Supply chain management deals with the activities carried out in the planning, controlling and execution of the flow of products right from production to the end customer in the most efficient manner (Grimm et al., 2015). In supply chain management, agility, and cost minimization, therefore, remain significant factors. Agility matter most because it can affect revenue and profitability directly. A successful supply chain puts in place effective logistics to ensure that goods reach the end customer without delay and in the best quality. This paper is a discussion of business and supply chain strategies in light of Innovations in Transportation, Inc. The paper recommends the adoption of best practices that can help the company improve its supply chain management.
Opportunities for improving supply chain activities through better alignment of logistics and the company’s strategic plan.
Many opportunities can help the organization improve the supply chain by aligning logistics and the corporation’s strategic plan. First is the chance to globalize manufacturing operations. If the company goes international, its global network of procurement will be good enough to support and make necessary reactions to its supply chain needs. Most organizations that have excelled in the supply chain have in place a strategic supplier who delivers quality to various locations of production. It is always challenging to find a reliable local supplier who meets the desired standards of service and quality. Secondly, there is a chance to improve the quality and safety of the organization’s products. This can be done by putting pressure on the manufactures to produce goods that are safe for consumers and of good quality at the same time. Cases of poor quality products that do not meet customer’s demands are on the rise, and such occurrences can quickly ruin a company’s expectations (Gunasekaran, Subramanian & Rahman, 2017). It is vital that every available opportunity to improve the quality and safety of goods is taken. Consolidation of the supplier base is yet another opportunity, which can come with many benefits. If adopted, there would be instant eliminations of overheads and variances in the supply base.
It, therefore, becomes highly essential to work with suppliers who understand supplier base consolidation practices. Also, there are opportunities to get access to the most recent technology. Technology has changed the way work is done in many production firms and using the latest technology can significantly assist in the development of new products. In implementing new technology, management can purpose to hire experts who have experience in handling machinery. The staff must show significant commitment to finding solutions to various challenges that come with the technological implementations. Lastly, the organization can use fewer inventories, which promises a shorter life cycle in the production process. In as far as, the lean movement is concerned; many companies are making moves towards the adoption of lean practices that support the general strategies of operation. The primary challenge in this context is not just to get the right concept but also to get a working idea in a lean environment.
Ways in which the supply chain can integrate with logistics to get goods and services moved effectively and efficiently.
The movement of goods from the point of production to the hands of the customers determines the success or failure of a business organization (Grimm et al., 2015). In the postmodern business environment, many organizations have come to prefer full container loads to less than a container load. Some of the time, however, loading is conducted under the specifications of the organization in question. Considering this, therefore, there are some situations when less than a container load is preferred as a less costly method especially when the goods being transported are of small freight. To avoid uncertainties, there needs to be an approach that puts into consideration various factors. One of the best ways to do this is by using consolidated shipment. This approach combines many smaller shipments got from multiple suppliers who share a similar destination into a single consolidated shipment. Alternatively, when importing, for instance, less than a full load, a logistics provider can collaborate with another logistic provider so that they combine both shipments. This is more cost effective as the two importers share the cost of one single importation as opposed to two.
Another way is by using the advantages of outsourcing. Many businesses today are outsourcing some portions of their supply chain with the primary intention of reducing costs. Some of the parts mostly outsourced are storage as well as transportation. Outsourcing is not only efficient in terms of cost reduction. It is having the ability to leave some of the most significant work aspects to professionals who have better skills in handling them (Scott, Lundgren & Thompson, 2011). This increases the chances of effectiveness hence success. To eliminate possible excessive costs, the logistics provider and the client ought to agree on some aspects that are treated as necessary. Some of these may include temperature requirements, packaging specifications and how frequent shipments will be made and in what sizes. Optimizing the use of resources is another practice that can help improve efficiency. Using an organization’s resources insufficiently can have a direct effect on a company’s revenue. These can be achieved through rearranging delivery schedules so that all vehicles involved in transit are active enough at all times as opposed to leaving the cars in an idle state after a busy morning of transportation. There are usually high and low business peaks at various times of the year. It is upon the business to take advantage of the high peaks by renting additional warehouses for instance. Some practices such as renting a warehouse that goes unused for the better part of the year is one that should be avoided.
How a company’s agility in terms of the supply chain and/or logistics can improve the movement of goods and /or products
First, the agility would help the organization respond to customers’ demand in real time. Many business organizations focus so much on the forecast but forget to concentrate on demand. With the help of modern technology to get information about demand, as is the situation from the real market, it gets possible to respond immediately. Keeping a good relationship with the suppliers can eliminate possible complexities at the boundaries of the chain. A timely response can be heightened by the use of real-time visibility that cuts into all the inventories in the different channels (Tarafdar & Qrunfleh, 2017). This helps the operational teams in fulfilling delivery promises. Secondly, agility would support an organization to use the available technology to gain more visibility in the supply chain. The internet of things has changed the way things happen in the modern logistics environment. There are technological tools that can inform the stakeholders on the nature of deliveries including anticipated disruptions. With the right technology, probable disruptions can be detected and prevented before they occur in the real sense.
