Evaluation of Supply Chain Management Theory in Practice
Introduction
Supply chain management can be described as the general oversight of the organization’s operations which ranges from information, materials as well as capital as they are transferred through a certain procedure from the products producers, to the brand's wholesalers than to the retailers which end in the hands of the customers (BIDGOLI, 2010, 112). SCM entails the integration and coordination of the procedure flow within the particular organization and amid corporations. SCM aims at decreasing the inventory usage as it utilizes the assumption that products can only be made available at the particular period when they are required. A chain supply, on the other hand, is referred as firm’s alignment in providing a corporation's services and its product to the market. Supply chain entails the operations that are mainly aimed at ensuring that the needs of the consumers are achieved. This process does not only entail the suppliers and the respective manufacturers but it involves, in general, the consumers, warehouses, retailers and the individuals that provide transport plus the consumers (BIDGOLI, 2010, 112). Supply chain mainly deals with distribution which performers materials procurement and ensures that these materials are transformed into finished goods and assist in transporting the goods to the respective consumers.
On the other hand, SCM deals with systematic and strategic business operations as well as tactics coordination. This is objected at developing the whole supply chain and the sole corporation development (BIDGOLI, 2010, 113). This involves the general coordination of inventory, situation, production and transportation amid the supply chain players in achieving efficiency and responsiveness of the certain market that the corporation is serving. Logistic differs from SCM as this involves the activities that happen within a single environment boundary and SCM incorporates logistic activities with those of supply chain like consumer services, finances fresh product growth and marketing. SCM mission is basically increasing throughput as it decreases the operating costs and inventory (BIDGOLI, 2010, 113).
Evaluation of Supply Chain Management Concepts
Partnerships
It is essential for an organization to determine their strategic partnerships with the appropriate suppliers in attaining a successful supply management. Corporations in the present manufacturing world have begun limiting the supplier’s number by impending review programs. Having a partnership with effective suppliers helps in consumer satisfaction as the suppliers work to satisfy the expectation of the consumers. The capability of an organization in developing close partnerships with suppliers and consumers as it makes the management of supply easier (Liu, Ke, Wei, and Hua, 2013, 1450).
Partnerships help in developing wallet share for an organization when the economy becomes tight. In this situation securing fresh accounts can be challenging even as fresh markets emerge. Due to this suppliers partnerships helps to manufacture corporation in developing their sales targeting efforts to the existing consumers and this implies that success is only achieved if the partnership adds value above the one subjected by the competitors. It is important to note that prices in any business are very crucial but prices competitions may not be solely able to maintain the consumers as with time they are bound to establish cheaper goods. This, therefore, implies that having good suppliers partnership would help in securing trending knowledge (Liu, Ke, Wei, and Hua, 2013, 1453).
The best management of supply must incorporate partnerships which are the general relationship between the consumers and the buyers which are mainly grounded on delivering value. This value can be defined as the combination of quality, time delivery, services as well as process management (Liu, Ke, Wei, and Hua, 2013, 1450). This relationship allows the consumers to develop their goods purchases from the corporation’s suppliers. This results in increased efficiency for the corporation and the competition ability is developed further. Partnerships as an SCM concept additionally help in lowering costs. This thus results by processes routing over the partnership existence. With better partnership inefficiency in operations is reduced greatly based on the good interactions developed between the involved parties. The cost of supply management is reduced as goods and services are only provided at the particular period when they are needed. The interpersonal relation in the given organization and beyond becomes effective simultaneously (Liu, Ke, Wei, and Hua, 2013, 1450).
From the recent studies, it is clear that partnerships in the context of SCM help in reducing indirect costs which mainly entail operation costs. The saved cost is then shared by the corporation, the suppliers and the consumers who receive goods at favorable prices. This transformation, therefore, develops the position of the supply chain in a competitive environment (Liu, Ke, Wei, and Hua, 2013, 1454).
Moreover, through relations innovation is achieved. It is well known that reducing the brand's cycles in an organization which is done by SCM requires the corporation to be highly innovative (KIRK, 2010, 702). Innovativeness requires knowledge, expertise, and huge finances. This mainly subjects increased pressure to the organization marketing operations and financial constraints. In addition, more pressure is subjected to the managers of the supply chain in the quest of developing fresh procedures which help in achieving consumer services and finances efficiencies (KIRK, 2010, 702). This can, therefore, be a risky and expensive thing for an organization to engage in and a partnership helps in sharing the involved risks as well as cost.
