Research Paper: Supply Chain Strategy

Pages: 9 (2689 words)  ·  Bibliography Sources: 4  ·  Level: Master's  ·  Topic: Business  ·  Buy This Paper

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[. . .] The negative effects seen by doing this means problems all throughout the supply chain and costs that will increase (Heizer & Render, 2010).

D. Concepts and Methods

Having good communication at every level of the supply chain is the most important thing the company can do. This should be the first step, as it will help to ensure that supply chain management is integrated and effective. There are specific methods to use in order to create good communication, such as Collaborative Planning, Forecasting, and Replenishment (CPFR). (Heizer & Render, 2010). That allows all the members of the supply chain to share plenty of good information so they are better able to manage their inventory through collaboration with one another (Heizer & Render, 2010; Jacoby, 2009). This is very beneficial to many companies, and will help the new power tool company because there will not be any excess inventory. That means lower costs, as well.

Reducing lot size and using blanket orders are other good ways to reduce costs. The power tool company can be helped by both of these, through keeping inventory moving so they do not have to store it and through getting items shipped at a previously agreed upon price -- but not until they are actually needed. That helps a company figure costs, but does not require it to store excess inventory (Heizer & Render, 2010).

E. Three Risks

1. Process- One of the risks associated with process would be the availability of raw materials that are used to produce the power tools. It is possible to mitigate this risk by locating different sources that can supply the raw materials the company needs. By staying in communication with a number of suppliers, the company can make quick choices in the event of a problem with the main supplier.

2. Control- A control risk could involve inferior products. If these fail to meet standards of quality but still get shipped out to customers, it could be disastrous for the company. Mitigating this risk can be done by a good quality control program that tests every product for proper assembly and functionality.

3. Environmental- An environmental risk that could be considered would be a downturn taken by the economy, as that could cause sales to decrease. There are ways to mitigate this risk, though, like offering a lower priced line of tools that would be more affordable when the economy is weaker. The workforce could also be cut back when the demands for products are not strong enough, and business loans are available to get through very lean times until adjustments can be made.

F. Organizational Structure and Components

1. Functional organizational structure-

The new power tool company will have a functional organizational structure where the manufacturing function is at the top. Operations, Finance/Accounting, and Marketing functions will be found underneath, as seen in the figure here:

The operations function would deal with facilities, production, inventory control, quality control, management of the supply chain, design, engineering, and analysis of processes (Heizer & Render, 2010). Under the finance or accounting function would be seen disbursements and credits, management of funds and requirements for capital (Heizer & Render, 2010). Marketing would watch over sales and promotion, advertising, and research as to the viability of the market (Heizer & Render, 2010). That allows the company to operate smoothly and keep functions separate from one another.

2. Organizational Components of the Operations Function-

The operations function includes the facilities department. This would focus on new construction and any maintenance required, as well as inventory control and production (Heizer & Render, 2010). Quality control is also found under the operations function, and ensures the materials that are received from suppliers are good quality and the products being shipped out meet company standards (Heizer & Render, 2010). Supply chain management also falls under the operations function, as does design -- where new products are created to fit customer needs. Engineering is equally valuable, since it maximizes efficiency for the company and provides adequate and properly designed workspace (Heizer & Render, 2010). The equipment has to run properly and efficiently, which can be done through the process analysis department (Heizer & Render, 2010).

G. Strategic Operations Management

Various decisions have to be made through strategic operations management to keep a company on the right track (Heizer & Render, 2010). The first of these is the location of the sales office and manufacturing facility. Labor and utilities should be reasonable in the new location, which can give the new power tool company a great advantage from the beginning. Market research can also provide insight into where the sales office should be located. Power tool design and cost also require market research. From that point, the wages and benefits that will be offered to employees must be determined. Good packages mean the recruitment and retention of good employees (Oliver & Webber, 1992; Jacoby, 2009). That is something to carefully consider when it comes to proper operations.

G1. Mass Customization

The new power tool company should adopt mass customization so it can focus on the customers and their power tool needs. This allows customers to order products with custom options (Heizer & Render, 2010). The versatility of this is something the company will have, and can be an important tool in gaining market share. When the manufacturing facility is designed, this customization plan should be kept in mind. It will save money in the end, because things will not have to be changed later. Listening to customers and providing them with what they want is another way to see a lot of success with a new product (Jacoby, 2009) If a demographic of customers wants power tools with lights, for example, then at least some of the company's power tools should have lights. Give the customer what he or she needs, and loyalty will be gained (Heizer & Render, 2010; Oliver & Webber, 1992).

H. Recommend actions to improve cost effectiveness for each of the following:

1. Manufacturing Facility- The best way for cost effectiveness to be improved for the manufacturing facility is to implement both work cells and lean manufacturing. Work cells raise productivity, make the environment more collaborative, and lower costs (Nagurney, 2006). The return on investment would also be better, as lean manufacturing would make things more efficient and keep storage of raw materials to a minimum.

2. Supply Chain- The best way for cost effectiveness to improve for the supply chain is through blanket orders. With these, the company could order only what they needed but would also be able to anticipate big orders and get more supplies if necessary. By establishing good communication with suppliers, the company will be much more likely to get what it needs, operate successfully, and keep customers happy. No one in the supply chain should ever be left in the dark.

References

Heizer, J. & Render, B. (2010). Operations management (10th ed). NY: Prentice Hall.

Jacoby, D. (2009). Guide to supply chain management: How getting… [END OF PREVIEW]

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