Focusing On The Supply Chain Management


Now a day is very competitive times, so any company progress and developed market depends on strong and proper supply channels. Supply chain shows a marketing companies strength and weakness to his marketing activities. At the assignment my analysis is on the base of poultry supply chain system are operate in recent times. The recent trend at Wings & Legs supply system in the Netherlands has been analyzed here also its utilized in UK. According to market demand the company supplied the processed wings & Legs to the customer and retailers. In the view of marketing and supply chain management tried to provide the highest quality product service to the customer by the use of effective and fast supply chain. In the framework of supply chain system might be increase company profit by cost minimization. So every company should respond consumer demand for proper delivery."

Supply chain management:

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"In the definition of supply chain management we prescribed here that the Planning, design, and control of the flow of information and materials along the supply chain in order to meet customer requirements in an efficient manner, now and in the future.

Also, supply chain management is defined here as something different from the supply chain itself. It is important to note that supply chain management requires attention to both information and materials flow. The information feedback loop is critical to effective and skill management of the supply chain. Delays in information can lead to fluctuations in orders and in ineffective movement of materials."

A typical supply chain is shown below:

"â-ºHow might Wings & Legs combine a lean and agile approach in its supply chain?

In the modern times most company follows the supply technique that is Agile and Leans approach. I have tried discussing supply system according to this approach.

In the Agile approach is a wide range of supply strength that includes organizational structures, information systems, logistics processes and, in particular, mindsets. Agility means using market knowledge, skill, information and a virtual corporation to exploit profitable opportunities in a volatile marketplace. It is the result of current market developments making customer demand very volatile and unpredictable whilst still requiring short lead times.

Therefore, a key characteristic of an agile operation is flexibility. To be truly agile, a supply chain must possess a number of distinguishing characteristics: the supply chain is capable of reading and responding to real consumer or customer demand; Information Technology to share data between buyers and suppliers; Referring to collaborative working between buyers and suppliers, joint Product development, common systems, and shared information;Every organisation has to structure, coordinate and manage their relationships With their partners in a network committed to better, closer and more agile relationships With their final customers. (5)

Have to aware to timely delivery to the customers.

The characteristics of the lean company and the lean supply chain are described by Womack and Jones providing a vision of a world transformed from mass production to lean Enterprise.

The authors highlight the huge amount of waste that occur in most organizations and show that a systematic attack on waste, both within companies and along the supply chains, can have tremendous benefits to the short run profitability and long term prospects of companies and organisations. To satisfy customers a company needs to eliminate or at least reduce the wasteful activities in its value streams for which customers do not wish to pay.

Lean is about doing more with less. The term is often used in connection with lean Manufacturing to imply a "zero inventory", just-in-time approach . The origins of lean

Manufacturing can be traced to the Toyota Production System, with its focus on the reduction And elimination of waste.

Both agility and leanness focus on customer responsiveness since one of the main principle of lean supply is "make only what is pulled by the customer". However, leanness emphasises efficiency and cost reduction and thus deals with the trade-off between long lead times and the presence of inventory (both are considered 'waste'). Van Hoek et al. State that Economic trade-offs based on physical assets, labour, capital and land are most relevant in the functional, lean environment that is focussed on eliminating waste in operational processes.

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Trade-offs based on time, information and knowledge are more relevant in the innovative, agile, environment. Leveraging information and knowledge is one of the primary dimensions of the agility concept. Leanness departs from a relatively stable market demand and searches for an optimal supply chain design at the lowest cost. Agility emphasises the fast response to changing customer demand, since product availability is considered the market winner. However cost is an important market qualifier and this is usually reduced by leanness. The solution is therefore to utilise the concept of the legible supply chain and position the decoupling point in the optimal location.


â-ºWhat are the relative merits of each possible position of the material decoupling point and the information decoupling point. How do they relate to each other, with respect to (supply chain) planning and control?

At the discussion of supply chain we can say that decoupling point should focus on leanness, processes downstream from the decoupling point should be focussed on agility.