Partnerships help in achieving decisions quicker which helps in developing different processes before the competitors (KIRK, 2010, 703). The demands and the expectation of the consumers and the performance of suppliers as the collaboration help in better investigations of market trends. The lead time is reduced as the demands are evaluated and meet shortly. This helps in developing consumer’s loyalty. Unlike other strategies partnership can be utilized in different industries like servicing industry, manufacturing and so on. Partnership increases the return of inventory through lowering the level of the utilized inventory. This, therefore, implies that stocks are not warehoused and transported frequently which lowers the cost. Lower out of stock instances implies that partnership is beneficial in developing efficiency (KIRK, 2010, 704).
Outsourcing Operations
SCM concepts are mainly purposed at decreasing cost. Outsourcing is a procedure that is utilized by corporations in decreasing cost through transferring tasks portions to suppliers existing externally rather than completing the operations internally (BIDGOLI, 2010, 85). This strategy is termed as an effective approach to saving cost if utilized appropriately. Outsourcing as an SCM concept is linked to numerous benefits. First, it helps in attaining flexibility, in that with the growing economic world uncertainty companies are highly required to develop their capabilities. But this is always challenging based on the existing laws in the context of labor as the lawsuits for employees are normally high. However through outsourcing corporations are fully able to eradicate the risk which allows the businesses to quickly adapt to the rising demands. The second benefit is efficiency, outsources assists companies basically in the context of getting quick services without much hustle (BIDGOLI, 2010, 85). This is mainly because corporations sometimes utilize too much time and resources in getting an expertise for a particular inside corporation service.
Outsourcing helps in elimination negative employee interactions which arise after the dismissal of an employee. Outsourcing helps in offering relief to the organization as the contract helps to ensure that conflict does not appear (WANG, 2012, 53). This is in addition beneficial as it does not result in poor performance that may result to bad relations within an organization. Outsourcing therefore helps in saving resources and time which is then utilized for the betterment of the organization, this is mainly because finances and expertise are highly required in the business world today and resources should be focused on the important activities. Risk management is an additional benefit that is associated with corporation’s outsourcing. When an organization is involved in providing or developing a fresh product having workers from developed states offers less in the context of risk management. This is in the case that a product fails to respond well to a market that is open. Therefore having workers within the offshores an organization can be able to tune operations quickly in meeting the rising demands (WANG, 2012, 53).
Outsourcing is additionally helpful in developing services (WANG, 2012, 54). This is mainly because the corporation is not required to spend much resources time and finances offering training services to service teams while they hold the opportunity of hiring service professionals to accomplish the particular tasks at a lowered cost. The most tasks that corporations opt to outsource are HR roles, IT conduct as well as accounting services. This is mainly because the tasks require high expertise and an employee internally tends to be expensive while compared to outsourcing those services (WANG, 2012, 56).
Outsourcing is helpful in breaking taxes as when business are addressed from overseas corporations attain the capability of attaining an increased ability to pay lower taxes. Some countries overseas offer less corporate taxes which help corporations in saving costs. In addition, the regulatory costs are decreased (WANG, 2012, 56). Outsourcing does not only help in lowering salaries costs but also regulatory costs. This is mainly because programs such as Medicare, social security as well as employment insurance are not involved. This means that the business operates at a lowered cost. Lastly, outsourcing helps the business in centering on core functions. Outsourcing provides the business with adequate time to focus on the most beneficial roles which help in developing the flow of work thus permitting quick completion of projects (WANG, 2012, 56).
Third-Party Logistics
A provider of third party logistics is described as a firm in which corporations can be able to attain or outsource all or several functions of supply chain management. An appropriate third party logistics giver is the one that has the capability of scaling operations, transporting services and warehousing services to match the needs of the corporation (MÁRQUEZ, 2010, 68). Opting for third party outsourcing is a good choice business based on different rationales. this is mainly because logistics third party can help in enhancing efficiency, saving finances and permitting corporations on focusing on the primary sections of a business. Third party logistics gives the corporation distinct kinds of value services which involve network analysis, customized services, optimization of network and vendor compliance management in association with logistics professionalism. In the context of SCM expertise operations and warehousing are the main services that are offered by a logistics third party provider. This can additional facilitates transportation and marketing the brands manufactured by a corporation. This concept is essential as it helps an organization in developing revenues, increasing efficiency and developing success and the level of profitability (MÁRQUEZ, 2010, 69).
