Anlayzing Value Chain Management … Research Paper
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Value Chain Management
Supply Chain Management (SCM) is a new powerful source of competitive advantage, which entails all incorporated activities, facilitating the introduction of a product into the market and generates satisfied clients. The SCM Program incorporates topics from purchasing, production operations and physical supply to transportation into one program. Successful SCM then incorporates and manages all these activities into a flawless procedure. It unites all partners involved in the chain. Apart from the organization's departments, these partners comprise of vendors, third party organizations, information systems providers, and carriers. This paper discusses supply chain management through the following characteristics: lean operations, logistics management, customer service, JIT inventory and leveling, and how they contribute towards SCM.
This is a very powerful strategy in business. If correctly applied, outsourcing delivers benefits like reduction of cost, enhanced quality, competitive advantages, reduced time, superior capabilities and competencies, and the ability to concentrate on core skills. It is strongly linked to SCM and Procurement. The need for cooperation amid the seller and the buyer is identified as one of the best means of improving costs, delivery, performance, quality, and time, through combining efforts, sharing commitment and rewards to high quality. The supplier has tremendous influence on the company's quality, competitiveness, as well as productivity (Hila & Dumitra-cu, 2014). Outsourcing various goods or services enhances the cash flow, increases flexibility, and minimizes the potential labor costs and risk of investment. The subcontracting project increases value to the organization given that it permits the company to concentrate on core activities, increase efficiency and minimize costs, minimize in-house risks of failure, and through benchmarking, provides the best practice sharing experience.
Outsourcing has shifted from initiatives which are financially driven to a stage of being strategically driven. In financially motivated outsourcing efforts, it is common for an organization to form a long-term contract with one supplier in order to secure the steadiest relationship and obtain the best discounts possible. Strategic motivated outsourcing efforts are competency and demanding capability (Hila & Dumitra-cu, 2014). Outsourcing is capable of freeing resources from other uses, obtaining an infusion of money through selling assets to a provider and can minimize risks and costs. Companies concentrate on conducting core value-adding activities in-house where the company is capable of best utilizing its core abilities. So as to decide if outsourcing is indeed the nest solution to apply, its risks and disadvantages ought to be considered.
The logistics tasks of managing information and material flow is an important portion of the general task of SCM. SCM basically manages the whole chain of processes, including supply of raw materials, production, packaging, and supply to the end-client. Logistics entails both managerial (medium- and short-term planning and control) and strategic (long-term) aspects. The objective within a SCM should be to maintain the flow of materials from the source to the end-client. Parts ought to be moved through the distribution chain as fast as possible and in order to avoid inventory build-ups, flow should be coordinated so that parts move in an organized manner. The phrase frequently utilized is synchronous (Harrison & van Hoek, 2008).
It is frequently hard to observe the 'end to end' nature of flow in any given supply chain. The adverse impacts of such complexity include sluggish response to end-client demand and inventory build-ups. Pure greed by the most influential members of the distribution chain often implies that it is the weaker partners (particularly SMEs) that end up holding the inventories (Harrison & van Hoek, 2008). Therefore, management strategies for the supply chain calls for a more holistic look at the connections, together with an understanding that flow barriers are easily created by organizational boundaries.
A lean supply chain demands that supply chains minimize the operations costs at each and every level. Lean demands that supply chain utilizes the least quantity of resources to efficiently conclude its task. The main sources in supply chain include: warehouses, inventory, working capital, trucks, and individuals. A lean supply chain shall be structured to have minimal inventories within the system, minimal quantity of warehousing space needed to store the inventories, and optimized deliveries to minimize the cost of inventory transportation. Additionally, a lean supply chain shall be designed to create a long-term, steady supply deal with the lowest negotiated cost, but normally without any considerable capability of changing the ordered amounts, delivery points, and stipulated need dates after placement of the order (Kova?, 2013).
In the current competitive market, organizations are searching for top line growth as well as opportunities to minimize their total cost structure. Senior management of such organizations would like to raise quality, capability, and efficiency without raising capital investment. The Six Sigma DMAIC (Define, Measure, Analyze, Improve, and Control) problem solving method and lean thinking provides the increased capability and efficiency to write the organizational business processes (Alsmadi and Khan, 2010). To attain constant success and growth in the current market, almost every business process calls for improvement. In this case, improvement implies minimizing total working hours per unit, increasing On Time Shipment (OTS), minimizing cost and process variation, increasing inventory turnover, and quality enhancement. All these changes can be attained through improvement of the business processes. Six Sigma method aims to minimize process variation while practice of lean methods aims to minimize waste.
Just-In-Time (JIT) Inventory and Leveling
JIT philosophy is founded on a simple notion that wherever possible, no activity ought to be conducted in a system until a need for it arises. It needs the parts to be made available at the time of their need and not before. It aims to produce the needed items at the needed time, and in the needed amounts. It is thus one of the most effectual ways of controlling flow of inventory. JIT inventory management maintains a balance between optimum quantity of inventory and its cost of holding (Singh and Singh, 2013). Inventory made available at the correct amounts, correct costs, and the correct time, is JIT's main objective. JIT is a method whereby stock held by the organization gets measured in terms of hours of manufacture instead of months or days. It eradicates waste by simplifying the processes of production, eradicates surplus inventory so as to minimize associated costs of production, and stresses on the utilization of small lot size so as to satisfy quick client needs. Inventory being managed on a JIT basis eliminates several kinds of uncertainties in a system of production. It guarantees timely delivery of customized products to the clients and therefore assisting the company in the long run to obtain its brand status.
SCM effectively incorporates the materials and information flow within the distribution chain network beginning from product design to distribution. Integration of linked activities of a manufacture system facilitates the smooth flow of materials within the system, thus drastically reducing the level of in-process inventory. As an outcome of effectual SCM, the correct products are made available to the client at the correct time, majorly because of minimized cycle times as a result of sped up and simplified operations (Singh and Singh, 2013).
The customer service management procedure is the company's face to the client. It offers one source of client data, like product availability, dates of delivery, and order status. It is accountable for administering the Product and Service Agreements (PSA) (Croxton, Garcia-Dastugue, Lambert & Rogers, 2001). In the strategic level, customer service management processes are concerned with designing the procedures for the management of the PSA. Customer relationship management offers the set of services and products that the company can provide to its clients. Strategic customer service management process is accountable for arranging how all the products and services to be incorporated in the PSA are to be distributed and managed.
There are four sub-processes involved in strategic customer service management. Firstly, the customer service strategy is established for the set of PSA features recognized in the customer relationship management procedure. Secondly, the team comes up with response procedures for all these events. Next, infrastructure for implementation of the response processes is identified by the response team. Lastly, a framework of metrics is developed (Croxton et al., 2001).
Outsourcing truly delivers benefits like reduction of cost, enhanced quality, competitive advantages and minimized time, among others. It is strongly connected with SCM and Procurements. The logistic task of managing information and material flow is a major task of SCM. Supply chain management controls the whole chain of processes. A lean supply chain demands that supply chains reduce operation costs at every level. Some of the main sources of supply chain inventory include warehouses, trucks, inventory, operating capital, and individuals. JIT philosophy is founded on a simple notion that wherever possible, no activity ought to be conducted on a system until a need arises for it. It aims to produce the only needed items at the needed times, and in the needed amounts. The customer service management process is the company's face to the client. It offers the one source of… [END OF PREVIEW]
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