Supply change management is the important part of the organization. If supply chain is working effectively in the organization than organization can achieve their goal in well manners .supply chain management engage on three levels which are strategic, tactical and operational. On the strategic level, organization take the decision with concern to supply chain management that how it will work. Tactics means which thing has to include in supply chain which will help the organization to achieve their goals and operational means how it will exactly work. So there is a strong relationship between supply chain management and organizational business objectives.orgnaization has differ objective which has to fulfil by the organization these objective are following in which supply chain management supporting them to achieve them.
Organization's Management has to classify a strategic direction while considering the products which organization will manufacture and recommend to their consumers. As company's product get old and they need new product to launch in the market on that time supply chain management play a crucial role to set new product in the market. In this thing company has to develop the strategy that how ,they will take the help of supply chain which will make easy to launch the product in the market.
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On the strategic level ,company has to find out the real consumer for their product .that is difficult task for the organization .and supply chain management help the organization to distribute the product to those person who targeted by the company .
Manufacturing depend on the demand and company's sales forecasting. So on that time company has to develop the strategy that how product will be manufactured. This decision can require new manufacturing facilities to be built for the organization. If business objectives contain moving manufacturing out of the country, then the decisions can bend towards via subcontracting and third party .another factor is environmental issues which influence organization policy to a better level, these issues may persuade strategic supply chain decisions with regards to manufacturing of the product. With the help of these thing we can say that ,there is a strong relationship between the supply chain management and business's objective.
LO1.2 Explain the link between your chosen organization's supply chain management and its business functions.
Supply chain management is the lively management of supply chain activities with the objectives of maximize customer satisfaction and attain the sustainable advantage over the competition. It represents a cognizant effort develop and run supply chains in the most effective & efficient ways possible. The supply chain is concurrent together through physical flows and information flows. the transformation, movement, and storage of goods and materials involves in Physical flows . Information flows permit the a variety of supply chain partners to conquer their long-term plans, and to manage the day-to-day flow of goods and material up and down the supply chain.
Function of Supply chain in DELL
There are some functions of DELL related to the supply chain management are as follows:
Identify Customer Values
Organization used customer knowledge With the help of contracts, survey results, business intelligence data and platform sales to begin its customer-centric view of value. Dell invested in resources to complete detailed configuration profitability analysis, targeted surveys and external marketing insights from multiple industries.
Understand Dell's Strengths
With the help of the effective supply chain management the DELL's strength can be analyzed.
Understand the External Environment
Supply chain is specifically related to the external business environment with the help of supply chain the DELL can be easily understand the external environment.
This the supply chain of the opted organization DELL and its function that are related with the supply chain of the DELL.
LO.1.3 What are the key drivers used by your organization to achieve an integrated Supply Chain?
As companies increasingly put into action their supply chain to compete and attain market share, spending and action in this area are remarkably on the upswing. Technology and process upgrades at forward-thinking companies evidently demonstrate that supply chain excellence is more broadly established as an element of overall business strategy and that growing value to customers is not just management's, but everyone's business.
Always on Time
Marked to Standard
The transfer in how company's outlook their supply chain is taking hold. Scrutinize how your company views its supply chain and deem your answers to these fundamental questions. Does leadership view your supply chain as a strategic competitive advantage? If not, are you bearing in mind outsourcing your supply chain? Are the capacity strengths of your supply chain generally known and understood by leadership of the company? If so, how do they sway growth, profitability and customer service?
So organization has to find out the key drivers which will help the organization to achieve an integrated supply chain management. There are some key drivers which will help the organization to achieve an integrated supply chain which are following
Customer service management process :
Customer service management process is concern with the organization and its customers. Because customer service is the cause of customer information.
Customer service management provides the customer through real time information on arrangement and product accessibility during interfaces with the organization's manufacture and distribution operations. Good organization uses the following steps to build customer relations:
Verify jointly pleasing goals for organization and customers
Set up and preserve customer relationship
Produce optimistic feelings in the organization and the customers
Strategic tactics are drawn up with suppliers to maintain the manufacturing current management procedure and the growth of new products. In organization where operations expand internationally, source has to manage on a international basis. The preferred result is a win-win connection where both parties take benefit from each other, and a decrease in time which is required for the design series and product.
