Supply Chain Practices - Essay Example

Student Name: Tutor: Title: Logistic Course: Logistic Introduction Logistics/supply chains describe the networks of companies that work in collaboration with each other in coordinating the actions that deliver a particular product in the market. Traditionally logistics revolves around activities such as distribution, procurement, maintenance, as well as inventory management. On the other hand Supply Chain Management takes into account all traditional logistics and further encompasses other activities like new product development, marketing, customer service and finance (Estampe et al, 2013). Supply chain performance is that ability of a supply chain in delivering the right product to the correct location at the specified time and at the lowest cost. Performance measurement has to be adapted to the particular needs of each supply chain. Careful selection of indicators together with their dimensions assist in identifying problematic areas and it is important in managing the organizations. At the primary level continuous improvement involves improving organizational performance. The small incremental improvements will eventually result into operations and processes that are highly effective and efficient. Incremental improvements lead to best practices and reduce challenges that come with change management. This paper provides an evaluation of recent literature of supply chain performance indicators and supply chain practices. Supply chain practices Information sharing is one of the major changes that happened in the evolving digital economy in the supply chains of both e-commerce and traditional companies. In many cases information technology has created a platform enabling partners to share information, trade goods, as well as integrate their processes. This has resulted in the transformation of inter-organizational dynamics and has resulted in channels that are more efficient (Soosay, Hyland & Ferrer, 2008). Electronic data integration accompanied with the automation of business practices has led to cost being driven downwards and increased sales through satisfying the consumer needs efficiently. This is the information age where information available has been increasing at a very high rate. Information explosion has provided decision makers in supply chains with opportunities and possibilities for improvements in the supply chain efficiency. Information offers the decision maker the chance to get ahead of competitors and the power to navigate in a complex environment (Beamon & Balcik, 2008). Companies share information and collaborate on promotional activities, forecasts and production strategies. Information plays a pivotal role in supply chain management. Procter & Gamble has a business relationship with Wal-Mart that enables information sharing to take place for the benefit of the partners. Retailers share with suppliers’ point-of-sales, forecast data and inventory levels, and information regarding promotional events. With information on inventory levels and current demand, suppliers are able to better schedule and forecast their production-inventory practices and offer better service to customers. Supply chain performance depends largely on how its members are coordinating their decisions. Information sharing is the basic form of coordination within the supply chains. There are various emerging technologies that are available for connecting members of supply chains in support of information sharing. Advancement in corporate information technology like Enterprise Resource Planning systems permit to be shared seamlessly between members of a supply chain (Jaber, Bonney & Guiffrida, 2010). The advantages of sharing information among the members of a supply chain are not usually the same. The benefits depend on the kind of the supply chain structure adopted as well as its operational characteristics. There have been studies that have been carried out on different operational characteristics and structures. The members at the supplier’s end are referred to as upstream members whereas members at the manufacturer’s end are described as downstream members. In case members of a supply chain share information, the downstream members are able to share information with the upstream members and vice versa (Beamon & Balcik, 2008). A common Illustration of how downstream information is shared is in Vendor Managed Inventory (VMI) relationships whereby grocery retailers share end-customer point of sale demand data with suppliers who are upstream members. Information sharing is very important to effective coordination within the supply chain. Information sharing practices enhances supply chain performance. Information sharing plays an important role in reducing the bullwhip effect. Bullwhip phenomenon refers to the case that ordering information flow can be distorted in a way that the variation of orders tends to increase as one move up the supply chain. The phenomenon was first observed within practice by companies like Hewlett-Packard and Procter & Gamble. Bullwhip effect is crucial since order variability means that the firm has to increase safety stock levels for the purpose of avoiding service levels decrease (Carvalho & Azevedo, 2012). Information sharing makes it possible for companies to arrive at better decisions hence