SUPPLIER RELATIONSHIP MANAGEMENT (SRM):-
The Strategies for Supplier Relationship Management Systems were developed & maintained to coordinate and automate the process concerned with the Supplier integration & communication.
There are seven types of supplier/organization relationships that have unique characteristics. At one extreme are interactions where neither side places much trust in the other, where they have infrequent contact, and where the parties perceive that they do not have much commitment to the relationship. By contrast, there are relationships where the parties feel that they trust one another, where there is abundant interaction between them, and substantial commitment. These types of relationships are:
These relationships are not necessarily one-time transactions, but they do typically involve many commodity exchanges and first-time transactions between suppliers and customers. In these situations, it’s common for the parties to feel little obligation to each other as alternative sources of supply or market access is readily available. For this reason, discussion has focused on using electronic exchanges, typically Web-based, to drive out transaction costs in such relationships.
These are also fairly casual arrangements, but in this case one party does more with using informal influence strategies to try to manage the relationship. Relative to the six other types of relationships. This relationships exhibit the lowest concern for the personal character and capability of the other party. At the organizational level, they do not reflect significant business volume or investment.
Contractual relationships reflect the need for formal control over business activity between suppliers and organizations. Relative to the other relationship types, contractual relationships are characterized by modest levels of communication frequency and perceived dependence.
SRM is the part of the supply chain management, which deals with all aspects of the business relationship between companies and their suppliers. SRM, on the other side, describes the business structures and processes required by companies to communicate with their suppliers, while providing methods, processes and tools to support the different phases of a direct supplier relationship, e.g. identification, evaluation, qualification, and if necessary termination.
EVALUATING THE EFFECTIVENESS OF STRATEGIES USED BY THE ORGANISATIONS.
The overall objective of this part is evaluating the effectiveness of strategies used by the organisation. The part has addressed to Director of the NewG Furniture. There are three types of strategies in regards to supply chain strategies, which are as follows:
Supply Chain Strategies:
Customer Relationship Management (CRM): The processes that take place between an enterprise & its customers downstream in the supply chain.
Internal Supply Chain Management (ISCM): ISCM includes all processes involved in planning for & fulfilling a customer order.
Supplier Relationship Management (SRM): Those processes focused on the interaction between the enterprise & the suppliers that are upstream in the supply chain.
Key Characteristics of Relationships:-
Before managers can properly evaluate their companies’ supplier-customer relationships or select a security protocol for the relationship, they must be able to identify the elements that differentiate one relationship from another. The three most critical elements are:
The perceived level of trust between the parties.
The level of interaction between them.
Their commitment to the relationship.
The key for supply chain professionals is to think about the specific questions that will help to classify each relationship. All of the relationship elements work on two different levels. One level comprises the personal connections between the individuals who interact and manage the relationship (such connections surface in both business and social settings). The second includes organizational influences, which may or may not be aligned with the personal connections. These organizational influences are dictated by the strategies created at the corporate level. For example, corporate policy may lean toward limited credit availability, which can strain relationships between the supplier and customer. However, the personal relationship between the supplier’s salesperson and the customer’s purchasing manager can improve the relationship beyond the constraints of the organizational influences.
IDENTIFY HOW INFORMATION TECHNOLOGY IS USED TO CREATE STRATEGIES AND DEVELOP AN ORGANISATION’S RELATIONSHIP WITH THEIR SUPPLIERS.
Building and maintaining relationship with suppliers are important for the long-term. To achieve advantage from suppliers, organization needs to build and retain firm relationship with suppliers to achieve continuous improvement ( kaizen ) for organization. The information technology plays important role to underpin the relationship with the partners or suppliers. Supplier enablement is the channel that enterprises use to integrate with their trade partners and realize their e-sourcing and e-procurement activities. The two main forms in that supplier enablement takes place in companies are through the application of supplier portals and/or e-marketplaces.
A company’s portal is defined as a web based application that makes available personalized content as well as the rights to operate specific collaboration processes between heterogeneous groups. In the case of supplier portals, they create the basis to connect suppliers with their buyers, with the focus on purchasing processes and the exchange of transactions data. They offer a structured and customized gateway to improve the business relations between two or more business partners. On the other side, e-marketplace is described as a virtual online market where buyers, suppliers, distributors and sellers find and exchange information, conduct trade, and collaborate with each other via an aggregation of information portals, trading exchanges and collaboration tools.
HOW NEWG COULD ALSO USE INFORMATION TECHNOLOGY TO CREATE SUPPLIER RELATIONSHIP STRATEGIES
The NewG could take an example of Dell company, who they were maintaining strong relationship with the suppliers through the using of information technology.
The web-based applications used by Dell i.e. software from both Microsoft and i2 Technology has immensely helped to develop a supply chain structure that is cost effective, practical and potential for further growth. The implementation of i2 supply chain software has enabled Dell to link to its suppliers in real-time thus limiting any delay, and has allowed them to approximate the correct level of materials needed at Dell’s manufacturing locations. The i2 supply chain software was set up for the purpose of planning and execution of the products. The software helped the planning stage by gathering the needed materials from the suppliers and Dell factories. Then the execution stage required Dell to have the right components on hand in order to construct the customer’s order. Consequently these two steps helped to create a more efficient supply chain.
Furthermore the i2 technology has helped the planning process because it has enabled the option of having suppliers linked to Dell’s supply chain system, through the web i.e. valuechain.dell.com. This web-related access mentioned previously is a secure extranet portal that acts connection for suppliers. The benefits of this are that the suppliers are offered the chance to view their materials at Dell, including reports on performance, product quality, cost reports, supply/demand forecasting and engineering alterations. It is therefore, web-based application, i2 technologies could be benefited to the NewG in order to underpin the relationship with the suppliers(www.dell.com.supply).