Logistics third party is associated with three main benefits which are suitable for several businesses (IRMA, 2012, 45). The first benefit is basically saving costs. Based on research most of the clients who utilizes logistics the third party generally saves finances. This is mainly because logistics is the center of third party expertise and their services are always superior which makes corporations to opt for the services. In the real world, most corporations may not have the time of the necessary professionalism to update their information technology systems. Logistics third party is professional in the sector and they hold the capability of meeting all the manual necessities at a reduced cost and less period time. Logistics third party assists a corporation in becoming more strategic by lowering the cost of delivery for the corporation which helps in developing management and lowering the cost of inventory (IRMA, 2012, 45).
The second benefit of logistics third party as an SMC concept is lowered commitment of finances (IRMA, 2012, 47). When an organization focuses on logistics functions outsourcing from a logistics third party the company holds no necessity of worrying in regard to administering and maintaining transportation as well as the system of warehousing. The party helps in administering transporting, warehousing associated operations in an effective way more than the corporation would work on it on as well as decrease cost of operation. This is mainly because the corporation requires less cost in getting logistics services from the corporation outsourced services which are a good benefit. The third benefit of logistics third party SCM concept is that it gives a corporation adequate freedom of focusing on competencies (RAY, 2011, 103).
Operating a managing big business can be challenging and this, therefore, makes it challenging for an organization to have the opportunity of holding expertise in each field that is required. This is an expensive strategy because the professional employee is expensive to maintain. However, this hustle is not present when the option for logistics third parties because they are expertise with more developed experience at a lower cost. This, therefore, helps in freeing the corporation management and most employees in prioritizing to use the free resources, time and efforts on their particular professionalism areas. Instead of utilizing the strategy of diverting personnel’s, assets , resources and finances in administering logistics operations the resources are then utilized in perfecting the operations of the business (RAY, 2011, 103). For most corporation logistics and supply operations are the most significant and therefore outsourcing this helps in attaining operations efficiency as well save cost. The concept helps organizations in maximizing operations benefits by attaining better operations.
Logistics third party concept is best when utilized in a highly competitive market and for big firms. This concept helps in sharing major responsibilities which help in keeping the consumers happy and satisfied. This helps in attaining a competitive advantage since the corporation is able to acquire information in regard to the market. In addition, the strategy requires huge resources which only favor huge firms with adequate capabilities to focus the resources on outsourcing. This approach is not favorable for an innovative corporation because this may result in loss of ideas as the corporations necessitate developing the ideas internally (RAY, 2011, 104).
Whole-Chain Planning
Whole supply chain management can assist in transforming the supply network into a more developed and adaptive strategy (BIDGOLI, 2010, 86). Whole chain planning helps in increasing visibility in the management supply chain which helps the corporation‘s responsiveness. This helps the corporation in sensing changing quickly and responding to them responding. This strategy is, therefore, effective in capitalizing the occurrence of opportunities. The concept of complete chain planning additionally equips the business in a manner that collaboration and effective communication is achieved. Complete chain planning enables the business in adopting and meeting the needs and demands of consumers. It is, therefore, easy for an organization to monitor environment compliance of business laws (BIDGOLI, 2010, 86). This helps in developing actual time intelligence of the business as well as transparency. This reduced the amount of time that is necessary for the production of goods. In the context of SCM, the operational expenses are lowered at a high rate as it develops a working time frame which begins with raw materials procurement, production, and transportation of the particular goods. Improved operations orders, production as well as transportation help in developing the general operation of the organization. This is achieved through lowered costs and quality development which help in developing coordination. Through a close connection with associates in business the corporation, in general, can be able to align its strategies as well as priorities to develop the entire performance of the organization (BIDGOLI, 2010, 87). This is additionally beneficial because it helps the business in overcoming uncertainties as they are highlighted before.
