Previously there were many fundamental weaknesses in the old system of SCM. But now Manufacturer needs to know a lot more about effective supply chain management.
Manufacturers need to develop flexible supply chain processes that can adapt to the needs of various customer segments. They must also develop supply chain strategy, processes and supporting systems that conform to current and future requirements.
Supply chain management (SCM) is used to describe the management of the flow of materials, information, and funds across the entire supply chain, from suppliers to component producers to final assemblers to distribution and ultimately to the consumer.
Today those companies are more successful in which more effective SC system prevails than those in which not. Effective supply chain management provides you greater opportunity to be in the top of leading companies. We shall look at the example of Wal-Mart that how they implemented the SCM system in there organization and to how much extend they were successful.
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US based Wal-Mart is one of the leading organizations in the world having about 4000 stores in US and about 1170 stores worldwide .The company's owner has always focused constantly reducing cost and adopting efficient distribution and logistics system. According to analysts Wal-Mart
has been able to achieve leadership status because of management practices. Since it's established in mid 1960 thereafter Wal-Mart revenues has been increasing. Wal-Mart were ever entered in the world has acquired the local business due to availability of products at low cost. By 2002 the Wal-Mart has emerged as largest company in terms of revenues .This growth was only due to customer needs and reducing cost through effective supply chain management practices. Wal-Mart was able to offer vast range of products at lower rate in shortest possible time .There were two reasons behind the success of Wal-Mart firstly highly automated distribution centre which reduce the cost of shipping and secondly its computerized inventory system which speeded the checking time and recorded transitions.
Supply chain management, re-engineering, inventory, proper planning.
Supply chain management can be defined as the process of planning, implementing and monitoring the everyday operations of the organization. Supply chain management is an all encompassing process as it undertakes
the management of availability of raw materials, their processing into finished goods.
What Is Quality Improvement:
(According to ISO) Actions that are taken by the organisations to increase the effctiveness of process to provide benefits both to organiastions and customers or in other words quality improvements is any thing which bring about a change in quality performance for instance to reduce the defecdted products 10 out of every 100 to meet the target of 1 to every 1000.
Supply Chain Management All stages involved, directly or indirectly, in fulfilling a customer request
Theories of SCM:
Ketchen and Hult (2006) and Lavassani, et al. (2008) had tried to provide theoretical foundations for different areas related to supply chain with employing organizational theories. These theories includes:
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)
Components of SCM:
Lambert and Cooper identified the following components which are:
Planning and control
Product flow facility structure
Information flow facility structure
Power and leadership structure
Risk and reward structure
Culture and attitude
Flows of SCM:
The product flow includes the movement of goods from a supplier to a customer
The information flow involves transmitting orders and updating the status of delivery
Financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements.
(Cycle View of Supply Chain)
Customer Order Cycle
Difference between learning organization and traditional organization:
Always on Time
Marked to Standard
Workers do assign task:
They do assign task without questions. Either it is right or wrong. Their task is only done task which is assigned them. No Proper Structure and lack of decision making
Hierarchy structure flat. no complexity in it.
Causal and goal oriented organization:
They don't create innovative ideas. They only follow defined rules, regulation, guideline and procedures which are defined.
Employees can directly communicate with top management.
Their hierarchy structure is tall. Complex system.
They do their work on innovative style.
Communication gap in traditional organization. The workers can't directly approach to their top management.
Employees participate for making planning and strategy of management.
Research on Servis Sales Corporation Pakistan:
Service Sales Corporation has well established supply chain department for retail wholesale and factory outlets. Supply chain retail deals directly with retail outlets.
SSC Retail Business currently comprises Company Operated Stores, Agencies, and Factory Outlets. The business is now eyeing Large Format Stores and Franchise Stores as its future growth engines. The Business operates in 14 strategically spread regions of Pakistan which the business has named as its 'districts', and these are Peshawar, Rawalpindi, Gujranwala, Gujrat, Lahore 1, Lahore 2, Sargodha, Faisalabad, Sahiwal, Multan, Bahawalpur, Sukkur, Karachi 1, and Karachi 2.
Mantak Solutions(Computer related company who is working for SSC)send the soft data to supply chain analyst which they receive from outlets then supply chain analyst analyses this data and make their estimates that how much they have need for their outlets and how much they should give order and how much articles and for which outlets. Then they send PO (production order)
Literature that review:
(1) SUPPLY CHAIN SYSTEM CAN BE CONTROLLED BY JIT PHILOSOPHY
Supply chain management (SCM) is a process of flow of materials and information from suppliers to producers to final assemblers to distribution and finally to consumers.
