affect it.
- The task flow like order fulfilment, inventory procurance, goods transporting and ware housing
SUPPLY CHAIN MANAGEMENT PROBLEMS
Supply chain management must address the following problems:
- Distribution Network Configuration: number, location and network missions of suppliers, production facilities, distribution centres, warehouses, cross-docks and customers.
- Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking, DSD (direct store delivery), closed loop shipping; mode of transportation, e.g., motor carrier, including truckload, LTL, parcel; railroad; intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar); ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated, private carrier, common carrier, contract carrier, or 3PL).
- Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These tradeoffs are key to the most efficient and effective Logistics and SCM strategy.
- Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc.
- Inventory Management: Quantity and location of inventory, including raw materials, work-in-progress (WIP) and finished goods.
- Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain.
Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional.
Supply chain management is a cross-function approach including managing the Movement of raw materials into an organization, certain aspects of the internal Processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement.
Several models have been proposed for understanding the activities required to manage material movements across organizational and functional boundaries.
SCOR is a supply chain management model promoted by the Supply Chain Council. Another model is the SCM Model proposed by the Global Supply Chain Forum
Activities in Supply Chain Management
- The movement of raw materials for internal processing in an organization.
- Conversion of raw materials into finished goods.
- Movement of finished goods to the consumer or end user.
- It is the responsibility of supply chain management to bring down the ownership of raw materials for the organization for a long period and to help the company to achieve the competence for the organization.
- The functions can be outsourced to increase the cost effectiveness and the satisfaction of customers' demands.
- The management of supply chain has to construct trust among the members in the supply chain and it must better the association among them.
- The organization should be helped to actuate the inventory immediately and must develop the visibility in the supply chain.
A Supply Chain Management model projected by the GSCF (Global Supply Chain Forum) demonstrates that the activities in a supply chain can be characterized as strategic, operational and tactical activities.
- The optimization of strategies of an organization like number of warehouses, locations, centres of distributions, facilities and locations of warehouses etc are included in strategic activities.
- Strategic activities include the communication network creation among the supply chain members and it must develop an improvement in the activities of supply chain such as shipping, docking, transport, and logistics etc.
- The organization of designing of the products and development are included in strategic activities of an organization and the strategic activities must integrate the new and existing products into the supply chain.
- It should support all the activities in supply chain.
- All the activities of supply chain must be integrated with overall activities of the organization by the strategic activities.
- It includes decisions concerning to purchase of inventory and contracts.
- It includes decisions pertained to production such as the location, schedule, contracts, plans and definition of processes of production etc.
- Decision making in relation with the quality, transport, quantity, location, and use of inventory.
- The strategy formulation in concern with freight like the transport frequency, the cost, routes, contracts and logistics etc are included
- It involves the best process benchmarking in the industry throughout its operations.
- It includes decisions and activities in relation with day to day activities connected to production and planning at each levels of supply chain.
- It involves forecasts of production facilities and necessities in supply chain in every instant.
- It involves forecasting and planning of Demand and converting the overall demand into supply and share it with every the members of the supply chain. Forecasting, planning and coordinating the demand forecast of each and every customer and share bode with all suppliers.
- Inward operations, such as movement and transport of goods and stocks in the supply chain.
- It involves operational decisions and planning from ingestion of inventory to the current of finished goods in the chain of supply.
- It includes the promises of orders, accounting for all processes in the supply chain from suppliers to consumers or end users.
Scope of Supply Chain Management
To compete in the global market, companies rely on effective networks of supply chain According to Peter Ducker, business networking concept covers beyond the conventional enterprise limitations and broadens to coordinate the entire process of business throughout a value chain of multiple companies included in it.
Outsourcing of Information Technology has enabled the organizations to be processed in such a way that each partner of business concentrates in the few significant areas in which he is specialized.
This inter organizational network is the innovative trend in form of organization with the complex interactions among the key players; the structure of network is not a hierarchical structure or a market structure.
It is ambiguous of what kind of performance level impact that various supply network structures could have on organization, and little is known about the conditions of coordination and tradeoffs that may subsist among the players. From point of view of a system, a structure of complex network can be decayed into individual component companies (Zhang and Dilts, 2004). Conventionally, companies in a supply network focus on the processes' inputs and outputs, with little matter of concern for the internal management of the firm working on other individual players. Therefore, an internal management choice control structure is known to make a major impact on performance of local companies (Mintzberg, 1979).