LO2: Be able to use information technology to optimise supplier relationships in an organization.
LO2.1 Evaluate the effectiveness of strategies used by your organization to maintain supplier relationships.
Efficient management of suppliers is one of the ways manufacturing companies can advance their performance. There are many significant aspects of supplier management; they incorporate sourcing strategies, and the way relationships are managed and the information exchange policies adopted by manufacturers. Characteristically, it has been argued in the literature that close relationships with suppliers should be urbanized, in contrast to the conventional price-driven transactional relationship. In concurrence with this approach manufacturers should employ a single sourcing strategy rather than multi-sourcing. The research found that noteworthy portion of the companies surveyed had experienced an alteration in their relationship with suppliers in the last few years. In the main relationships had become closer and the use of partnerships was in proof. Although the companies had developed partnerships with some of their suppliers the majority of firms continued to prefer a multi-sourcing policy. The research results have implications for manufacturing companies as they point out the potential for development through the greater adoption of best practices in the area of supplier management.
LO.2.2 What information technology does your organization use to create strategies in developing relationship with its supplier's?
As search costs and other coordination costs turn down, theory predicts that firms should optimally amplify the number of suppliers with which they do business. Despite recent declines in these costs due to information technology, there is little proof of an augment in the number of suppliers used. On the contrary, in many industries, firms are working with fewer suppliers. This suggests that other forces must be accounted for in a more complete model of buyer supplier relationships. So there are many technologies which is using by the organization to develop relationship with their suppliers .which are following.
Analyze actual time information about market trends sales and orders.
Predict and respond rapidly to changes in demand
Develop efficiency with concern to precise information on supply .
E-collaboration with the suppliers, like, using email and giving out spreadsheets, can be simple, but the most profit approach from sharing information in real time. This approach requires more refined technology, which are following
Forecasting systems or inventory planning - this means use their inventory records to predict the market demand for their product.
Online analytical processingÂ systems - this system analyze history sales performance and evaluate the forecasts from different suppliers.
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Enterprise resource planningÂ systems - ERP system plan and programed their entire business. By connecting their order and purchasing system with that of their suppliers, orders can repeatedly be placed and tracked and the supplier will automatically issue an invoice.
These technologies helping the organization to make good relation with their suppliers.
LO 2.3 Identify systems used by your organization to maintain relationship with its suppliers.
A natural approach to determining the optimal number of suppliers is to begin from the assumption that a firm would profit by growing the number of its suppliers, thereby broadening its choice, but that technological considerations constrain this strategy. In this perspective, the number of suppliers is restricted by considerations such as the cost of setting up a relationship, search costs, and transaction costs, which can commonly be summarized as coordination costs.
For example, in trying to determine the optimal number of suppliers for a given input, it may be supposed that suppliers' product offerings are substitutes for one another, except that they differ in some desirable feature, such as price, fit, or product characteristics. Interacting with each supplier entails a coordination cost. After surveying some number of suppliers, the buyer selects the product offering that renders the best value according to its set of criteria. The optimal number of suppliers is determined by trading off the cost of further searches against the expected benefit from identifying a better supplier.
In the same way organization is making the relationship with the their suppliers .some ways are following
Organization is making the Understanding that how their supplier works gives them a enhanced sense of how it can benefit their business.
Organization is using the strategy to make the relationship with their suppliers to Ask about their plans for development or expansion. Will this affect the goods or services which organization is providing to them?
Organization is helping their suppliers by placing orders in excellent time, being clear about deadlines and paying on time.
Organization is making their business important to their suppliers with a view that concept that they will work harder for you. So some suppliers offer superior deals if organization promises to use them wholly.
So these strategies helping the organization to make their better relationship with their suppliers.
LO3 Understand the role of information technology in supply chain management
LO3.1 Assess how information technology could assist in the integration of the different parts of the supply chain within your organization
Information technology could assist in the integration of the different parts of the supply chain management in the organization. In dell the IT assist in the integration of the different parts of the supply chain There are different integrated strategies are discussed below regarding the supply chain management in Dell.
Allocation network strategies:
The issues like location of warehouse and their capacities etc are related to the allocation network strategies. The allocation network strategy maintain the facility that how should the information is being flowed between the management & supply chain members i.e warehouse & retailer . It helps provide the reduction in the total holding and logistics costs. The allocation network strategies are specifically related to the reduction in he logistic & as well as the holding cost of the organization.