COLLECT SUITABLE INFORMATION ON THE ROLE INFORMATION TECHNOLOGY PLAYS IN SUPPLY CHAIN MANAGEMENT
“Supply chain management is defined as the science of integrating the flow of goods and information from initial sourcing all the way through to delivery to the end user. Key activities within this end-to-end process include purchasing, production planning, order processing and fulfilment, inventory management, transportation, distribution, and customer service” .
Nothing has rocked the young field of supply chain management like the emergence of the information technology. While the management of information flows have always been a key aspect of supply chain management, the rapid growth of and information technology or web-based information transfer between companies, their suppliers, and their customers has decidedly increased the importance of information management in creating effective supply chains. This marriage is transforming many processes within the supply chain from procurement to customer management and product design. The following is the discussion of how information technology could benefits to an organisation in supply chain.
E-Commerce is used to conduct business on a paperless environment, and therefore it includes use of electronic data interchange(EDI), Electronic Fund Transfer(EFT) etc, thus enabling companies to move the information electronically between suppliers and customers.
ELECTRONIC DATA INTERCHANGE:
Electronic Data Interchange (EDI) refers to exchange of business documents in a standard format using computers. EDI is the practice of communicating information between two organizations electronically rather than using standard form of mail, courier, & fax. Some of the benefits of EDI include
1. Information is processed quickly.
2. It provides better customer service.
3. It helps in reducing paper works.
4. It increases productivity.
5. It is Cost effective.
7. It provides competitive advantage for the organization.
8. It improves billing systems.
BAR CODING AND SCANNER:
Bar code scanners are most visible in the check out counter of super market. This code specifies name of product and its manufacturer. Other applications are tracking the moving items such as components in PC assembly operations, automobiles in assembly plants.
Data warehouse is a consolidated database maintained separately from an organization’s production system database. Many organizations have multiple databases. A data warehouse is organized around informational subjects rather than specific business processes. Data held in data warehouses are time dependent, historical data may also be aggregated.
ENTERPRISE RESOURCE PLANNING (ERP) TOOLS:
Many companies now view ERP system (eg. Baan, SAP, People soft, etc.) as the core of their IT infrastructure. ERP system have become enterprise wide transaction processing tools which capture the data and reduce the manual activities and task associated with processing financial, inventory and customer order information. ERP system achieve a high level of integration by utilizing a single data model, developing a common understanding of what the shared data represents and establishing a set of rules for accessing data. Some of the benefits of ERP system are
Synchronisation: ERP aids in the proper planning and coordination of the various activities and processes among the different components of the supply chain. It helps in promoting effective and seamless collaboration, thus helping to deliver the products or services to customers quickly, accurately and often at a lower cost.
Process Automation: Automating any or all parts of the supply process, including planning, procurement and purchasing. All the isolated tasks of procurement are merged into one efficient process. Suppliers can be allowed to view parts of the production process and automatically deliver goods when they are needed, thus contributing towards lowering overall costs.
Integration: Integrates data from various sources thus eliminating redundancy and obsolete data reducing costs of managing and running the supply chain.
Optimization: With up to date information and data, ERP helps in maintaining the supply chain as a well oiled machine working at maximum efficiency and highest level of optimization.
Labour Costs: ERP greatly reduces labour costs associated with manual inventory checks, manual ordering, and cumbersome handling of errors, rework, returns, and deductions thus cutting the cost of supply chain.
IMPACTS OF IT ON COMPANY VALUE CHAIN EFFICIENCY:-
Companies can use the internet & internet technologies to improve the efficiency & effectiveness of particular value chain activities as follows:
Powerful tool for better supply chain management.
Internal operations – Just in time inventory, Gear production schedules & production quantities to buyer orders, more accurate monitoring of buyer preferences & shifts in demand.
Collaborative data sharing with distribution channel partners – online systems reduce transaction costs.
USING FACTS AND ILLUSTRATIONS, WRITE A REPORT ASSESSING HOW NEWG COULD USE INFORMATION TECHNOLOGY TO ASSIST IN THE INTEGRATION OF DIFFERENT PARTS OF THE SUPPLY CHAIN OF AN ORGANIZATION
Supply Chain is all the activities involved in delivering a product from raw materials through to the customer including sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, delivery to the customer and the information systems necessary to monitor all of the activities “. The function of SC might be said to the provision of goods/services required by customers and to provide appropriate form, time, place and quantity.
The following information technology could assist NewG in order to integration of different parts of the supply chain, especially NewG is heavily depending for the raw materials from outside of the country.
MATERIAL REQUIREMENT PLANNING
The raw material, parts and other components of the products are named as dependent demand and MRP is a computer-based system designed to organize the timing and ordering of the dependent demand products. This system is designed to answer 3 questions
What is needed?
When it is needed?
How much it is needed?
MRP is a widely used production scheduling technique in manufacturing industry to plan the requirements of raw materials by using bills of material, inventory, open order data, lead time and master production schedule. Some of the benefits of using MRP are
Low levels of in-process stocks,
A possibility to track the component needs,
A possibility to evaluate the capacity requirements suggested by the main schedule,
A possibility of distributing the production time
One of the useful software which help for MRP is Enterprise Resources Planning ( ERP ) as it helps manufacturers to better control the time, raw materials and resource requirements to fulfill production orders. It provides the link between planning and assembling systems by acquiring and sharing information from and to suppliers, dealers, customers and employees, in which NewG could obtain benefits. From that, it provides to produce master production schedule for MRP. ERP could provide NewG for effective order management, inventory, purchasing and production planning by showing each department information. ERP could help NewG to communicate with suppliers about required materials to produce master production schedule.
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