There have been large changes in environment of business which has contributed to the supply chain networks' developments. Primarily, as a result of globalization and with the increase of big multi-national companies, strategic alliances, joint ventures and business partnerships, have found to be making important factors of success, following the earlier practices of "JIT" (Just-In-Time), "Lean Management" and "Agile Manufacturing". Secondly, changes of technology, especially the dramatic fall in the cost of information communication, which is a predominant component of transaction costs, have led to changes in organization among the members of the network of supply chain (Coase, 1998).
The exceptional transformation towards activities of integration from managing functions of individuals with processes of key supply chain in place could be the first significant step in establishing a successful supply network. For example; the department of purchasing places orders as necessities become appropriate only, when Department of Marketing responding to consumer demands and convey the same with all the distributors and retailers across to go with the demand of customers. The overall integration process leverages the whole shared information among partners of supply chain of an organization towards its advantage.
The key to Successful consolidation of Supply chain business process is by employing the collaborative work across suppliers and buyers, common systems along with the shared information and joint product development.
In 2000, the Lambert and Cooper expressed their view as the whole as "The continuous information flows in the integrated supply chain process supports an organization to achieve best product flows". Despite such expression, there subsists an opinion among organizations and networks of management, that product flows' optimization cannot be realized without implanting a process access to respective businesses.
The supply chain significant processes by Lambert (2004) are listed below:
- Customer relationship management
- Management customer service
- Management of demand
- Fulfilment of orders
- Management of flow of manufacturing
- Management of supplier relationship
- Development of a product and commercialization
- Management of Returns
In addition to points of Lambert other keys are:
- Physical distribution
- Outsourcing and partnerships
- Measurement of performance
- Management of customer service process
As the information of customer is the basic source for service of customers, the important aspect of Customer relationship Management is between the organization and its customers. This real- time information makes customers cognisant on various details such as product availability, product information, probable delivery dates through multiple interfaces of information about the company's operations of production and distribution.
Steps to build an efficient and Successful relationship with customers:
- Establish goals which are commonly rewarding between organization and customers
- Customize and invest efforts to preserve customer resonance and support always
- create positive outlook with customers in the organization
In laying good strategic plans for process of procurement, the interests, opinions and support of the suppliers is very important; because their confidence in the plans lay foundation for newly build manufacturing flow management and it is the same in case of a development of a new product.
When activities are global and far reach across, the companies need to accommodate processes to manage and source them accordingly. For achieving success in creating the preferred product, it is significant to have mutually beneficial relationship, cut down times cycles in design and development of the new product play very important role.
Communication systems can be boosted by deploying tools like Internet connectivity and electronic data interchange (EDI), of the purchasing function of a firm to drive activities.
These powerful systems of communication streamlines a lot of processes in managing, obtaining and tracking information about products and materials and products, which supports organization in dealing with issues successfully; supply sources, inbound transportation negotiation phases, resource plans, order placement, delivery status, storage capabilities, handling and quality assurance. Also, it actuates the organizations to handle the responsibility and to organize commitment with suppliers over supply continuity, delivery scheduling, misrepresentation, and research support studies in creating new product and sources of programs.
- Development of new product and commercialization
This helps organizations to reduce time cycles of development of product with aspects of customers, suppliers so as to capture markets better by being competitive, innovations of products, and scope to be ahead of competitors in exceeding expectations of customers.
Following points are suggested by Lambert and Cooper to Managers of product Development and Commercialization:
Abreast management of customer relationship with real needs of customers by making right choice of suppliers and materials in line with procurement, and by developing practices in evolving different potential production technologies to improve manufacturing flows in integrating them with best flows of supply chain of product-Market contexts.
- Manufacturing flow management process
The earlier forecast mechanism and its whole information and details help in a great way in designing better flexible manufacturing process procedures and supply efficiencies with channels of distribution.
Thus mass customized and Flexible processes to market changes, operating processes to order processes on just-in-time (JIT) basis of band sizes and reduce the time cycles of process of manufacturing flow with improved efficiency in responding to demands of customer. So the organization can easily develop efficiencies in work stream lining operations, planning, scheduling, and inventory transportation, and scales the elasticity across geographies in meeting production and distribution assemblies.