leading to better resource use and lowering costs of the supply chain. Companies have to carefully determine the partners of supply chain that they have to be closely integrated. The degree of integration depends on various aspects like the complexity of the products, corporate culture and firm capabilities. Information sharing forms the base or foundation of supply chain integration. The level of integration is directly related with the decisions of the type of information to be shared and the means of sharing it. Strategic supplier partnerships are important as supply chain practices. Supply chain management entails challenges like developing trust as well as collaborating amongst the supply chain partners. The management of supply chain involves identification of Best practices that facilitate supply chain process integration and alignment and implementing successfully collaborative information systems driving performance, efficiencies, as well as quality within the supply chain. Supply chain partnerships defines the long-term strategic coalition of firms within a supply chain in facilitating collaboration and joint effort in value creating activities like product development, research, marketing, sales and distribution with the purpose of enhancing the benefits to all partners through reduction of cost of acquiring and disposal of products. It is intended to influence the operational and strategic capabilities of the participating partners and assist them in achieving ongoing benefits. Strategic supplier partnership enables companies to work effectively with few selected suppliers who are willing to work together for the success of their products (Carvalho & Azevedo, 2012). Strategic supplier partnership within supply chain management has been found out to yield organization-specific advantages with regard to financial performance. Strategic partnerships between manufacturers and suppliers have a significant influence on the performance of the supply chain. Various components of the supply chain management have an impact on aspects of competitive advantage. Supply chain partnerships are regarded as resource-intensive investments that entail both strategic and financial risks. Establishment of supply chain partnership entails investment in partnership assets like warehouse locations, plants, tooling, machinery, and specialized facilities (Estampe et al, 2013). The partners have to invest in the infrastructure for the purpose of supporting the partnership objectives and goals. The partners can enhance the quality of partnership outcomes through continuously working on enhancing the operational, strategic, and cultural fit among the partners. Information sharing as a practice is enhanced through strategic supplier partnerships. Strategic supplier partnership within the supply chain management offers a vision that focuses every member within the organization on quality improvement (Beamon & Balcik, 2008). Strategic supplier partnerships develop mutually beneficial relationships in the long-term are regarded as a means of lessening risk and developing supply chain excellence. Giant companies like Procter & Gamble and Wal-Mart have entered into strategic supplier partnership in order to enhance supplier chain performance and attain efficiency. Innovation is an important ingredient for business performance. Innovations are an important source for competitiveness for organizations. Supply chain management practices enhance innovation in business by integration and coordination of tasks as well as activities through the chain in facilitate the design, delivery and development of solutions. Innovation is described as significant changes in processes and products together in the new product development, processes and services within the market (Louw & Goedhals-Gerber, 2014). Innovation is regarded as an enabler in creating business competitive advantage. Companies focus on the satisfaction of demand of customers of qualitative and innovative products and services through the use of technology-supported as well as non-technology-supported innovative methods in supply chain practices. The use of technology in improving processes is very crucial and companies are using technology to gain competitive advantage. Innovation captures value from innovative methods within supply chain practices and it is important topic among researchers and practitioners. Innovation has led to enhanced service delivery to customers. Firms are thriving in developing and testing new ideas, services and products. Supply chain innovation is crucial in making sure that is effective service delivery. One way of innovating is thinking about ones, customers and suppliers as partners (Pereira, 2009). Coordination as well as collaboration in the supply chain is important in the innovation process. Collaborative management of internal, downstream and downstream and their inclusion in the supply chain management become very crucial for customers’ value creation to happen. Assessing the performance of these kinds of innovations is a challenge that companies have to overcome in designing and ensuring their survival and competitiveness. Some researches within the field of logistics and supply chain management hugely ignore the concept of innovation. Many practices of supply chain management have