Customers can play an important role in establishing an organization .Because they decide where the organization stands among the others. If you want to be at front then you should have proper planning how to make your product well in time and with good quality. If you are with lack of planning about your goods and services this will lead to excess inventory, in-order to overcome this problem JIT technique can be used which will provide you with a good result (S.WANG, BR SARKER, 2004). JIT can also be a beneficial in a sense that it reduces the inventory cost means that you don't have to buy enough space for your inventory.
(2) Flexible and geniric approach to dynamic modelling of supply chains
Due to globalization more competition has been increased among the organizations ,the firm who make more changes are more successful nowadays because people want to differentiate there products from others (WY HANG & N SHAH,2004).Some time people get bored of using one thing , so they want changes in there products which make them feel more better and comfortable .So in-order to make more changes in SCM you have to go through proper decision making .This decision making is not made in one day but requires a
specific period of planning before actually you implement it.
(3 :) SUPPLY CHAIN DECISION MAKING WILL SHORTER CYCLE TIME CYCLE SS
The other thing which can be done to bring changes in SCM is to re-engineering your products .The two things can be cause of poor SCM first is lack of proper planning means too many levels in your design, Secondly poor forecasting that you don't know in what amount your raw material will be used (JOEL H. STECHEL, 2004).Means that your inventory must not revolve around the suppliers and whole sellers but it should reach quickly at the spot where it should be reached. In Servis industry of Pakistan the concept of re-engineering is not prevailing and it is an important deficiency which must be initiated by Servis industry as soon as possible in order to implement effective supply chain management
(4) The PERFORMACE IMPLICATIONS OF STRATIGIC FIT OF RELATIONAL NORM GOVERNANCE STRATIGIES IN GLOBAL SUPPLY CHAIN RELATIONS
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Global Supply Chain Management includes both the customers and shareholders of the company. Other than these two factors effective supply chain management includes multiple business partners doing business globally and locally. (cf. Kumar et al., 1992) The effective supply chain management leads to quality improvement when the managers have the ability to appropriately fit or align the organizational task with the current environmental opportunities and threats (Ginsberg and Venkatraman, 1985; Srivas-tava et al., 1999; Zajac et al., 2000).It can be viewed as where the demand or need arises and is the initiate which you are going to tackle for this need aligned with the organizational opportunities or it is moving towards different direction
(5) EFFECTIVE INVENTORY AND SERVICE MANAGEMENT THROUGH PRODUCT AND PROCESS DESIGN
Environment changes leads to new challenges for running business operations, these changes in the form of technology and increased becoming globalize businesses. So in order to compete with the competitor's effective inventory and service management must be undertaken. In order to initiate this management can start new designing of the product or redesign the existing one and mostly redesign would be more effective
Author(s): Hau L. Lee
Management (Jan. - Feb., 1996)
We take the examples of service shoes and Wal-Mart as mentioned above in-order to understand the difference between Pakistani and international industry to know about there SCM system.
By studying the service industry they are using the SCM system but they are not much customer oriented as compared to Wal-Mart. Wal-Mart has its own transportation system world wide due to which they are able to give products to customers at low price at the other end service shoes has to import the raw material due to which they charge more price from customers in-order to over come there production cost.
Secondly, in Pakistani industry the need for demand is not known. They bring the stock in large amount because they have to import the raw material from other countries the material later on can be perish. But on the other hand Wal-Mart has proper forecasting system.
They use different software for there future demand.
Lastly, being a multinational company Wal-Mart have been able to generate more leader ship managers which have lots of experience in SCM and are more qualified due to which they have been to study the system of SCM more effectively.
How to overcome the GAP:
There are two ways to overcome the problem of effective SCM in Pakistan industry .Firstly, there Servis shoes must have there own logistics system which can help them to reduce the cost of there products as the Wal-Mart did as explained above.
Secondly, the management of servis shoes must send there top management for training courses worldwide and learn from there different techniques and implement those strategies in there own organization. This will help them to control there SC system more effectively.
Today, SCM has become more important for firms competitive business environment. Because the competition between the firms has been increased and most importantly it is globally. And the innovations are moving from one organization to another .Logistics and SCM is becoming a key factor for the organizations to bring about the changes across all the industrial sectors.
So, importance of SCM cannot be denied it is one of the key factor for the organizations which can make the organization more successful .Although it might look expensive in the start to set up the whole SCM system in the organization but it will beneficial you in the long run.
The Search for affective supply chain management has become a core concept in normative models of strategy formulation. This paper is basically focuses on implementing affective supply chain management for quality improvement in Pakistani organizations, so in response to meet this we choose Servis Sales Corporation Pakistan Shoe making company and compare it with Wal Mart Departmental .Using data from US Industry we examine the product variety, supply chain structure and firm performance of Wal Mart and compare it with Servis Shoes. After identify the performance gap between Pakistani and US Organizations we realize the deficiencies in servis shoes in shape of not having its own logistic system and absence of experienced leadership as compared to wall mart have.