- Physical distribution
In the context of physical distribution, the consumer standout as the final end of marketing channel movement for any finished product or service, in continuous offers with the availability of the product or service in each channel of distribution. Also, the space time of customer service is of high value consolidation in the process of extending its customers like manufacturers, wholesalers and retailers.
- Outsourcing and partnerships
The basis of the concept of outsourcing by organizations has changed from typical procurement of materials to employing different channels and sources to hand over the services too, thus concentrating on areas of value chain and the advantages of it.
This trend is well comprehended in logistics domain, where organizations have picked and create partnerships with transportation leaders, warehousing and control of inventory to measure in the control collective partners and suppliers networks. This strategy allows the organizations to monitor effectively over performance issues of supplier and managerial command on the logistics partners on a daily basis.
- Measurement of performance
The organization draws the best of profits and ascendances the market share is a direct result of integration process of supplier and customer. It helps organizations to frame emphasis for management of performance setting about competencies in logistics with the capabilities of supplier and invests in long- term goals of customer relationships for advantages in the competitive environment.
The researchers along with A. T. Kearney Consultants noted that firms equipped with broader measurements of performance have delivered consistent results and below are some analyzed internal measures for any organization:
- Customer Service
- Levels of Productivity
- Asset measurement
The major and significant integration elements of Supply Chain Management are
The integration and management elements of SCM:
To construe the level of management and integration of business process is a calculation of function of number and level with drifts of low and high and the link of added constituents (Ellram and Cooper, 1990; Hooligan, 1985).The third component of the four square circulation model displays the components of supply chain management.
Application of the percept is in consolidation of more components of management or increasing level of each component can increase the level of integration of any process of business. Lambert and Cooper in 2000, proposed the below enlisted components, in balancing concept of the literature on engineering of business process, buyer-supplier relationships and attract the attention of management to different possible components of SCM.
- Planning and Control
- Work structure
- Structure of Organization
- Structure of product flow facilities
- Information flow facility structure
- Methods of management
- Structure of power and leadership
- Risk and reward structure
Culture and attitude:
A close look on the literature which is available will shed us more information about what produces the best structure with clear details on "branches" and "components" for a process of business related to suppliers and customers.
Bowersox and Closs expressed their view that "Great heights of joint achievement can be represented by the synergies exchanged mutually in establishing the cooperation" (Bowersox and Closs, 1996).
The chief participant is keen to accomplish responsibilities of ownership of inventory or in accepting the financial risk along with other components of primary level (Bowersox and Closs, 1996). The Secondary participant is more specialized, who is keen to perform services which are necessary for primary participants, along with constituting channel relationships, inclusive of components of secondary level. The Third level channel participants includes the branches and components of the participants of primary and secondary level channel.
Literature of The Lambert and Cooper do not help us to understand the specialized primary and secondary level components of the supply chain comprehensively (See Bowersox and Closs, 1996, p.g. 93). This expresses about the emphasis which is absent in understanding how these different components should be considered, structured and analyzed to lay an effectively integrated chain of supply. (See above sections 2.1 and 3.1).
Reviewing the literature by Baziotopoulos to bring out components of supply chain and some significant suggestions of the study are listed below:
Benchmarking, Customer service management and order fulfilment comprises the top priorities for both the components of primary and secondary level.
The primary and secondary level components for Product Data Management (PDM) are; development of product, commercialization customer satisfaction, profit margins, market share and stakeholders ROI respectively.
The primary and secondary level components for enterprise resource planning (ERP), are; physical distribution, manufacturing support, procurement, management of warehouse, management of material, planning of manufacturing, personnel management, and postponement or order management respectively.
The primary level components of logistics must be linked with facility of information flow through internal structure of organization for measurement of performance.
Variant, direction, decision and measurement of policy level constitutes the four aspects of the components of secondary level and in particular, total cost analysis (TCA), customer profitability analysis (CPA), and asset management are carefully analysed.
The outsourcing constitutes of the methods of management, and the strategic objectives for specific initiatives in significant areas of information technology, operations, and capabilities of manufacture as primary level components and logistics as component of secondary level.
