Samsung Electronics - Purchasing and Supply Chain Strategy - Term Paper Example

Purchasing and Supply Chain Strategy Name Date Course Table of Contents Table of Contents 2 1.0 Introduction 4 1.1 Background 4 2.0 Procurement and supply chain strategy 5 2.1 Strategic analysis 5 2.2 Strategic strategy 6 3.0 Purchasing and supply chain implementation 7 3.1 Forecasting 7 3.2 Systems 8 3.4 Inventory policy 8 4.0 Strategic improvements 9 5.0 References 10 6.0 Appendices 11 Executive Summary The new innovative product from Samsung will be delivered to the customers through the use of a strategic purchase and supply chain. Multiple sourcing as well as the outsourcing of the transportation services will be utilized. The supply chain will enable the company to deal with competitors like Apple which is the greatest competitor of the company. Forecasting will be carried out based on the past as well as the current data in order to ensure that the production meets the demands of the customers. A custom made system will be utilized for supporting the purchase and supply chain. Days of supply will form the inventory policy of the company. Continuous improvements will be carried out in order to improve on the efficiency. 1.0 Introduction Supply chain strategy is useful in terms of determining the ability of an organization to successful deliver its products to the customers. Customer satisfaction is usually influenced by the ability of the organization to deliver the required products to the customers at the right time and at the right place. The needs of the customers have to be reflected during the development of a supply chain strategy. Some of the companies that are unable to meet the needs of the customers have ended up with a few customers. The competition in the current market is quite competitive and the customers can easily switch to another company if they do not receive the services that they require. The supply chain activities mainly include the movement and storage of materials, work-in-process inventory and the movement of finished goods from the point of origin to the point of consumption (Bozarth & Handfield, 2015). The supply chain management strategies require design, planning, execution, control and monitoring of all the supply chain activities. The establishment of a competitive infrastructure is required in order to meet the needs of the customers. The paper is thus a purchase and supply chain that will be used by Samsung Electronics during the launch of a new product. 1.1 Background Samsung Electronics is a market leader in the development and supply of different electronics in the market. Due to the innovative nature of the company it usually launches new products from time to time in order to meet the needs of the customers. The company has wide customer bases that are located in different parts of the world. The raw materials for manufacturing the new products are also obtained from different parts of the world. The purchase and supply therefore requires the development of strategy that will meet the needs of the company as well as the needs of the customers (Barney, 2012). 2.0 Procurement and supply chain strategy 2.1 Strategic analysis The vision of the company is to inspire the world and create the future. Its mission is to be the leading company in the development and delivery of innovative products. The company is headquartered in South Korea and it is currently the market leader. It is products includes a wide range of electronics including mobile phones, televisions, ipads, tables, DVD players and the new products is a Smartphone. The main competitors of the company include Apple, Sony, LG Huawei and Microsoft (Chang, 2014). The new products will target customers from diverse regions as well as ages. This is considering the affordability and ease of use of the new product. Currently the pricing of the products is dependent on the income levels of the customers as well as the features of the products. Its prices are much lower but competitive as compared to the competitors. The pricing of the new product will also use the same pricing strategy. The new product will have various features including GPS/Geo tagging, TouchWiz for android, Wi-Fi, Android and Bluetooth. The purchase and supply chain of the company regarding the company will be agile and lean which will ensure that it is capable of dealing with the regional challenges. This is considering that the company will be required to supply the products in different regions across the world. The company is expected to face major competition from Apple which supplies almost a similar product in the market. However, the supply chain of Apple is not lean hence the competitive advantage to the company. 