Case Study: Supply Chain Management as a Supplier

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Supply Chain Management

As a supplier, which factors about a buyer (your potential customer) would you consider to be important in setting up a long-term relationship?

The most critical of all is trust, and there are many aspects to evaluating a buyer to the extent of their trustworthiness. Often Supplier Relationship Management (SRM) and Customer Relationship Management (CRM) strategies rely on the measurable factors in determining which buyers are the best fit for their products or services, and the level of financial viability they have (Hvolby, Trienekens, 2010). Commonly used measures of financial stability including Dun & Bradstreet credit reports, risk reports on their financial stability and credit worthiness, and payment history are all essential (Jacobs, Chase, 2010). The many measurable and quantifiable factors need to be balanced with the qualitative as well (Jacobs, Chase, 2010).

Often the qualitative can outweigh the quantitative, especially when a business has significant growth potential yet has not been generating revenue for an extended period of time. This often happens with start-ups and entrepreneurial ventures. The factor of how well the buyer's product vision and strategy align with the supplier is critical. This indicates how well the buyers' and supplier's future growth will complement each other's over time (Shang, Lin, 2010). Another qualitative factor is how well the buyer and supplier communicate across organizational boundaries. Organizational leadership, attitudes towards accountability, performance and measuring results must be comparable for a supplier and buyer relationship to be successful. The bottom line is that evaluating a buyer is a multifaceted decision, which needs to include both the highly measurable and the subjective. The best decisions on which buyers to work with are often the result of this type of qualitative and quantitative analysis.

References:

Hvolby, H., & Trienekens, J.. (2010). Challenges in business systems integration. Computers in Industry, 61(9), 808.

Jacobs, Robert, & Chase, Richard. (2010). Operations and Supply Chain Management. Upper Saddle River, NJ: McGraw Hill Higher Education. 13th Edition.

Shang, S., & Lin, S.. (2010). People-driven processes in customer relationship management. The Service Industries Journal, 30(14), 2441.

2. Discuss the basic differences between the mean absolute deviation and the standard deviation.

A standard deviation defines the level if dispersion throughout a given data set or population and is often applied to a given statistical sample. The mean absolute standard deviation is defined as the sum or mean of all deviations throughout a population. More specifically the mean absolute deviation defines the amount of dispersion around the data's mean (Wallstrom, Segerstedt, 2010). Of these two measures, the mean absolute deviation is the far less used by statistical practitioners in businesses, with academic researchers using the concept the majority of the time. The one exception is in measuring the performance of bond markets and debt-based investments (Zabolotnyuk, Jones, Veld, 2010). The mean absolute deviation can be applied with greatest accuracy to interval-level data as well.

Standard deviation is used far more prevalently and throughout many studies within business, as this concept is taught in many of the fundamental statistics courses (Jacobs, Chase, 2010). Standard deviation can also be reliably applied to ordinal, interval and ratio-level data as well, providing greater insight into its dispersion around a mean value.

In conclusion, the mean absolute deviation is used for more advanced analytics where the summary of dispersion measures around a mean is relevant. This would be the case in multi-segmented studies where multiple measures of deviation need to be aggregated or consolidated into the analysis. The vast majority of studies rely on the standard deviation to communicate dispersion of data around the mean, connoting the level of heterogeneity throughout a data set.

References:

Jacobs, Robert, & Chase, Richard. (2010). Operations and Supply Chain Management. Upper Saddle River, NJ: McGraw Hill Higher Education. 13th Edition.

Wallstrom, P., & Segerstedt, a.. (2010). Evaluation of forecasting error measurements and techniques for intermittent demand. International Journal of Production Economics, 128(2), 625.

Zabolotnyuk, Y., Jones, R., & Veld, C.. (2010). An Empirical Comparison of Convertible Bond Valuation Models. Financial Management, 39(2), 675.