The conceptions of reverse logistics are well known as "Aftermarket Customer Services", where on any given time, the budgets of Warranty Reserve or Service Logistics allow withdrawing money. The whole process of Reverse logistics is aspired to generate a purpose in recovering value or pertinent authorization of information by planning, implementing, monitoring and controlling the capable and valuable of inbound flow with storage of secondary goods.
A few place able changes in present total global scenario are:
- Cut down product life cycles.
- Shorter product change-over cycles
- Increased rate of scope for new product development
- Pint sized cycles of production process.
- Zero- defect integration of Quality and productivity
- Total Quality Management (TQM).
- Possession of strategic resources like Equipment and process technology
- Adaptable Manufacturing Systems (FMS)
- Rising significance for project management practices.
- Embracing technological changes over information and automation needs.
- Depart employees' strategic training on Technology work inputs, performance and accountability.
- Deploying Computer Aided Design (CAD), and Manufacturing (CAM).
Understanding the role of technology forecasting:
Enhanced exercise of automated decision supports for Decision Support Systems (DSS), Simulation Experiments and Expert Systems (ES).
Developmental Practices for 'hybrid' technologies as 'technology fusion' is executed in the process of business by blending technologies.
The existing trends in industrial sector are listed below:
- Knowledge driven activities of production and services
- Increasing belief for the concept of IT based faster economic growth across advanced nations in organizations, production systems and markets.
- Increased scope of assistance for global strategic coalitions among o networks of organization and inter organizational structure
Some factors that complicate the Issue are given below:
- Industries with inadequate facilities of production
- Growing levels of saturation by exuberant segmentation of markets.
- Fast shifting customer values increases stress to fix issues of product cost, quality, and user's performance.
- Demand to lower breakeven point with increasing segmentation of markets.
- Rise in the unexpected competitors across the world.
- An Unforeseen impact exerted by one sector or a branch or a product on network of industries by technology in equipment and processes.
- The traditional industry finds it difficult to match in customers demand with existing global context of competitiveness.
- FOUNDING NEED FOR PROCUREMENT
- Being conscious by the need of procurement
- Being decisive about the requirement
- Establishing specifications
- Communicating purchase requirements:
- Purchase indents/Bill-of-material (Production items)
- Other purchase indents
- SCRUTINY OF PURCHASE INDENT
- Comprehensiveness in description
- Suitability to requests
- Alignment through stores
- Sorting indents into indent registrar
- MARKET RESEARCH
- By Telephonic quotations
- By Printed quotations
- Buying schedules
- Sources for selection & development
- ORDER PREPARATION
- Scrutiny of received and short listed quotations
- Negotiations in placing orders on suppliers
- Acquiring information on suppliers' acceptance of purchase orders
- FOLLOW UP
- Pre-delivery summaries
- Deficiency in chasing Reminders
- Paying Personal visits
- Attending Telephones/Telegrams
- Accessing Faxes/Telexes
- Locating personnel sources at suppliers' works
- RECEIVING & INSPECTION
- Acquiring and storing end-end information in Material Consignment
- Register about dispatch (RR/LR/CAN)
- Through check of quantity and types of physical damages to the packages
- Noting consignment details in order in GRN register
- Quantity certification of unpacked goods
- Enclosing and aligning receipt of materials to the indenter
- Proper Inspection of goods
- STORAGE & RECORD KEEPING
- Tracking inward- outward Material mobility to respective stores
- Pitching for Quality certification
- Application of protective coating/marking
- Best utilization of rack spaces by filling storage materials
- Posting of receipt into stock card
- INVOICING & PAYMENT
- Receiving GRN s in accounts department
- Receiving suppliers' bills
- Posting of purchase register
- Passing of bills Effecting payments
Supply Chain Control
The supply chain control can be set as an operation model. The operations model-set is based on six views of enterprise operations and a set of description models that can be used for presenting each view. The model can be used for the design and analysis of operations. The views include resources, materials, information, processes, organisation and control. The, first five views are aggregated into a control view that can be represented in a control model. Hence, the control perspective constitutes the top-layer of several operations areas in a company. In order to identify typical control processes, two examples of control and planning frameworks are discussed. The first framework incorporates a set of modules of the manufacturing planning and control (MPC) system (Vollman, 2005), while the second framework involves various planning levels related to the materials and capacity perspectives (Mattsson and Jonsson, 2003). The two frameworks are hereafter referred to as the MPC framework and the planning framework. The essential task of the MPC framework is to efficiently manage the flow of material, the utilisation of resources and to meet customer demand by providing information that supports management decisions. It is based on three phases; the front end, engine and back end. Measurement and control actions are considered as part of all the phases.