1). The real motion of the customer order decoupling point (CODP) the point that separates' the part of the supply chain geared towards directly satisfying customer orders (order-driven or demand-driven) from the part of the supply chain based on planning (forecast-driven). However, according to Christopher and Towill the issue in supply chains is not how far the order penetrates, but how far real demand is made visible in the supply chain. Orders are aggregations of demand, often delayed and distorted due to the actions and decisions of intermediaries. On the other hand, demand reflects the ongoing requirement in the marketplace as close to real-time as possible. Christopher and Towill go beyond the one-dimensional perspective of the decoupling point and recognise two types of decoupling points in real-world supply chains. First, they distinguish the "information decoupling point" (IDP), stating that it represents the furthest point to which information on real final demand penetrates. Upstream from the IDP processes are forecast-driven and based on planning, downstream processes can be demand-driven and based on real-time demand. The idea here is that the IDP should lie as far as possible upstream in the supply chain.

2) Christopher and Towill distinguish the "material decoupling point" (MDP) where strategic inventory is held in as generic a form as possible. They refer to the concept of "postponement", or "delayed configuration". By delaying product differentiation one delays for as long as possible the moment when different product versions assume their unique identity, thereby gaining the greatest possible (mix) flexibility in responding to changing consumer demands. According to Van Hoek postponed manufacturing equates to 'assemble to order' where fabrication of parts is standardised but the assembly and distribution process is customised.

Postponement is based on the principle of seeking to design products using common platforms, components or modules but where the final assembly or customisation does not take place until the final market destination and/or customer requirement is known. Downstream from the MDP products or goods are differentiated to specific customers or markets. Upstream from this point (production) processes are 'generic', which means no customer or market-specific attributes or value is added to the products. Christopher and Towill state that the MDP ideally should lie as far downstream in the supply chain and as close to the final marketplace as possible. According to Christopher and Towill the challenge to supply chain management is all about the effective management of these two decoupling points. However, some questions appear when you relate these two "decoupling points" to the concept of legality.

Merits of MDP and IDP:

Proper delivery to the customer.

Provide specific chicken legs and wings according to order.

Attached the retailer level of packaging.

Meet the customer needs and wants.

Essay to levelling and packaging products.


The following remarks can be made to relate each other:

Firstly, the IDP is not the point to which information about actual end-consumer orders penetrates the supply chain, but is the point to which information about final consumer demand of an earlier moment is made visible. This means that downstream of the IDP processes are not driven by actual orders, but that they are driven by (hopefully undistorted) demand data of an earlier moment. This is the case in most ECR food supply chains; producers receive EPOS-data of today and replenish the inventory of distribution centres and retail-outlets for the next day. The actual order of an end-consumer in retail outlets has already been fulfilled at that time; the end-consumer has already bought his or her product. Actually, in this case the EPOS-data of today is used as a 'forecast' of the demand of the next day.

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Secondly The exchange of EPOS-data requires data translation capabilities; the organisation should be able to use the EPOS-data for planning purposes. For example, a potato supplier to a salad producer has no use for consumer demand data of salads in retailer outlets if he cannot translate them into quantities of potatoes; especially if he is not the only potato supplier to that particular producer. Thirdly The MDP is directly related to a certain position of the CODP (assemble to order). However, in practice it is possible that the point of product differentiation (PDP) is not the same point as the CODP. For example, customer orders can be sent further upstream in the supply chain than the PDP. In that case this information can be used to improve the customer-relatedness of the strategic inventory (to agile supply) or the information is used to plan efficient production runs (to lean supply). When the CODP is located downstream of the PDP, it means that products are made customer/market-specific and then stored in this way at a central strategic inventory point (the CODP). There exists a risk that the wrong product-variant has been produced for the wrong customer. Hence, flexibility of the strategic inventory at the CODP is low. In this case it is worthwhile to either move the

PDP downstream to the same point as were the CODP is located or move the CODP upstream. In the first case, the flexibility of the strategic inventory increases and customer or market-specific attributes and value are only added to the product when actual customer-orders are known. In the second place, the risk of obsolescence could be reduced. Postponing the PDP has to be evaluated relative to the position of the CODP.

Finally although demand information could penetrate the supply chain far upstream, it does not automatically mean that all processes downstream from that IDP are designed for agility. Demand data could also be used to make production even more effective and still pursue a lean approach."

