As every organization strives to satisfy their customer needs, the optimisation of their supply chain management, which deals with the total flow of materials from supplier to end users (Jones and Riley, 1985), is an essential part of tapping the full potential of a business and their product or service. In our following essay we will be stating what core competencies are in theory as well as defining the supply chain management.
Furthermore on the basis of veridical examples we will be identifying the core competencies of the different elements within the supply chain followed by demonstration how these have affected the supply chain design in total. Finally we conclude our work with a brief interpretation of the prior mentioned examples. “Supply Chain Management requires traditionally separate materials functions to report to an executive responsible for coordinating the entire materials process, and also requires joint relationships with suppliers across multiple tiers.
Supply Chain Management is a concept, whose primary objective is to integrate and manage the sourcing, flow, and control of materials using a total systems perspective across multiple functions and multiple tiers of suppliers. ” (Monczka, Trent, and Handfield, 1998) A basic Supply Chain consists of a supplier, a company and a customer, which are involved in an upstream and/or downstream flow of product or service, information and finances.
Furthermore the Supply Chain Management deals with the efficient integration of operation, distribution and service strategies to be able to produced and distribute the goods in the right quantities, to the right locations and at the right time with the right service. The operation element of the supply chain implies to the management of the materials as from the procurement of the raw material to the manufacture and production of the goods, which often goes through several tiers of suppliers.
The process of moving the merchandise from its production source to the end consumer is the distribution within a supply chain. As companies are required to adapt their distribution strategy according to the product or service nature as well as to their customer’s convenience, they will be choosing from the following design options: -Manufacturer Storage with Direct Shipping is the option where the product is shipped directly from the manufacturer to the end customer, bypassing the retailers, who undertakes the order process and initiates the delivery request.
All inventories are stocked by the manufacturer. The information flows from the customer via the retailer to the manufacturer, while product is shipped directly from the manufacturer to customers. -Manufacturer Storage with Direct Shipping and In-Transit Merge combines pieces of the order coming from different locations so that the customer only receives a single delivery. The information flow for the in-transit merge network goes from the customer via the retailer to the manufacturer, where the product flow is from the manufacturer via in transit merge by carrier to the customer.
-Distributor Storage with Carrier Delivery is where the inventory is not stored by manufacturers at the factories, however is held by distributors or retailers in intermediate warehouses and package carriers are used to transport products from the intermediate location to the final customer. Information when using distributor storage with delivery by a package carrier flows from the customer to the distributor or retailer. The product flow is from the factories to the distributor or retailers to the customers.
-Distributor Storage with Last Mile Delivery refers to the distributor or retailer delivering the product to the customer’s home and not to the usage of package carriers. Unlike package carrier delivery, last mile delivery requires the distributor warehouse to be much closer to the customer, therefore increasing the number of warehouses required. The warehouse storage with last mile delivery network information flow is from the customer to the distributor or retailer warehouse and the product flow from the factories to the distributor or retailer warehouse to the customers.
-Manufacturer or Distributor Storage with Consumer Pickup is the approach where inventory is stored at the manufacturer or distributor warehouse; however customers place their orders online or on the phone and then come to select pickup points to collect their orders. Orders are shipped from the storage site to the pickup points as required. The information flow in the network is from the customer via retailer to the factories, where as the product flow start at the factories via cross docks to the pick up sites, where the customers collect the products.
-Retail Storage with Consumer Pickup is the option where inventory is stored locally at retail stores. Customers either walk into the retail store or place an order online or over the phone, and collect the products at the retail store. The information flow is from the customer to the retailer and the product flow is from the factories to the retailers, where customers collect the products.
Finally the service which is offered to the consumers affects the perception of the whole product tremendously, therefore by providing the consumers with the right quantity of information and an attentive assistance the organisation can contribute a great amount to the customer’s overall satisfaction. 4) How core competencies affect supply chain designs On the basis of the following examples we will be demonstrating how specific core competencies of the chosen companies have been affecting their supply chain designs.
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