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The decisions that are developed based on the supply chain should affect the overall corporate strategy that the organization is following. The strategic supply chain processes that management has to decide upon will cover the breadth of the supply chain. Therefore it includes product development, customers, manufacturing, vendors and logistics.
Senior Management has to indefinite a strategic direction when assuming the products that the company should manufacture and offer to its customers. As product cycles or products sales decline, management has to make strategic decisions to make and introduce new versions of existing products into the marketplace, rationalize the present product offering or whether develop a new range of goods and services. These decisions involve the need to gain another company or sell existing businesses. Therefore, when making these strategic product development decisions, the overall objectives of the firm should be the determining factor.
At the strategic level, a company has to impose the customers for its products and services. When company management makes strategic decisions on the products to manufacture, they need to then identify the key customer segments where company marketing and advertising will be planned.
At the manufacturing level decisions setup the manufacturing infrastructure and technology that is necessary. The company management has to make strategic decisions on how products will be manufactured. The decisions can claim new manufacturing facilities to be developed or to increase production at existing facilities. This may affect strategic supply chain decisions with consideration to manufacturing.
Company management has to determine on the strategic supply chain policies with regards to suppliers. Decreasing the purchasing spends for a company can directly associate with an increase in profit and strategically there are a number of decisions that can be made to obtain that result. Leveraging the total company's supply over many businesses can enable company management to choose strategic global suppliers who offer the greatest discounts. However, these decisions have to agree with the entire company objectives.
The logistics function is major success of the supply chain. Order execution is a key part of the supply chain and company management need to make strategic decisions on the logistics network. The design and operation of the network has a meaningful influence on the operation of the supply chain. Strategic decisions are required on warehouses, distribution centers which transportation modes should be used. If the overall company objectives identify the use of more third parties subcontracting, the company might strategically decide to use third party logistics companies in the supply chain operations.
Strategic decisions determine the overall direction of company's supply chain. They should be made in conjunction with the company's overall objectives and not focused towards any particular product or regional location.
Variable 2: Organizational Strategy
Firms strive for sustainable competitive advantage financial performance that consistently outperformers their industry peers. The world is so dynamic, with new products and new competitors constantly rising, which means that truly sustainable advantage might seem like impossibility.
The mission gives a broad statement of personal or business scope, purpose and operation that differentiate from others. It serves to inform employees, friends, neighbors about what's important to business. Mission statement is of significant importance of any company and is one which shows how business operates in a real world.
As a mission statement represent actually what is, while a vision statement show of what and how businesses actually operates. It gives a clear picture of the future in which ways company works to create and what business will become. In order to develop and motivate a vision statement business people needs to be connected with the core values of both, the individuals and the firm business and as well as be effectively communicated to and accepted by everyone involved in certain company.
Goal and Objective
Goals represent most important things, while objectivities are the smallest ones:
Specific, Measurable, Attainable, Rewarding, Timed
All these step from the above help one company to achieve its goals. Clearly and meaningfully represented can eliminate confusion and misunderstanding.
Variable 3: Supply Chain Activities
Supply chain management plays a very important role to the companies. The supply chain generates the most of the costs of the company, expected to the width and complexity of the function (manufacturing, where house, distribution). Any inefficiency can create tremendous negative impact of the company. On the other hand, good supply chain management can bring huge benefits and competitive advantage to the firm. In order to provide the product, the supply chain needs to perform the various activities that extend to different areas, from procurement to customer service.
Procurement: Activities related to the purchasing of all goods and services required by a specific company to operate their business.
Order processing: Functions needed to capture customers' orders, cash as order receipt, order picking and order shipment.
Demand and Supply Planning: Process of forecasting customer demand, actual sales and current inventory levels on stock.
Inventory Management: Expands through different activities in order to track stock levels - including forecasting, positioning of stock and the tracking of product age and availability.
Warehousing: Keeping of goods with an emphasis on moving product into through and out of warehouses in a timely and accurate manner.
Transportation: Movement of products from one destination to another. Transportation can involve different transport methods, depending on the business, market and infrastructure specifics.