Lastly, an active company would break down barriers in the supply chain. Companies have adopted various technologies such as Enterprise Resource Planning to improve communication between stakeholders in the supply chain, but this has not often been as successful as required. Currently, there are web-based technologies that can heighten productivity enabling companies to give faster responses to the changes in the market. Using electronic applications improves agility and makes goods reach their final destination faster. These applications increase the pace of procurement activities for instance through strategic order management. Firms can also manage agility and control when goods are delivered to customers. Many manual operations can reduce the possibility to respond promptly to various changes in the supply chain. Automated procurement systems enable buyers to purchase products without relying on the manual approach. It translates the requirements of the MRP into purchase orders. Buyers also can look at the orders and make desired changes before they are delivered. The system captures this information and transmits reports to the users regarding the history of transactions.
Challenges that the interaction of supplier and manufacturers bring to the logistics management arena
Traditionally, the supply chain is composed of many players such as the manufacturers, the distributors, the retailers, and the customers who use the end product. The manufacturer and the supplier are highly essential in the chain because they determine whether the goods demanded will be available to satisfy the needs of the customers (Waters & Rinsler, 2014). The first challenge, therefore, the ability to deliver the right products to the customers. This is a challenge of demand and supply. It is the manufacturers and the suppliers who determine whether the customers will get the goods they ordered for. With strained relationships between them for instance, there could be communication breakdowns leading t wrong supplies. Once the errors are detected at some stage in the delivery process, the goods have to be returned so that the right ones are chosen. This may cause delays.
Second is a challenge of time. The interaction between the manufacturer and the supplier must be done in a prompt and timely manner so that the goods reach the end customer in time. To avoid the possibility of counseling orders by customers, the manufacturer ought to produce the right quantity of products within a specified period. The supplier has to make the manufacturer understand the market demands. Without a proper agreement, fewer goods may be produced leading to shortages in supplies. A deficit will automatically mean delaying the deliveries as the customers wait for the products to be ready for shipment. Thirdly, a challenge exists in the interaction between suppliers and manufacturers in terms of customer preferences. Supply chains have increasingly become complicated because of the changing nature of product features. Whenever new products are released, customers always apply pressure companies to get it right with the current trends. It is essential to pay attention to innovation because it boosts competitive advantage. Companies are therefore tasked with the ability to redesign supply networks and adhere to various preferences. Manufacturers and suppliers must collaborate in innovation so that the goods delivered adhere to the trendy designs desired by customers.
Processes that could be adopted to increase value for the customer
In the context of logistics, increasing value for the customer should be a priority for business organizations. The first Process that could be adopted is automation. In the current logistics environment, technology has taken over, and many companies are now using automation to improve the transportation culture and increase value for customers (Ross, 2016). Automation plays a significant role in optimizing business processes.
An example is using process software that gives updates on how the goods are moving from time to time. The software will inform both the company and the recipients about the assets already in transit, procurement of the products and the delivery at the stated destination. In the long run, a lot of time that would have been used in the manual set up is saved. Effective tracking also helps businesses improve their process management culture.
Secondly, warehouse management as a process can also help in getting the best value for customers. Without proper warehouse management, logistical operations could easily cause losses. Perishable goods such as milk need to be refrigerated. Grains, on the other hand, should be kept in environments free of moisture. Without these measures in place, the goods could be in a compromised state by the time they reach the consumers. The company should establish a warehouse inventory that minimizes wastages. The capacity of the warehouse ought also to be at the maximum so that goods are not stacked and squeezed as this may reduce their quality. Efficient transportation can help in delivering products to customers in the right manner. Organizations must think of the best routes to use when providing goods to customers. Taking shorter periods will satisfy customers and in turn create more value for the business. A shorter route will be cost effective as well as timely for the customer. The packaging of goods ought also to be optimized so that the package does not increase the weight of the products. Staffs also need to be trained on modern trends of order management.
Training of staff can be done by the human resource department as well as the software vendors. Whichever way the business chooses, training sessions ought to be thorough as to ensure that staff members master the skills required for such transition. If the skills are not acquired, many mistakes will be made in order management customers will be on the receiving end either through wrong or untimely deliveries. The staff members must understand the new standard operating procedure so that they make the right moves.
Impacts of Supply Chain Management on various organizational functions
Implementing an effective supply chain system with the right solutions can have a high impact on different corporate functions. First, it creates an improvement in the product flow (Flynn, Huo & Zhao, 2010). The efficiency of the product flow is measured by the time goods take to reach the customer. Nonetheless, many factors like the demand and supply curve, the cost, and method of shipment and the general quality of the goods sent to customers. Effective supply chains will often provide opportunities for business corporations to improve the flow of products through advanced inventory management that cuts down on the bullwhip effect thereby increasing the production levels. An improved flow will be characterized by reduced delays in delivering products and enhanced visibility during the transportation process. There will be a high acceleration of the time-to-market periods, which will translate to higher revenues for the company.