Manufacture source strategy:
This strategy is the integration of the logistics and production costs. It also related with the impact of producing in large volumes to reduce the fixed cost for the production .but the production in heavy volume may increase the transportation cost and the logistic cost and production in small batches is related to the high fixed but the balance between them can be maintained by the manufacture source strategy of the organization.
Record organizes strategy:
This strategy connected with the decisions concerning the inventory control system of the organization. Inventory control strategy includes economic order quantity to reduce the holding and ordering costs. It also determines the quantity to be stored. This very strategy can be used for the avoidance of over stocking and under stocking.
Income managing strategy:
In the income managing strategy the price flexibility of demand is fix according to the market in order to maximize the revenue from sales.
Technology & choice support system:
Technology is deals with each and every part of the organization whether it is related to the inventory, production, revenue etc. so we can say that the technology is a choice support system of the organization.
LO3.2 Evaluate how information technology has contributed to the management of the supply chain within your organization
The flow of products and information between supply chain members' of the organizations is known as Supply chain management. Information Technology helps a lot in availing the information in organizational premises very easily. The IT is very helpful to coordinates the activities to manage the supply chain.
In past before 1980 the information flow between the organizations to the second part is totally based on the paper. The paper based method of exchanging the information is very slow. But after some time the information technology had evolved and provides the easy method for exchanging the information between the organization and the supply chain member. IT includes: computer, data recognition equipment, communication technologies, factory automation and other hardware and services. Information flows plays a crucial role in strategic planning. Because it helps in:
Rapid procedure to information.
Good customer service.
Reduction in paper work.
Improvement in tracing and expediting
After the study of these points it can easily understood that the IT plays an essential role in supply chain management and we can also take the example of the dell(Case study of Dells Transformation Journey through Supply chain). The above mentioned points are also related with the dell and its supply chain management. After using IT in its supply chain management the dell got the maximum benefits from it like : rapid flow of the information , great and better customer service , paper work reduction , proclivity enhancement , cost efficiency , competitive advantage etc. So we can say that information technology has contributed to the management of the supply chain within your organisation.
LO.3.3 Assess the effectiveness of information technology in managing the supply chain in your organization.
There are some vast impact on the organization because of the information technology here we took the example of DELL. There are certain effectiveness of IT on the DELL that are as follows:
DELL has successfully developed E-business solutions for improving customer service.
Enhanced efficiency of DELL allows company personnel's to focus more on the dangerous business activities.
E-business solutions of DELL support preparation teamwork & better quickness of the supply chain management.
The use of E-business solutions improves the information quality of DELL.
To gain strategic benefits, the DELL uses of IT to be coupled with process re-designing.
SCM & IT are the prominent part of the DELL.
IT has enabled supply chain to flourish the criteria of the supply chain management of DELL.
LO4 Understand the role of logistics and procurement in supply chain management
LO4.1 Explain the role of logistics in supply chain management in system in your organization
The organizations are still locate that poignant goods and services all the way through of the global supply chains is expensive time overwhelming. Â Logistics and supply chain management are the two important approaches to surmount the business activities.
The flow of resources between the origin and the destination in order to fulfill the needs and wants is known as the logistics management. The physical items, such as food, materials, equipment, liquids, and staff, as well as abstract items, such as information, particles, and energy all can be include in the logistics. The common motives of logistics are minimization of the use of resources and time.
The role of logistics can be divided in four categories that are as follows:
Material management : Logistics plays a very important part in material management because it can provide the overall facility regarding the material handling. The complete process of production can be handled with the help of logistics management.
Channel management are the recourses by which the goods and services can be transported from one place to another place.
Distribution management is related to the distribution technique of the goods and services of the organization . it can help in the logistic management of the organization .
Supply chain management:
Supply chain and logistics are the essential part of one another that was discussed above previously. If any organization wants to work properly than it will compulsory to use logistics management in the supply chain management.
LO4.2 Evaluate any procurement practices in your organization
The procurement policy is based on the Nestle procurement policy
The objective of NESTLE is to produce and market food products that and that can please customers and consumer prospect, and to provide enhanced quality food and worth for money.