- The front end phase encompasses activities and systems for establishing the overall company direction for planning and control. It includes the modules of demand management, sales and operations planning (SOP), resource planning and master production scheduling (MPS). Demand management includes activities such as forecasting demand from customers, etc. Sales and operations planning balances the sales and marketing plans with available production resources, involving decisions about overall product volumes and mix. The MPS states the quantities and timing for specific products defined in the SOP and takes into consideration the capacity limitations, production costs and resource considerations. Resource planning constitutes the basis for matching manufacturing plans with capacity and defines the capacity needed to produce the current and future products.
- The engine phase covers the detailed material and capacity planning based on the MPS. Material requirement planning (MRP) can be used to determine the timing and quantities for all component and parts needed to manufacture the products.
- The back end phase encompasses systems for the execution of material and capacity plans. It deals with detailed scheduling and control of work centre activities on the shop floor and vendor scheduling. Orders are planned and released to the factory and vendors.
The planning framework is similar to the MPC framework. However, this framework has a clear focus on planning. While the measurement and control components are embedded in the MPC framework, the planning framework does not seem to take the measurement perspective into consideration. Yet, as the control concept often includes planning activities, the framework is here considered to be representative also for the control perspective.
The planning framework is divided into material and capacity planning perspectives. In the material perspective, planning deals with decisions regarding the deliveries in terms of product types, quantities and timing while in a capacity perspective, decisions regarding the capacity needed to produce required quantities and what capacity is available are dealt with. The planning framework is based on four levels:
- The sales and operations planning (SOP) cover the management process where overall plans for sales and production are established. Forecasting on tactical and operational levels seeks to foresee a future demand and is used for decisions regarding resource purchasing and utilisation as well as ongoing operations.
- In the master planning process, forecasts and customer orders constitute the information support. There are various customer order processes depending on product types and whether products are manufactured to stock or to orders. Master planning covers the process of establishing sales and production plans showing quantities of various product types that will produced over a time period.
- In order planning, the plans that have been defined on a strategic and tactical level are executed. It covers the administrative processes that are needed on an operational level to control material flows within a defined production and distribution structure.
- In workshop planning, production orders created on the superior levels are planned in detailed and executed. This planning seeks to establish a balance between available production capacity and current order and operations capacity needs.
With regard to the overall division, the time frame dimension is emphasised in both frameworks. In the MPC framework, the long term perspective includes management decisions regarding the appropriate amount of capacity to meet future market demands; in the intermediate term, activities deal with matching supply and demand in terms of product volume and mix; in the short term, focus is on detailed scheduling of resources to meet production requirements (Vollman et al., 2005). The planning framework takes
besides the time frame dimension also the level of detail and decision levels into account; strategic, tactical and operational (Mattsson and Jonsson, 2003).
Both frameworks include the processes of SOP, master planning, material and capacity planning and workshop planning, although the processes are named differently. In the MPC framework, the master planning is divided into the same phase as SOP while in the planning framework, the master planning corresponds to a separate level. The front end of the MPC framework may correspond to the SOP and master planning levels of the planning framework, the engine phase to the order planning level and the back end phase to the workshop planning. The different planning levels can also be considered as main control processes covering a set of different sub-processes.
The main control processes identified in the frameworks may imply sharing of different types of information both internally and with participants in the supply chain. some examples of such information types are based on the MPC and planning frameworks (Mattsson and Jonsson, 2003; Vollman et al., 2005). The time horizon shows the approximate planning time frame (Mattsson and Jonsson, 2003). However, it should be noted that these time frames may vary significantly among individual companies.
