Explain the advantages and disadvantages of implementing a Supply Chain Management (SCM) system.
The advantages and disadvantages of Nike implementing a supply chain management system include cost of buying and handling inventory, processing orders, and information systems support.
Advantages of implementing a (SCM) by Nike
By implementing the process of supply chain management, Nike will be able to set up networks and facilities that transforms raw material into products that will be delivered to customers. This will give Nike a huge advantage over their competitors by helping them use information more efficiently along the entire chain which can result in significant cost savings, it also helps regulate the movement of inventory coming in and going out of the organization, orders will be process much faster than formal times, and predictable delivery with updated information system. The networks in each level must handshake or interact to help connect suppliers to the Manufacturer, to the retailer then the finished product is delivery to the customer in just-in-time (JIT).
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Implementing supply chain management will enable Nike to be more effective and efficiency also transportation costs will be reduced, cost of inventories will be fair and inexpensive, increase number of capable suppliers, it maximizes the means of transmitting messages and information effectively within the organization and it will help Nike adapt to technology changes more quickly than before. SCM will also help Nike gain the buy-in of all key markets, increase supply chain speed and the bullwhip effect.
Implementing Supply chains management in Nike had proven to be very difficult in the past, this is due to the problem cause by the I2 software which required significant customization to make compatible with Nike’s legacy systems. Other downfalls of implementing supply chain management system is that it can become highly complex and dynamic in the short-run, switching cost are relatively high, increasing uncertainty, high competitive pressure urges, increase implementation costs. Developing a planning system that effectively coordinates information technology and people is a considerable challenge, changing market conditions, negotiating terms and conditions required huge amount of risk and forecasting.
Describe the options for acquiring a SCM system with the advantages and disadvantages of each option.
The first option for acquiring a SCM system is implementing an ERP Enterprise Recourse Planning System using the SAP software; ERP system can facilitate SCM Needed production planning and purchasing systems already in place. ERP integrates sales, order, inventory, manufacturer, and customer service activities. One advantage is that it allows sharing production plans along the supply chain to occur in real time and helps them determine whether to buy regionally, establish a collaborative team or appoint a global lead buyer. Other advantages of ERP include efficient business processes, inventory reduction, lead-time reduction, improved customer service, improved decision making, real-time insight into organization and higher profitability. The disadvantages are the combination of the people, procedure, hardware, software and data in the organization or problem in the operational, managerial, and strategic level of the organization. Inadequate or inconsistent data, mistakes in customer ID numbers, and bad customer service.
The second option is implementing a Customer Relationship Management Systems. CRM supports the business process of attracting, selling, managing, delivering, and supporting customers. CRM addresses all activities and events related to customers in a single repository data about all customer interaction. CRM also stores all customer data in one place and make it possible to access all data about the customer. CRM will allow Nike to be more flexible, productive and efficient in handling customer’s private information. Flexibility ensures them to recognize manufacturing issues, to response to design changes requested by the marketplace. Nike will also be able to response to unexpected or uncertainty the company has and will provides the means to adjust to the consequences of inevitable risks, and reduce total costs. However, flexibility is costly, uncertain environments companies with highly flexible supply chains perform better than companies with less flexible supply chains while in certain environments the opposite holds. The disadvantages or implementing CRM include system overload, turnover, inconsistence data, people and hardware and software.
Outline the raw material inventory purchasing process from the identification of the need for an item to the supplier payment.
To optimizing and regain control over control over production planning Nike must utilize the approach of raw material inventory purchasing process to help increase efficiency, increase lead times and to help increase the rate in which product is being delivered to the customer. When a customer demands for a product or item, the primary retailers sends an order for the product to the major raw material supplier which sends the raw material needed for the production of the product to the manufacturer, then the manufacturer outs all the components of the product together and sends it the distributor. The distributor in turn purchase the require items from the manufacturers, and then distributes the products to the retailer which then delivers the product to the end consumer. From the distributor point all the way back up the supply chain to the raw material suppliers there is no further injection of cash. The money you spend on the product or equipment is passed back up to the supply chain as payments for gods or raw material. Customer is the only source of revenue. By reducing numbers of suppliers and increasing efficiencies in the entire distribution chain, manufacturers are able to reduce raw materials inventory. Bennett,R..(2009). Trade Usage and Disclaiming Consequential Damages: The Implications for Just-in-Time Purchasing.American Business Law Journal,46(1),179. Retrieved April 21, 2010, from ABI/INFORM Global. (Document ID:1665640451).
Describe the potential pitfalls that may be encountered in implementing a SCM system.
Along with the great advantages that come with switching to a supply chain management system there are some potential pitfalls that can cause money loss or confusion within the system. The system will be set up with a great deal of rigidity but must also leave room for some exceptions because things do not always run as smooth as they were planned out. The supply chain may not have the same information systems so incorporating the different systems and getting them to work together without confusion may be a hard thing to set up and cause orders to be messed up. The companies within the supply chain may also have different goals which could cause the companies ideals to clash causing different tasks to be taken with more urgency then others. The delivery dates may also not match from the supplier to the retailers causing wrong delivery dates being told to the customer. Customer service expectations may be different from company to company along the chain as well, causing different goals in quality and customer support for the product. Some companies will not have a sufficient information system to receive the information and relay back, which can cause more confusion in the system. Making sure that everyone along the way in the system is trained well enough to deal with any problems that may arise is a big help.
Assuming a SCM system is purchased and customized; explain the major tasks that need to be completed in order to implement this system. The tasks should be presented in chronological order.
If Nike were to introduce the SCM system they would need to start out with setting up a strategy that the companies can agree with to keep the system working smooth. Getting all the companies on the same page is the crucial first step to setting up a SCM system and will help the companies work together easily. Configuring the system to work with all the companies is the next step, getting compatible information systems or a way to enter the information into each information system is a key in keeping the companies joined in the system. Making sure the constraints of the systems and requirements are right for the use each company needs them for. Figuring out the locations for all the pieces of the system is the next step making sure they will work together to benefit the company and not cause more costs to the companies. Planning the source of resources and the resource requirements to set up and make the system functional is the next step in the process of setting up. Also making sure that sufficient man power to make the system work properly is in place is very important to having a strong SCM system. Setting up the supply chain controls is the next step, and this consists of deciding which information to keep a watch on and the measurements needed to control the system. The performance of the system needs to be maintained and watched over so these evaluations of the system are important to keeping the system beneficial. The last step would be developing the internal and external relationships, keeping them working together. Identifying the systems needed to keep the information passed to each company is very important so the information doesn’t get misinterpreted and orders get messed up. The key to smooth running SCM is communication between the different sectors of the system, if they all receive the right info and can reply back easily then everyone is kept up to date on the time periods.
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