Secondly, it could encourage a seamless flow of information. In the modern business world, customers have grown to like real-time responses and easily available information regarding products in the supply chain. The flow of information should, therefore, be without interruption and insufficiency as these could easily create poor relationships between the supplies and the customer. Business organizations that have put in place strong supply chain networks can correctly handle bottlenecks that may interfere with the flow of information in the chain. The information is transmitted with a lot of timeliness, accuracy, completion, and relevance. In turn, it helps in the avoidance of potential risks. If the flow of information is useful and error-free, it cannot get distorted, and various parties in the chain will not be misinformed.
Effective supply chain management improves the relationship between the stakeholders in the chain. This is achieved through collaboration where all the business entities are coordinated in the process of delivering to the end customers. Without proper communication between the distributors, it is hard to rate the performance of the chain. With a good chain management system in the business, communication is heightened with reports and quotations. This will in turn help in solving the problems that may occur. The current business environment is full of market challenges, and various factors cause problems either in logistics or production. A distributor can, for instance, disappear unexpectedly. Nonetheless, when a right SCM is implemented, the collaborative aspect enables the development of working solutions in such a way that the whole process is not negatively impacted.
Financial implications of improving supply chain management for the company
The first financial implication of supply chain management done well is often profitability. The transportation of goods significantly impacts a company’s expenses. Through the calculations reflected in the cost of goods sold (Cogs), payments occurred when transporting goods are indicated. Good supply chain focuses on excellence and operates on the principle of timely deliveries. If therefore this is the case, then it is readily determinable that timely deliveries will lead to customer loyalty, which will create room for more orders than before hence increased profitability (Prajogo & Olhager, 2012). An improved supply chain will also affect revenue. Growing revenue is often the topmost agenda for most business managers and is directly affected by the supply chain. The significance of the SCM on revenue is not just about getting goods to the end customers but also about time. Taking the case of perishable, for instance, a reliable network of transportation must be kept to maintain the quality of goods on transit. When shipping delays so that there is no adherence to the schedule, the quality of the perishable goods may drop thereby reducing their market value. Well-informed manufacturers use lean practices and will, therefore, see the significance of using experienced vendors who can create more value for the products through increasing visibility to the supply chain.
Timeliness, the ability to satisfy demands established in the markers and meeting the specifications of various customers have an enormous effect on a company’s revenue. Lastly, improving supply chain management often leads to the utilization of capital in an organization. Within any supply chains, there must be capital investment often embodied in materials such as the warehouses, equipment, and manufacturing plants. Most successful firms have realized that transportation is not cheap. Without proper management of the supply chain, different expectations will not be met such as those of the customers. There must be substantial investments in various aspects of warehousing, nature of distribution, inventories, and manufacturing plans among others if there is any hope in the success of the supply chain management.
Supply Chain Management Best Practices
The first best practice I highly recommend is the use of D2M. D2M is a delivery strategy meaning direct to market. A well-established current trend has already been adopted by many organizations that wish to take their supply chain to the next level. As opposed to selling to big retailers or various intermediaries in the chain, the D2M method allows organizations to sell directly to the customer. It creates more room for organizations to cash in and increase their business returns. To establish a well-working DM2, the organization ought to build its brand identity by directing a global supply chain that runs from the suppliers to the shelves and then directly to the consumers. Stock keeping units outside the home market must be well positioned to perfect the working of DM2.
Secondly, there is E-commerce, which is also a growing culture among big businesses today. E-commerce is closely associated with DM2 since it also delivers directly to the customers without having to use so many channels (Myerson, 2012). Nonetheless, the chain needs to be responsive enough to warrant the success of e-commerce. Customers must receive placed orders promptly without having to wait for more extended periods. If this does not happen, orders might be canceled leading to losses for the business. E-commerce enables the positioning of products in such a way that the integration of technology for its improvement is supported.
Lastly, I recommend the optimization of inventory to reduce costs. In any business, the organization’s management always strives to cut costs in various ways. Since the global economic downturn has affected many companies across the world, the need to reduce costs is fresh than never before. Some of the best ways of optimizing the chain include planning on demand and forecasting. There should also be frequent reviews to keep the system in check. The leadership must often review the supply chain practices and check whether they comply with policies and were executed efficiently. They ought to mitigate risks by conducting evaluations on their probability and the impact they could have on the organization’s finances. This may help in developing appropriate measures to prevent the risks from occurring.
In conclusion, supply chain management remains a complex yet highly essential practice in business. It is affected by many factors such as time and demand. Whenever customers order products, they expect to receive the right ones within the shortest possible time as they may also cancel orders if delays are too long. This calls for agility in the supply chain. An adequate managementSCM will often lead the business to success in terms of increased revenue and profitability. It is recommended that the company adopt the proposed ‘best practices’ as they may help in improving the supply chain and help it achieve a greater competitive edge.
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