developed within corporations. Product and technology innovations have been at the forefront in creating business competitiveness (Lotfi, Sahran & Mukhtar, 2013). The new practices are part of the continuous improvement as well as value creation policy for customer and increased supply chain performance. Innovation is the financial and economic translation of an invention. Innovation is significant when it has been processed through production and marketing tasks and then diffused within the marketplace. The innovative capacity of any organization deploying innovative supply chain practice is the translation of their ability to implement and adopt new ideas, processes or products successfully. Every organization has to question is capacity for innovation. Evaluation performance of innovations is important for organizations (Pereira, 2009). Majority of the innovative business models are founded on the perception that collaboration will yield better results for every partner involved. Fundamental requirement for attaining the full influence of innovative business innovations is creating trust between the organizations involved. Execution of an innovation that is inept can result into costly missteps especially in the present fast-paced competitive environment. The strategy by Zara to co-locate its production and design centers in close proximity to the end markets resulted in efficiencies that made the apparel company to process in a quicker and more responsive way for sustaining a supply chain innovation. Concurrently the coupling of high-automation, fast-cycle time with a vertically integrated supply chain was a representation of a disruptive supply chain innovation (Carvalho & Azevedo, 2012). The resulting model challenged the dominant design of remote manufacturing, low automation, and long cycle time as well as outsourced supply chain. Recent studies have suggested that relying on just the single or individual focal organization for industry and economic competiveness is unsustainable. Innovation within the supply chain makes sure that the technologies in place together with technologies under development always face the likelihood of being pushed aside to make room for alternative developments. Innovation entails research and development as mostly originates from the suppliers. Supply chain performance indicators Measuring supply chain performance facilitates a deeper understanding of a supply chain hence positively influencing the behaviour of actors and improves the overall performance. There are various supply chain performance indicators that can used within organizations. Performance indicators have to relate to the efficiency and effectiveness of the supply chain as well as its actors. Performance indicators at the supply chain level include product quality, availability, delivery reliability, responsiveness, and total organizational costs (Akyuz & Erkan, 2010). Supply chain management has a direct influence on product quality as well as the general profitability of an organization. Consequently, quality control within the supply chain is important in further ensuring a competitive edge within the marketplace as well as reducing the operating costs. In the absence of quality control, waste becomes a common thing to intolerable amount. The main challenge of sustaining quality within the supply chain is communication. Various organizations maintain supplier quality functions that are decentralized in order to be responsive to needs. The approach can ensure there is responsiveness to emerging issues but it is usually characterized by constrained information sharing as well as limited best practices sharing that could result in better economies of scales (Estampe et al, 2013). The techniques and tools for management of quality within the supply chain have not evolved together with the supply chain. Companies focusing for excellence have to focus on customer experience. Service delivery has to be on the consumer. Products have to be delivery on time, at the specific location and at an affordable price. The supply chains have to be responsive and flexible to the market and customer needs. The management has to be very conversant with issues such as manufacturing procurement, distribution and inventory which play an important role on loyalty and satisfaction. Some quality performance measures include fitness of use, quality award standards, meeting quality performance standards, product per unit sold and defect detected per unit produced as compared to unit produced (Pereira, 2009). Quality means conformance to fitness or requirement for use. The management of product quality within the supply chain is a responsibility that is shared among all participants. Management of quality in the supply chain describes the integration of quality philosophy of quality system of supplier, the vantage point firm internal system and the quality expected by customers. A quality indicator has to involve a quality assurance system that is formal. Quality is an important factor for companies in their relationship between customers and suppliers. Quality management has a direct impact on the performance of the supply chain. Defects are reduced through continuous quality improvement within the supply chain. Cycle times are greatly reduced and improve on-time delivery. Quality