Gaining an Efficient Supply Chain Management

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Logistics: Logistics is defined as a company development program for the supervision of arranging capital flows, facilities, information's and the raw materials for trading, which also consist of complicated data for communication. .

SUPPLY CHAIN MANAGEMENT: A supply chain is defined as the transferring goods by transforming the raw materials to the customer. Depending upon the size of the organization and type of the product manufactured by the organization, their exist a supply chain for each and every organization. The supply chain includes obtaining supplies and components which are transformed to the final products and are distributed to the customers. Managing the events of these changes is known as supply chain management.

Why supply chain management?

In the world, companies are looking across the value of innovation management for strategic growth. The performance of scm outputs are as follows:



Continuity of supply



Important of supply chain management:

Service orientation: The basic concept of supply chain is to give superior customer service. Customer service is the value that is obtain by the customer and is dependent upon customer's perception. The design, the alignment, the integration of the companies on the supply chain and the coordination between them are for customer satisfaction.

System orientation: It is defined as the core of the existence of the supply chain management. System orientation involves supply chain as a whole by obtaining optimal results, the partners of the chain may not receive compulsorily optimal results. They can get less than optimal results some cases. But these results are considerable gains for all the partners working together.

Competitive and efficiency: The supply chain is defined as a competitive business organization which provides values to the customer. Competition is important for a supply chain for its existence and to provide good customer service to its customer with efficiency.

Improving visibility demand:

Efficient chain improves visibility of demand by each one of the partners.

Improving quality:

Efficient supply chain helps in improving the quality of operations of the organizations.

Reduces transportation cost:

Efficient supply chain reduces the transportation cost, thus helps in increasing efficiency and reduction in carrying cost of the company. The convensational objectives of Supply Chain Management is to minimize total cost and to achieve fixed demands.

Reduces warehousing cost:

Efficient supply chain helps in reduction of warehousing cost of the company as there will be less held up of inventory.

Supplier Base: A group of suppliers are often found by organizations which manufacture a variety of commodities or various services. As the growth of the organization increases the supplier bases of the supplier increase which become complicative to manage.


The measure according to which supply chain performance is judged is still a matter of debate. Financial performance indicators of individual firms in the supply chain will tell the story post facto, but that alone is not enough to give managers information on which to base their actions. Others surveys have proposed a number of performance measures. These include total supply chain cost, process capability, customer retention measures and lead-time as some primary indicators of supply chain management.


The total cost of supply chain alerts managers, fact that it is not just one element of cost that is important, but the totality of cost incurred at various points in the supply chain.


Process capability is usually measured in terms of variability of the outcome with respect to the desired target. Improving process capability is the basic quality control tool that has a long-run impact on effectiveness by reducing wastes and decreasing uncertainty over yields at any stage in conversion. In addition to conversion activities, it is essential to view storage, transportation and other activities also as processes where capability can be built.


Customer retention is another attribute that modern supply chain management must explicitly focus, in order to stay competitive. For example, if availability or reliable supply is a value, then a measure such as, fill rate may be important which is then translated into a logistical service parameter.


Process lead-time is another measure of basic supply chain capability. If process capability the technology and engineering aspect of the activity. Lead-time to deliver a certain promised range of products indicates how quickly and reliably the supply chain can respond to needs as and when they arise. Which inventories can be contingency plan; process lead times would measure the primary effectiveness of the demand fulfilment process.


FUNCTIONAL: In this level, operation details are finalized. Excellency in the functional area includes practice of optimal operations for managing transportation, material management and warehouse management. To increase the overall efficiency of the system above strategies should be supervised regularly.


Five fundamental features of supply chain management

Single entry

Inventory perspective

Improving flexibility

Reducing lead-times

Reducing uncertainties

Improving quality

Strategic decision making

Systems approach

Doing what one can do best

Case Study:

The Issue

A company of commercial engine Manufacture Company is a market leader. It in the last seven years this company reformed its capacity of installation and reduced its base of cost to improve its efficiency. As the management of the company expected the demand to remain constant, they continued to focus on those areas. According to the recent changes in the market, they demand responded with a sharp up swing. Then management plan to use the profits from the sales with this growth to provide finance to the extra capacity that this upswing in the demand would require. This made the company to face a blow which was large and rising back order over worked production team, annoyed customers, equivalent increasing the delayed deliveries. Management reacted by producing a large group surrounded by the firm committed to accelerate "important" orders to reduce the price for late penalties paid dynamic that irritate the firm's aptitude to convince its clients' on-time delivery needs. Each functioning area had its own motivations. The marketing VP was charged with selling as much as he could to maintain or grow market share during this boom period. The production VP, just finishing up a five-year initiative to reduce costs, had eliminated all excess assembly capacity from the system and would bring on additional capacity cautiously.

The Approach

The company brought in planned clearness to recognize how their business policies affect their aptitude to take advantage of this changing demand. Together with the client, Strategic Clarity developed a model that shows the basic Strategic Clarity's analysis exposed management to the conflict between these policies and how this drove the company to the situation they were suffering. In addition, the modelling process highlighted a critical underlying assumption for management, that assembly capacity grows with sales, which in their reality is not true, since all excess capacity had been "streamlined" out of the system.

Small profits would limit the company's ability to invest in additional capacity and, with sales increasing and assembly stabilizing; orders would be later and later. Increasing late orders would reduce sales in the future, leaving the newly installed capacity idle. By enabling senior management to visualize the impact their policy decisions might have on the company's future performance, Strategic Clarity provided the tools and the insight necessary for the company to help create the future it wants. The company used these results to reformulate their sales policy and adjust their investment programs to create a more balanced approach to their challenges of the future.

The Results

After validating the model with management, by showing that it accurately replicated the historic results leading up to the present situation, Strategic Clarity worked with the client in using the model to simulate into the future. The simulations showed that, under current policies, sales could increase over the near term but with minimal profit, due to the high cost of expediting and heavy penalties for late orders.


A challenging with customer service is to ensure that you have focused your attention on the right key area, measured by the right key performance indicator. There is no challenge to come up with a lot of meaningful indicators, but the challenge is to select an overall strategy of the company. Recently many organizations have implemented feedback loops that allow them to capture feedback at the point of experience. Recently we know that the company has maintained the good strategy for the organization.