THEORIES OF SUPPLY CHAIN MANAGEMENT
Currently there is a gap in the literature available on supply chain management studies: there is no theoretical support for explaining the existence and the boundaries of supply chain management. A few authors such as Halldorsson, et al. (2003), Ketchen and Hult (2006) and Lavassani, et al. (2008b) have tried to provide theoretical foundations for different areas related to supply chain by employing organizational theories. Thesetheories include:
- Resource-Based View (RBV)
- Transaction Cost Analysis (TCA)
- Knowledge-Based View (KBV)
- Strategic Choice Theory (SCT)
- Agency Theory (AT)
- Institutional theory (InT)
- Systems Theory (ST)
- Network Perspective (NP)
SUPPLY CHAIN SUSTAINABILITY
Supply chain sustainability is a business issue affecting an organisation's supply chain or logistics network and is frequently quantified by comparison with SECH ratings. SECH ratings are defined as social, ethical, cultural and health footprints. Consumers have become more aware of the environmental impact of their purchases and companies' SECH ratings and, along with non-governmental organisations ([NGO]s), are setting the agenda for transitions to organically-grown foods, anti-sweatshop labour codes and locally-produced goods that support independent and small businesses. Because supply chains frequently account for over 75% of a company's carbon footprint many organisations are exploring how they can reduce this and thusimprove their SECH rating.
DEVELOPMENTS IN SUPPLY CHAIN MANAGEMENT
Six major movements can be observed in the evolution of supply chain management studies: Creation, Integration, and Globalization (Lavassani, 2008), Specialization Phases One and Two, and SCM 2.0.
- Creation Era
The term supply chain management was first coined by a U.S. industry consultant in the early 1980s. However, the concept of a supply chain in management was of great importance long before, in the early 20th century, especially with the creation of the assembly line. The characteristics of this era of supply chain management include the need for large-scale changes, re-engineering, downsizing driven by cost reduction programs, and widespread attention to the Japanese practice of management.
- Integration Era
This era of supply chain management studies was highlighted with the development of Electronic Data Interchange (EDI) systems in the 1960s and developed through the 1990s by the introduction of Enterprise Resource Planning (ERP) systems. This era has continued to develop into the 21st century with the expansion of internet-based collaborative systems. This era of supply chain evolution is characterized by both increasing value-adding and cost reductions through integration.
- Globalization Era
The third movement of supply chain management development, the globalization era, can be characterized by the attention given to global systems of supplier relationships and the expansion of supply chains over national boundaries and into other continents. Although the use of global sources in the supply chain of organizations can be traced back several decades (e.g., in the oil industry), it was not until the late 1980s that a considerable number of organizations started to integrate global sources into their core business. This era is characterized by the globalization of supply chain management in organizations with the goal of increasing their competitive advantage, value-adding, and reducing costs through global sourcing.
- Specialization Era—Phase One: Outsourced Manufacturing and Distribution
In the 1990s industries began to focus on "core competencies" and adopted a specialization model. Companies abandoned vertical integration, sold off non-core operations, and outsourced those functions to other companies. This changed management requirements by extending the supply chain well beyond company walls and distributing management across specialized supply chain partnerships.
This transition also re-focused the fundamental perspectives of each respective organization. OEMs became brand owners that needed deep visibility into their supplybase. They had to control the entire supply chain from above instead of from within.
Contract manufacturers had to manage bills of material with different part numbering schemes from multiple OEMs and support customer requests for work -in-process visibility and vendor-managed inventory (VMI). The specialization model creates manufacturing and distribution networks composed of multiple, individual supply chains specific to products, suppliers, and customers who work together to design, manufacture, distribute, market, sell, and service a product.
The set of partners may change according to a given market, region, or channel, resulting in a proliferation of trading partner environments, each with its own unique characteristics and demands.
- Specialization Era—Phase Two: Supply Chain Management as a Service
Specialization within the supply chain began in the 1980s with the inception of transportation brokerages, warehouse management, and non-asset-based carriers and has matured beyond transportation and logistics into aspects of supply planning, collaboration, execution and performance management. At any given moment, market forces could demand changes from suppliers, logistics providers, locations and customers, and from any number of these specialized participants as components of supply chain networks. This variability has significant effects on the supply chain infrastructure, from the foundation layers of establishing and managing the electronic communication between the trading partners to more complex requirements including the configuration of the processes and work flows that are essential to the management of the network itself.
Supply chain specialization enables companies to improve their overall competencies in the same way that outsourced manufacturing and distribution has done; it allows them to focus on their core competencies and assemble networks of specific, best-in-class partners to contribute to the overall value chain itself, thereby increasing overall performance and efficiency. The ability to quickly obtain and deploy this domain-specific supply chain expertise without developing and maintaining an entirely unique and complex competency in house is the leading reason why supply chain specialization is gaining popularity.