The general success of chain management is not necessarily achieved in administering supply chain but it is additionally attained through the concepts of optimization as well as general planning (Seuring, 2013, 1514). This is mainly because the supply chain is the combination of the different aspects and functions of the business in the quest for achieving success. Planning supply chain helps in optimizing the benefits as the involved risks are managed and the costs of engaging in different operations are lowered generally. This, therefore, provides the business with the opportunity of integrating different concepts that are required in attaining business success. Planning is the procedure that aims at offering support to SCM decisions through providing different future options by opting for the best strategies through the given alternatives. Full supply chain planning generally involves integral planning which is mainly centered on the identification of supply issues thus developing solutions in numerous options. Optimization is engaged in planning and this helps through ensuring that solutions are provided by in a limited form that suits the corporation (Seuring, 2013, 1516).
Portals and Virtual Organization
Virtual organization refers to a corporation that utilizes distributed and disconnected sanctions including the employees and it requires the use of IT in supporting the tasks as well as the communication strategy (Stadtler, 2015, 11). This does not, however, represent the attribute of the organization as it is accounted indistinct nature. A portal organization is the one that utilizes a customized working for the employees as operations. The virtual and portal organization is advantageous because they help in saving costs. This is mainly because the organization is able to eliminate different costs that are involved in operations. The services are outsourced to those regions that hold fewer costs. This, therefore, reduced the associated costs of high risks. This concept is additionally beneficial because it helps in leveraging international attitudes. This concept provides the organization with an opportunity for outsourcing talent from distinct regions. This helps in collecting specialists and experts internationally who work together for the success of a project. Innovation is therefore enhanced in the procedure based on increased knowledge achieved through sharing thoughts. Marketing period is lowered as different teams are assigned distinct tasks which are aimed at attaining an efficiency of the corporation (Stadtler, 2015, 22). Less effort to market the corporation is thus required as through virtualization awareness is developed adequately. This helps in developing opportunities which are essential in achieving technological advances.
Portal organization as an SMC concept is beneficial because as it increases procedure efficiency. This is the daily activities that are encountered every day in a business. This process involves management as well as customer services (Stadtler, 2015, 26). This helps in hiring individuals who are highly qualified. Visibility is developed gradually as the business is not required to wastes resources which help in cost efficiency. This additionally results in innovation through the combination thoughts as well as ideas which help in technological development. Through this, the business is able to develop fresh products at a favorable cost. Most corporations are utilizing portal as business sophistication as it helps in fueling growth as it reduces the occurrence of productivity issues. Those kinds of the organization are essential as it suits the running operations of a corporation which sends growth uniformly to SCM operations as the level of profitability is being developed simultaneously. A portal organization is beneficial in an addition as it encourages employee’s engagement in decisions development. In addition, communication is developed based on improved management and transparency growth (Stadtler, 2015, 27). Target access is increased based on the capability to adapt to changes and develop brands to suit the different demands.
Vendor-Managed Inventory
Vendor inventory management is the relationship in any business in which the distributor or the main manufacturer takes over the inventory management for either a wholesaler or a retailer (Stadtler, 2015, 24). With the utilization of communication electronic approaches, the product’s vendor is able to administer orders and offer fulfillment for the orders that are also involved in the particular distribution chain. VMI exists in two types that are consignment and managed types of sales. The consignment kind is the sales where the particular vendor holds the power of retaining a products ownership until it has been sold to the end consumer. This implies that after the sales the retailer gets a price commission and the rest of the money is sent to the vendor. VMI is associated with distinct benefits; first, it results in a developed consumer service. In this context, an essential feature of VMI is developed communication medium. This is mainly because the involved manufacturers, retailers and wholesalers and the distributors have to build strong systems of communication through the utilization of developed software. This, therefore, offers the consumers and the vendors the necessary data that is required in running the operations. In addition to developed communication, VMI as an SCM’s concept helps in bettering consumer’s services, increase the quality of the produced goods, decrease the utilized coast and develop the rate of sales (Stadtler, 2015, 17). Consumer’s services are developed as the corporation is able to respond correctly and swiftly to the demands and expectations of the consumers.