Customer service: Includes all sales of after sales related activities that occur between the buyer and seller. These functions include order status, post-sale support etc.
All these processes within supply chain can be planed to and associated with the majority of the five components of the supply chain (suppliers, manufacturers, distributors, retailers, and consumers).
Variable 4: Supply Chain Design
Supply Chain Design (SCD) establishes the supply chain network architecture, manages sourcing decisions and ensures that the components are aligned with corporate and supply chain strategy, and that our supply chains are as efficient and effective as required.
There are several different Supply Demand Network designs such as:
Manufacturer storage with direct shipping
The product is shipped directly from the manufacturer to the end customer, by passing the retailer the one who takes the order and initiates the delivery request. This is referred to the drop shipping and all inventories are placed at the manufacturer. Information flows from the customer, by the retailer, to the manufacturer while the product is shipped from the manufacturer to customers.
Manufacturer storage with direct shipping and in-transit merge
Transit merge network combines pieces of the order coming from various locations so that the customer gets a single delivery.
Distributor storage with package carrier delivery
In this network inventor is not held by manufacture at the factories it's held via distributors or retailers in intermediate were house and package carriers are used to transport product from the intermediate location to the final customer.
Distributor storage with last mile delivery
Last mile delivery is referred to the distributor or retailer delivery the product to the customer's home instead of using a package carrier. Under this package, last mile delivery considers that the distributor ware house needs to be closer to the customer, increasing the number of ware houses needed.
Manufacturer / distributor storage with customer pickup
Inventories are stored at the manufacturer or distributor warehouses but customers place their orders online or by the phone and then come to designate pickup points to collect their orders. Thus then the orders are shipped from the storage site to the pickup points as required.
Retail storage with customer pickup
As retail stores the inventory is stored locally, customer can either walk into the retail store pr place an order online or via phone and then pick it up at the retail store.
Variable 5: Marketing
Marketing plays a significant role in the process; it balances purchases by giving essential demand information and building the connection which help's to improve the efficiency of supply chain operations.
Supply Chain Management Professionals emphasizes the integration of supply-and-demand management within and across companies. It indicates the importance of coordination and collaboration with channel partners such as suppliers, intermediaries and service providers. This shows increasingly obscurity in the lines within companies and suppliers. Marketing plays a key role in developing the connection between the parties through communication and support programs. Thus in turn, helps to make a collegiate environment in which all parties' works and interact in business development programs which can improve customer service.
With collaborative relationship, supply chain partners' gives high levels of customer satisfaction and help to make a company the favorable choice for customers. However this can increases in understanding of marketing demand and initiatives, which also can enhance supply chain planning. Marketing allows supply chain's to strengthen the company's competitive position and sustain the successful development of new products.
When supply chain partners have the appropriate level of market awareness, they can transmit added value and play a proactive role in providing products and services. In order to make it easier for members of the supply chain to work together marketing can help partners grow their own business to design programs.
The brand distinguishes a company from the competition when it communicates with certain customers. Marketing can help distribution partners accrue directly from the strength of a company brand. Marketing also can support resellers by driving business in their location.
Marketing provides an essential balance in supply chain management. It helps companies and their partners become more focused on customers rather than on the production process. By improving communications, support and collaboration, marketing helps rising supply chain efficiency and create a single extended enterprise with a strong competitive edge.
Variable 6: Sales
Order processing is associated with three main components of the supply chain: manufacturers, distributors, and retailers. The retailers are placing orders, manufacturers and distributors work in collaboration with one another in order to perform these orders.
Order processing involves the following steps:
Customer is placing order, Order is received by manufacturer , Order is processed , Credit checked (credit department) and verified , Order is picked and loaded to truck , Order is shipped to the customer , Order is received by customer and added to the customer's inventory
The order cycle time is the time necessary for order to be accomplished. Decreasing the order of the time cycle for all order cycle steps can bring to the effectiveness of the entire supply chain. A customer's order is the trigger for the all process within the supply chain. Slow and incorrect ordering processing can affect every segment of the supply chain and result in lost sales, revenue and eventually loss of customers.