3. Describe the differences between functional and innovative products.

The greatest difference between a functional and innovative product can be attributed to each product's approach to meeting needs in the market. A functional product is often designed as a replacement or substitute for any existing product or solution, while an innovative product is designed to completely disrupt a market or create a new one (Bertoluci, Millet, 2009). A functional product in the personal music player space would be a cost-reduced CD player while an innovative one would be a video-enabled iPad or iPod. The difference is that the innovative product completely disrupts the current market, nearly always expands it, and acts as a catalyst for new business models as well. In the case of the iPod and iPad the new business model is the pervasive number of music titles, many forms of video content, and the content providers who increasingly are looking at Apple's MP3 players as a potential revenue source for licensing their songs and digital content (Bertoluci, Millet, 2009).

Functional products are also deliberately be created to cause price competition and market consolidation as well (Jacobs, Chase, 2010). This is the strategy at the low-end of the automobile markets, where price and minimal levels of features are expected, exemplify this type of product strategy. The functional designs often lack differentiation at the feature or benefit level, relying in price and availability alone to compete. Due to this attribute of functional products, they often become commoditized rapidly. Innovative products however defy price competition and actually support price increases, capitalizing on the inherent differentiation and unique value they deliver based on their design (Bertoluci, Millet, 2009). The comparison of a standard personal CD player made in Taiwan vs. The latest generation of the iPod is a case in point.

References:

Bertoluci, G., & Millet, D.. (2009). Functional product enrichment and supply chain disorganisation: two barriers for sustainable design. International Journal of Product Development, 7(1/2), 149.

Finkle, T., & Mallin, M.. (2010). STEVE JOBS and APPLE, INC. Journal of the International Academy for Case Studies,31-40.

Jacobs, Robert, & Chase, Richard. (2010). Operations and Supply Chain Management. Upper Saddle River, NJ: McGraw Hill Higher Education. 13th Edition.

4. Distinguish between pure and mixed strategies in production planning.

Pure strategies of production planning are based purely on production efficiency and attaining a specified run rate to gain economies of scale during the manufacturing process (Jacobs, Chase, 2010). These strategies also look to gain economies of scale and eventually achieve the experience effect, or an accumulative reduction in costs with the doubling of production volumes over time. Most often pure production strategies are relied on in process-centric industries where there is little if any product variation.

When there is significant variation in product attributes and characteristics, and demand for a product varies significantly, many companies will rely on mixed strategies for production planning (Verdouw, Beulens, Trienekens, Verwaart, 2010). By definition, a mixed strategy combines the attributes of an active and passive strategy to attain the highest level of accuracy and efficiency possible. The active strategy components of handing fluctuations in product orders through demand management, applying pricing strategies to optimize gross margins, and the development of counter-cyclical products are included as the foundation of a mixed strategies. The use of demand sensing and order sensing are also prevalently used to attain insight into how best to manage inventories (Jacobs, Chase, 2010). The passive strategy components of managing to inventory plans and predetermined forecasts is also dominant in a mixed strategy (Bard, Nananukul, 2010). Often when product strategies are designed to support both make-to-stock and build-to-order workflows for customer requirements, mixed strategies become dominant.

References:

Bard, J., & Nananukul, N.. (2010). A branch-and-price algorithm for an integrated production and inventory routing problem. Computers & Operations Research, 37(12), 2202.

Jacobs, Robert, & Chase, Richard. (2010). Operations and Supply Chain Management. Upper Saddle River, NJ: McGraw Hill Higher Education. 13th Edition.

Verdouw, C., Beulens, a., Trienekens, J., & Verwaart, T.. (2010). Towards dynamic reference information models: Readiness for ICT mass customisation. Computers in Industry, 61(9), 833.

5. List the type of stakeholders that would be considered in a payoff analysis.

The internal and external key stakeholders that need to be considered in any payoff analysis include the management teams, employees, and supply chain management cross-functional teams who include finance and accounting staff as well (Jacobs, Chase, 2010). External stakeholders including the institutional investors, individual investors and their shared expectations of the ROI of the payoff need to also be considered as well. Payoff analysis also needs to take into account vendors and their maintenance and support contracts, and the resulting costs associated with these agreements (MacMinn, Han,1990).

Payoff analysis impacts the internal stakeholders the most however, often changing workflows and the approach to completing tasks daily in an organization after a payoff is completed (Aragon-Correa, Rubio-Lopez, 2007). This is over a longer-term time horizon as a payoff is completed and an asset is no longer used. There is often… [END OF PREVIEW]

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