management practices lead to reduction of process variance that has a direct impact on the performance of the supply chain. This leads to quality units moving through the supply chain (Louw & Goedhals-Gerber, 2014). Quality improvement that leads to reducing defective units as well as reduction in rework has a great influence on the supply chain as cycle times are reduced, schedules promptly met and customer response times is enhanced. Companies are able to move products faster through the supply chain hence improving integration and synchronization across the supply chain. Flexibility within the supply chain refers to its agility to respond to random changes in the marketplace for the purpose of gaining or maintaining competitive advantage. Flexibility is a performance measure that evaluates how quality manufacturers respond to unique needs of customers. Flexibility can be described as ability to react or change with little penalty in effort, time, performance or cost (Wagner & Bode, 2008). Flexibility is multidimensional and complex concept. Flexibility is able to improve the competitiveness of the company with regard to decision-making process in the implementation of technologies. Flexibility has become very particularly vital in new product development. Some managers do not have comprehensive perception of flexibility since they focus more on machine flexibility as opposed to total system flexibility (Lotfi, Sahran & Mukhtar, 2013). Flexibility within the supply chain represents a potential source of improving the company’s efficiency and can be a very significant measure of the performance of a supply chain. Some companies compete effectively through developing new products faster as compared to competitors. This calls for supply chain partners who are very flexible and willing to work closely with engineers, designers, as marketing personnel. Supply chain response time as well as production flexibility are main indicators of flexibility within the supply chain. Supply chain response time looks at the duration taken by a supply chain to respond to any changes in the marketplace without cost penalties (Chae, 2009). The supply chain must have the ability to vary according to the needs in the marketplace. A competitive advantage can be created through having a flexible supply chain. Flexibility has to be viewed from a value chain perspective and not from a process or equipment perspective. Conclusion The integration of various management systems has brought about practical and managerial challenges. The inclusion of quality management to supply chain management has also experienced challenges. Literature on supply chain quality management is still scarce. Supply chain performance indicators provide a means of evaluating the performance of the supply chain. Supply chain performance depends on the capacity to respond promptly to changes in demand and supply through the business cycles and during crises. Flexibility will continue to increase in relevance due to rise of emerging markets as well as proliferation of new products. Companies will have to consider new strategies like segmenting supply chains, strategic partnerships with suppliers and enhancing risk management as well as transparency. Emerging new technologies are making supply chains more efficient and transparent. Information sharing makes it easier for companies to making important decisions in time. Innovation has helped companies to respond to changes in the marketplace promptly. References Akyuz, G.A., & Erkan, T.E. 2010. Supply chain performance measurement: A literature review. International Journal of Production Research 48 (17): 5137-5155. Beamon, B.M. and Balcik, B., 2008. Performance measurement in humanitarian relief chains. International Journal of Public Sector Management, 21(1), pp.4-25. Chae, B. 2009, Developing key performance indicators for supply chain: an industry perspective, Supply chain management: An International Journal 14 (6): 422-428. Carvalho, H., & Azevedo, S.G. 2012, Agile and resilient approaches to supply chain management: influence on performance and competitiveness, Logistics Research 4: 49-62 Estampe, D., Lamouri, S., Paris, J.L. and Brahim-Djelloul, S., 2013. A framework for analysing supply chain performance evaluation models. International Journal of Production Economics, 142(2), pp.247-258. Jaber, M.Y., Bonney, M. and Guiffrida, A.L., 2010. Coordinating a three-level supply chain with learning-based continuous improvement. International Journal of Production Economics, 127(1), pp.27-38. Lotfi, Z., Sahran, S., & Mukhtar, M. 2013, A Product Quality - Supply Chain Integration Framework, Journal of Applied Sciences, 13 pp. 36–48 Louw, J., & Goedhals-Gerber, L. 2014, Logistics and supply chain management. Research theme/focus areas, Stellenbosch University. Pereira, J. V. 2009. The new supply chains frontier: Information management. International Journal of Information Management, 372379/ Soosay, C.A., Hyland, P.W. and Ferrer, M., 2008. Supply chain collaboration: capabilities for continuous innovation. Supply Chain Management: An International Journal, 13(2), pp.160-169. Wagner, S.M. and Bode, C., 2008. An empirical examination of supply chain performance along several dimensions of risk. Journal of business logistics, 29(1), pp.307-325. Read More