â-ºMost managers of Wings & Legs see the exchange of tactical information about (price) promotions between Wings & Legs and the retail companies as difficult to accomplish. What are the advantages for the retail companies to exchange information about promotions with Wings & Legs more timely and more accurate?

"When a marketing manager operates his marketing channels he must be associate with the supply channels. Most manger are often delivered of tactical information about price, promotion between Wings and Legs processors and retails company to developed their market. Once upon the distribution centers and retail-outlets are supplied. If EPOS-data,

Which shows the variability of demand is used to plan and control production processes downstream of the IDP, these processes have to be flexible and should be able to cope with varying capacity utilization and mix- and volume variability.

Finally, information enrichment could extend the basic idea of the exchange of EPOS-data, by including 'tactical' information exchange between supply chain partners with respect to promotional activities. Longer-term information about future promotions, but also category management decisions at the retail-outlet concerning the product-assortment, can be Characterised as tactical information. Transparency of this tactical information in the supply chain can increase the responsiveness of the supply chain.

The Advantage:

Increase coordination between supply chain and sales forces department.

Increase knowledge about products freshness and knowledge.

Focused in various promotional and developed programs.

Wholesale and retailers awareness increased.

â-ºThe network-based approach of an agile operations strategy could solve part of the

matching problem by Wings & Legs. In supply chain management much attention

is paid to improvement of the vertical processes in a supply chain. However,

Wings & Legs also outsource part of production (they buy poultry products from

other poultry processors) which means that horizontal processes and horizontal

co-operation are of importance

The network based approach of an agile operation strategy could solve the matching problems that are meet the customer expected different packaging system and pieces of legs and wings. In supply chain management vertical process improvement means to improvement supply to compare long difference and horizontal proceed means to compare year to year supply quality. In the shortage of accurate communication retailers and wholesalers might by wings and legs from other processors, on that case need to coordination between horizontal and vertical process.

Poultry supply chains in the Netherlands are confronted with increasing demands from customers (concerning customer service elements) and governmental rules concerning quality and environment. The current way of working must change to remain competitive in the future. In this case analysis we will use the concept of legality and the decoupling points to distinguish multiple alternative supply chain designs. First, we will present a short summary of the case methodology. Second, a review is given of the case company Wings & Legs and its supply chain with respect to market and demand characteristics. Third, the possible strategic positioning of the PDP/CODP and the IDP are discussed. Finally, an overview of identified improvement options is presented.

Case methodology

This case description is part of a ten-month research project, which has been performed at several companies in a poultry supply chain in the Netherlands. All these companies belong to the same cooperative organisation resulting in high trust level between them. Cooperation takes place on product specifications, quality and specifications of raw materials. In figure II an overview of the relevant actors in the poultry supply chain is given. During this project several interviews have been held with senior managers of each company. Most information has been gathered at the poultry processor company, because the CODP is situated at this stage in the supply chain; most complications arise at this point, were a level supply meets a variable demand. An analysis of the production planning and control structure of the poultry processor has been performed and improvement options have been defined."

a) What advantages are there for Wings & Legs in outsourcing part of their

production to other poultry processors? What advantages are there for these

other poultry processors?

"The advantages:

Customer can get easily betters facilities and information about product and promotion..

Increased companies market.

Ensure products qualities and services.

Core packaging and decoupling point.

Increase products knowledge among the customer..

Increase supply strength.

At the above of the report, several characteristics of demand and market were mentioned which determine the Operations strategy of the supply chain. These are the product/demand characteristics and market qualifying and market winning factors. Both these classifications will be used to describe the supply chain market and demand characteristics .Wings & Legs, the poultry processor, produces fresh poultry products for the consumer market. It supplies retail distribution centres, which distribute poultry products to the individual retail-outlets. Fresh poultry products are typical commodity products with low profit margins. The market winner in the Netherlands is still cost. Market qualifiers are quality, lead time and service level. This holds true for the end consumer, who buys its products in retail outlets, and for the retailer, who is the direct customer of Wings & Legs.