Outsourced technology hosting for supply chain solutions debuted in the late 1990s and has taken root primarily in transportation and collaboration categories. This has progressed from the Application Service Provider (ASP) model from approximately 1998 through 2003 to the On-Demand model from approximately 2003-2006 to the Software as a Service (SaaS) model currently in focus today.
The Management Components of SCM
The SCM components are the third element of the four-square circulation framework.
The level of integration and management of a business process link is a function of the number and level, ranging from low to high, of components added to the link (Ellram and Cooper, 1990; Houlihan, 1985). Consequently, adding more management components or increasing the level of each component can increase the level of integration of the business process link. The literature on business process reengineering, buyer-supplier relationships, and SCM suggests various possible components that must receive managerial attention when managing supply relationships. Lambert and Cooper (2000) identified the following components:
- Planning and control
- Work structure
- Organization structure
- Product flow facility structure
- Information flow facility structure
- Management methods
- Power and leadership structure
- Risk and reward structure
- Culture and attitude
However, a more careful examination of the existing literature leads to a more comprehensive understanding of what should be the key critical supply chain components, the "branches" of the previous identified supply chain business processes, that is, what kind of relationship the components may have that are related to suppliers and customers. Bowersox and Closs states that the emphasis on cooperation represents the synergism leading to the highest level of joint achievement (Bowersox and Closs, 1996). A primary level channel participant is a business that is willing to participate in the inventory ownership responsibility or assume other aspects of financial risk, thus including primary level components (Bowersox and Closs, 1996). A secondary level participant (specialized) is a business that participates in channel relationships by performing essential services for primary participants, including secondary level components, which support primary participants. Third level channel participants and components that support the primary level channel participants and are the fundamental branches of the secondary level components may also be included. Consequently, Lambert and Cooper's framework of supply chain components does not lead to any conclusion about what are the primary or secondary (specialized) level supply chain components (see Bowersox and Closs, 1996, p. 93). That is, what supply chain components should be viewed as primary or secondary, how should these components be structured in order to have a more comprehensive supply chain structure, and how to examine the supply chain as an integrative one. Reverse Supply Chain Reverse logistics is the process of managing the return of goods. Reverse logistics is also referred to as "Aftermarket Customer Services". In other words, any time money is taken from a company's warranty reserve or service logistics budget one can speak of a reverse logistics operation.
Global supply chain management
Global supply chains pose challenges regarding both quantity and value:
Supply and Value Chain Trends
- Increased cross border sourcing
- Collaboration for parts of value chain with low-cost providers
- Shared service centers for logistical and administrative functions
- Increasingly global operations, which require increasingly global coordination and planning to achieve global optimums
- Complex problems involve also midsized companies to an increasing degree,
These trends have many benefits for manufacturers because they make possible larger lot sizes, lower taxes, and better environments (culture, infrastructure, special tax zones, sophisticated OEM) for their products. Meanwhile, on top of the problems recognized in supply chain management, there will be many more challenges when the scope of supply chains is global. This is because with a supply chain of a larger scope, the lead time is much longer. Furthermore, there are more issues involved such as multi-currencies, different policies and different laws.
The consequent problems include:
- Different currencies and valuations in different countries
- Different tax laws (Tax Efficient Supply Chain Management)
- Different trading protocols
- Lack of transparency of cost and profit
Customers of a supply chain
There are two parties in a supply chain: supplier and organization. The organization provides Information on its requirements to the supplier, and the supplier produces goods or services. To meet the organization's needs. The organization should try to develop good relationships and close operation with the supplier, for it can meet the needs of its customers better with the supplier's support. These two parties of the supply chain have both internal and external customers (Fig. 1). The internal customers of the supplier are mainly its employees and the external customers of the supplier refer to organizations, governments, etc. that purchase goods or services from it. Regarding the organization, its internal customers are its employees and its external customers are organizations, governments and individuals that buy its goods or services. In order to meet the needs of the ultimate customers of a supply chain, both the needs of the internal and external customers of the supplier and the organization should be satisfied. For instance, when the supplier does not meet the needs of its employees, which may be appropriate rewards, training, technical support, etc.
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