VMI additionally assists the corporation in attaining better planning strategies. In developing adequate and appropriate associations through VMI it is necessary for the organization to have an adequate data amount that is gathered from their consumers (STADTLER, KILGER, & MEYR, 2015, 13). This information is utilized in inventory management plan prime. This helps in accounting for supply planning as well as management. VMI helps in attaining business alliances that are strategic as it benefits the relationships of an organization amid more than a single consumer while reducing cost. This additionally enables the organization to have adequate materials that are necessary for production based on the present market needs. This, therefore, reduces costs as waste is reduced because products are developed based on the needs of the consumers. The benefit is reduced costs of sales in that storage develops product cost. Storing products as they await an order increases cost and the consumers are then required to incur a cost as the products have to be stored as they await sales. These kinds of the costs are therefore eliminated with the utilization of VMI (STADTLER, KILGER, & MEYR, 2015, 14).
Moreover, VMI results in advanced forecasting. This is mainly because it helps the corporation in gathering data from the surrounding (STADTLER, KILGER, & MEYR, 2015, 16). Reliable forecasting primarily depends on the amount of data that has been gathered. With more data, the corporation is able to analyses the needs of the consumers, market trends, demand curves and the general existence cycle of products. Through the utilization of the historical data well-developed assumptions are developed which helps in gaining competitive advantage. VMI helps in gathering large and detailed data which is beneficial as it improves forecasting capability. Franchising verification is another benefit of VMI. Franchising helps the business in gaining full control of inventory throughout the distribution chain. This creates an opportunity for increasing flexibility and quality products. Product marketing is additionally affected as the distribution chain attains efficiency (STADTLER, KILGER, & MEYR, 2015, 18).
Electronic Information Integration
SMC offers businesses with the opportunity of decreasing cost and developing productivity simultaneously. This can be achieved through the means of newer technologies utilization which helps in eliminating manual procedures as they permit the corporation to spend decreased time period on tasks and more period time on things that are beneficial such as developing consumer’s services (FARAHANI, REZAPOUR, & KARDAR, 2012, 76). Electronic data integration cannot be termed as a perfect strategy of reducing cost, increasing efficiency and developing productivity as it has its individual flaws. However, this strategy is associated with numerous benefits in the context of SCM. It offers the business with distinct forms of attaining efficiency. In the present business world, electronic order request does not necessitate several days to be completed. Businesses are currently faced with much pressure of developing services and brands while at the same time they reduce the associated coast and develop productivity. In business, there is a growing necessity of achieving speed and accuracy (FARAHANI, REZAPOUR, & KARDAR, 2012, 74).
Electronic data integration can benefit the business financially. This helps in saving cost as it requires the number of employees that are required to keep the data as well as the rate of paper usage which is associated with high cost. In addition, it helps in achieving accuracy, reliability, and speed in operations (FARAHANI, REZAPOUR, & KARDAR, 2012, 78). Speed and accuracy play a significant role in attaining business success. This is because the two aspects help in ensuring that efficiency is achieved easily. Transactions that requires more time are completed within a very short period which offers a wider opportunity of responding to the needs of consumers in a faster mode. Moreover, business efficiency is also enhanced as the paper tasks are automated and this, therefore, implies that the employees can focus on other beneficial tasks. This, therefore, acts as a form of motivation which impacts production positively.
More than fifty percent of the required human efforts and resources are saved. Visibility is additionally enhanced by that electronic integration of data permits the business to attain visibility that is real of the status of transactions. This process, therefore, results in a speedy mode of developing decisions. In addition, the responsive capability of the organization is developed and this helps in meeting the demands of both the consumers and the entire market. This provides the business with a single communicating language which facilitates understanding with international partners (FARAHANI, REZAPOUR, & KARDAR, 2012, 78). The last benefit is that electronic integrated data helps in developing market competitiveness as the needs of the consumers are addressed appropriately.
Some of the above approaches such as outsourcing and VMI are mostly appropriate for manufacturing, large corporation and servicing business. If such approaches are utilized in other industries that can result in incurring huge costs and the achieved benefits may be lower as compared to the utility in a manufacturing industry. In the context of the approaches competitive requirements provides an adequate explanation of the approaches. This is mainly because the approaches are utilized in attaining competitive advantage in the market.
Future Research Recommendation
Based on the research the findings suggest that more investigation is conducted on the SCM’s concepts barriers in achieving efficiency. This will help corporation in assessing the risks before engaging in the implementation of the approaches. In addition, further studies should be done in establishing how SCM can help businesses in reducing costs without affecting the actual operations of the business.
References
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