Term Paper: Supply Chain Management Concept

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Supply chain management has emerged as an important aspect in the modern business environment in light of the challenges businesses face because of rapidly changing customer expectations, inefficient product development processes, and increased cost of operations and human resources. This concept is increasingly considered as a new means of managing businesses and increasing performance and profitability. However, business enterprises must consider various aspects related to Supply chain management during its implementation to gain performance and increase profitability. These elements include supply chain strategies and policies, suitable infrastructures or technologies, and logistics function.

Infrastructures/Technologies for Tesco and Safeway

Tesco is currently regarded as one of the largest food retailers across the globe given its huge workforce and customer base. The company provides an assorted range of products and services to customers, which has contributed to its tremendous growth and profitability in the past few years. In contrast, Safeway is one of the leading companies in the grocery industry that has been built on the principle of providing everything to its customers in one store. Despite the increased competitiveness of the grocery industry, Safeway has relatively maintained its dominance in this market or industry. Given the nature of their businesses and need to enhance the effectiveness of their operations, Tesco and Safeway are exploring ways to support data sharing with suppliers. These plans require the identification of suitable infrastructures or technologies that will enable Tesco and Safeway to support data sharing with their suppliers.

The identification of suitable supply chain infrastructures or technologies will enable Tesco and Safeway to develop effective supply chain configurations that will be less challenging in the management of buyer-supplier relationships. Tesco and Safeway would benefit from two major supply chain infrastructures or technologies that will support data sharing with suppliers i.e. vendor managed inventory and just-in-time technologies. Vendor managed inventory is a coordinated inventory policy through which every enterprise has its independence in pricing (Yugang, Liang & Huang, 2006, p.335). Through this infrastructure, Tesco and Safeway's suppliers will become responsible for management of their products in the companies' warehouses. It will support data sharing with suppliers through the development of a communication and relationship networks with suppliers in order to enhance the flow of materials with lower inventories. On the contrary, just-in-time supply chain infrastructure is a concept that focuses on reducing waste and inefficiency during production. The infrastructure will support data sharing with suppliers through ensuring demand-driven production, control of logistics costs, and zero inventories.

Centralized v. Decentralized Global Logistics Function

Logistics function is an important part of supply chain management since it entails planning, implementing, and controlling the efficient, effective flow and storage of materials, information, and services from the source to the point of consumption in order to meet the demands of customers. As a result, the effectiveness of supply chain management is strongly linked to the effectiveness of logistics management. However, in logistics management, business enterprises are constantly faced with concerns on whether to opt for a centralized global logistics function or a decentralized one.

Generally, a centralized global logistics function significantly differs from a decentralized one, which contributes to different results when applied in supply chain management. One of the differences between the two is that a centralized global logistics function requires the business enterprise to maintain a single logistics department, which handles the various logistics management activities for the whole business or company from the home office. In contrast, a decentralized global logistics function implies logistics management decisions and activities are made separately at the departmental or product group level. In most cases, these decisions and activities in a decentralized global logistics functions are made and carried out in varying geographic locations. Secondly, a centralized global logistics function focuses on efficiency whereas the primary focus of a decentralized one is customer responsiveness. Third, as compared to a decentralized global logistics function, a centralized global logistics function tends to carry fewer inventories because it operates in consolidated warehouses and logistic structures.

Risks of Maintaining Fewer Suppliers

Maintaining fewer suppliers or the few-suppliers strategy is one in which the buyer is seemingly weaker in relation to seller. In circumstances where this strategy is utilized, the seller company is likely to be the dominant player in the market since the buyer is weaker than the seller.… [END OF PREVIEW]

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