One could argue that, because of the growing attention for food safety and recent out brakes of animal disease, quality is moving from a market qualifier to a market winner. The risks associated with poor quality are so high, that retailers and consumers are increasingly prepared to pay more for higher quality. The high demands on quality, places constraints on the flexibility of the supply chain. The most effective supply chain operations strategy would be lean supply. But we also have to take into account the nature of demand of poultry products, as mentioned by Fisher. Makes a distinction between predictable and unpredictable demand. The demand for poultry products of end-consumers shows a very peaky pattern, and therefore seems unpredictable. This may look strange at first sight, but is explained by the heavy use of promotional activities at the retail stage in the supply chain (which are not communicated in detail to Wings & Legs). If there were no promotional activities, demand would actually show a seasonal pattern, which would be predictable. The promotional activities initiated by the retail companies place heavy strains on the upstream supply chain. An opportunity to level demand is to eliminate all promotional activities, as mentioned by Fisher, but this encounters much resistance from the retail companies involved; poultry products are favourites for promotions to bring in new customers. Meat products are the most expensive components of evening meals, and a reduction in the price is therefore attractive to consumers.

Also the poultry processor itself initiates promotional activities. Company provide demand a delivery between 18 to 48 hours), frequent deliveries and increasing product variety; typical elements of an agile supply chain. Lead-times are very short and therefore stock needs to be held at the poultry processor. The required service levels for poultry products are high. The poultry processor has to comply to a minimal delivery reliability of 99 percent (also in case of promotions). Based on the matrices of Fisher [2] and Mason-Jones ether demand and market characteristics of the case company are summarised in the Table."

â-ºThe information decoupling point only concerns information about changes in demand and market. This is information that flows upstream the supply chain. In the poultry supply chain, living chicken and perishable products are exchanged. Wings & Legs therefore not only have to take into account variations in demand, but also variations in supply. What information should flow downstream the supply chain (to the poultry processor) so that Wings & Legs is able to match supply with demand in a better way?

" Information decompiling point only concern information about market demand that is t are the market situation, Customer reflection about promotional program , product information to the supply chain . According to the upstream information the supply chain takes necessary action following upstream information on the downstream way. In short, demand uncertainty is relatively high. And as a result, the need for production capacity, and thus the need for raw materials (live chickens), fluctuates. The production capacity itself is fully utilised (to keep production costs per kg product as low as possible) resulting in very low production flexibility. Finally, the supply of (certified) chickens from (vertically integrated) suppliers has to be planned twelve weeks ahead because of the duration of the breeding and growing stages. Buffering is not possible in the supply chain since the quality of the supply (chickens) will deteriorate. Production planning and control is material oriented with concern to the supply of chickens, is capacity-oriented with concern to production costs and is inventory-oriented concerning shelf life of (end) products. Production and supply are currently based on demand forecasts, which are unreliable given the market characteristics presented. Most of the case characteristics point to a lean operations strategy for the poultry supply chain. However, the uncertainty of demand and the short required lead-times suggest that a part of the supply chain should be designed for agility. In the next paragraphs we will evaluate the opportunities for a legible poultry supply chain. First, we will examine the possible positions of the PDP/CODP and the constraints (inherent to the processing of fresh products) that limit these possibilities. Second, the alternative strategic positions of the IDP are examined for the case supply chain. The strategic location of the material decoupling point (PDP/CODP) Before an analysis of the PDP/CODP can be made, customer or market specific attributes of the poultry product and the associated 'product differentiation' processes have to be defined. The final customer and consumer has the choice between several poultry supplier."


" Eventually we can say that effective and flexible supply channels bring companies goals and objectives. It also conveys highest profits and maximum market share for any business organization. In the poultry supply chain especially wings and legs market developments depends on proper supply products to customers. Using the legality and decoupling point's concepts proves to be very helpful in the analyses of supply chains and in the identification process of innovative supply chain designs. The relationships between the quality requirements of raw materials and products in the food industry and supply chain logistics are of outmost importance, but have only been briefly addressed in management research. In the poultry supply chain quality requirements limits flexibility. So any supply channels must be accountable, transferring and would be more flexible to time adaption. "