Milk, coffee& coca are the key raw material of the Nestle in total the raw material turnover of Nestle is 19.7 bio Swiss Francs. The basic problem is regarding to the procurement of the raw material so the Nestle opt the two types of strategies that are:
Pre competitive & Competitive
Pre-competitive strategy of Nestle:
In pre competitive strategies the Nestle wants to collaborate with the food industry i.e SAI (Sustainable Agriculture. n this strategy the Nestle provides the support to the agricultural development, trades , preliminary works regarding the agriculture industry. In this strategy the Nestle try to overcome the berries of raw material procurement for the Nestle plant.
Competitive strategy of Nestle:
The competitive strategy deals to encourage the sustainable agriculture through the sourcing of its key raw materials (milk, coffee, and cocoa). This is done by providing with the help of guidelines to the producers and by developing preferential supplier contracts. Sustainable Agriculture offers opportunities for food companies to achieve better control on long term supply of raw materials at reasonable costs, and at the same time to improve quality and enhance quality control .
These are the two strategies of procurement of NESTLE by which Nestle can overcome the hurdle of raw material procurement.
LO4.3 what are some of the factors that must be considered when improving logistics and procurement practices in your organization?
There are some factors that must be considered when improving logistics and procurement practices in your organization. The factors are as follows:
Effective Order processing: There should be the effective order processing so that the logistic department can perform its task in a better way.
Transportation: The transportation cost must be low with the help of the logistics strategies. If the proper logistics are to be used than it will become very helpful in reduction in the transportation cost.
Inventory management : Inventory management is the very important part of the organization . With the help of inventory management the logistics can be improved in a better way.
Warehousing: The warehouse handling is to be in a successive manner with the help of the logistics department.
Material handling: Material handling is one of the process by which the logistics can be improved and procurement process can be easy for the organization.
Sound packaging: The packaging should be sound so that the procurement can be done in an effective manner and the logistics management can be improved.
Information system : Information system plays a very important role in logistics management because IT is having the integration of all the area f the business.
In your different groups
LO5.1 Plan a strategy to improve an organisation's supply chain
There should be the planned strategy for the improvisation of supply chain management of Dell. The strategy must include certain points that are as follows:
Reduction in cost: The strategy must be planned with the perspectives of cost reduction in the supply chain process in the organizations.
Time reduction: The strategy should be formulated in such a way s that the time can be reduced and the process can complete in the proper time span.
Release value: value of the production must be acquired by the planned strategy.
Appropriate quality : The planned strategy of the supply chain management is to provide the appropriates quality to the consumers.
Reduction in truncations: the strategy should be formulated in terms of reduction of the transaction cost of the origination.
LO5.2 Assess how a supply chain improvement strategy will benefit overall business performance in the organisation
There are certain points which tell us the benefit of supply chain management on overall performance on the organization that are as follows:
Reduction on inventories
Information sharing among the partners
Preparation being done in discussion rather than in segregation
The improvements can be reflected in terms of:
Satisfy customer service
Better trust among the partners
LO5.3 Explain how barriers will be overcome in the organisation when implementing a supply chain improvement strategy
Supply chain management helps a lot in reducing the barriers in the organizations There are certain methods by which the barriers will be overcome in the organization when implementing a supply chain management. Here we are giving the example of DELL that how supply chain management can overcome the barriers in DELL.
Stronger connection to customers - The DELL's supply chain is completely focused on the customer satisfaction. And the basic problem of the organization is to satisfy the customers and with the help of supply chain the customer can get the maximum satisfaction so that the DELL could get the positive feedback form the customers.
Complexity reduction - The production operations are vey important as well as complex. but the supply chain made this complexity is an easy going manner. All the process related to the Production will be in a concise way in the supply chain in the Dell.
Improved internal collaboration - managing & identify practical interdependencies have ambitious association across product design, supply chain, marketing, sales and finance. Dell also simplified interactions by centralizing global operations, while aligning to customer verticals.
Cost reduction - with the help of the supply chain there were the cost reduction of $1.5 billion in DELL. This was the major barrier reduction.
Improved forecast accuracy - the supply chain provides results in three terms that are: augment in predict correctness at the product, platform and configuration levels.