2.2 Strategic strategy Strategic sourcing will be applied for the purposes of ensuring efficiency. Strategic sourcing will also be useful in terms of dealing with the challenges in the market. The purchase of raw material will be dependent on the risks, costs, supply and demand. The main issue that needs to be addressed involves the transnational trade. This involves the legislations across different countries as the new products will be sold throughout the world. In order to reduce costs, the cooperative sourcing will be applied. Cooperative sourcing involves working with the other companies for the purposes of ensuring that the products are supplied to the customers (Chicksand, et al, 2012). Samsung will therefore be required to work with other companies in different continents. Multiple sourcing will be used in order to create competition among the suppliers and hence leading to lower prices. However, a healthy relationship will be maintained with all the suppliers. Transactional purchasing will be used as due to the high risks that is involved when dealing with the suppliers from different parts of the world. The transportation and distribution of the product to the customers will be carried out through outsourcing. Logistics companies like DHL will be contracted to offer the service as it operates worldwide. Outsourcing of the distribution process is beneficial as it is less costly (Chicksand, et al, 2012). The risks are low as most of the transportation companies usually insure their cargo. Outsourcing will also ensure that the global customers are able to receive their orders in time with the maximum time for receiving the product being 72 hours. 3.0 Purchasing and supply chain implementation 3.1 Forecasting Month July Aug Sept Oct Nov Dec Jan Feb March April May June Demand (millions) 3 2.8 2.6 2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 The demand will vary from one month to the other. In most cases the demand is usually high for the electronic products when it is introduced in the market. However, it starts dropping over time as the lifecycle of electronic products is low. Forecasting is the estimation of quantity of a product that or services that the customers are likely to purchase in future (Stadtler, 2015). Forecasting will be used in order to estimate the number of gadgets that need to be produced. Different methods can be used for the purposes of forecasting the demand. This includes an educated guess, expert opinion, historical data and current data. The historical data has been used in for the purposes of forecasting the demand of the new product. Forecasting can be used in other areas such as entering a new market, pricing decisions and assessing future capacity requirements. Important consideration during the development of the forecast includes lifecycle of the product (Stadtler, 2015). Other factors include the fashion or emergence of a competitive product. In the electronic industry, new and innovative products are usually designed within a short period of time and hence reducing demand of the existing product. Forecasting will be beneficial to the company in terms of avoiding losses as a result of overproduction. The process will also ensure that the demands of the customers are met. Various information can be used in the process of developing a forecast. This may include the past and current sales figures as well as the customer preferences in the market. 3.2 Systems A custom made purchase system that meets the needs of the organization will be used for the purposes of managing the orders. WMS will be used for the purposes of supporting the custom made system in order to ensure that it is effective. The use of the custom made purchase system will be important in ensuring that the organization is able to make any necessary changes while responding to the challenges that it is likely to face. All the needs of the company as well as that of the customers will be considered when a custom made system is used and this will improve on the efficiency of the system. A custom made system however requires a lot of expertise in order to ensure that the system is operational and it supports the operations of the company (Wisner, et al, 2015). 3.4 Inventory policy Days of supply will be used as the inventory policy. When using this policy, the parameters of minimum and maximum are specified in the number of days as opposed to the quantity (Chopra & Sodhi, 2012). The actual demand will be used for the purposes of computing the actual demand. A week’s stock will be kept by the company for the purposes of ensuring that it meets the production demand as well as the demands of the customers. This will also ensure that the stock does not run out before the production process is complete. A buffer stock is mainly an attempt to use the commodity storage in order to stabilize prices in the individual commodity market. This concept utilizes the purchase of the products in the market when there is a surplus and sold when there is a shortage. A buffer stock that can last for at least three months will be kept before the products are released back to the market. An inventory management system will also be used in order to enhance the ability of the company to handle the inventory. An independent demand is tied to the demand or production of level of another item that is also dependent on demand items (Monczka, et al, 2015). The systems of managing such items are relevant to the manufacturers. The results of the independent demand may be based on forecasts. An item however has an independent demand when its production cannot be tied or controlled by the production of another product. This factor will play an important role in forecasting demand as well as fixing the prices of the product. The inventory of the company with regards to the new product will be dependent as it will not depend on another item. All the materials will be delivered by the suppliers to the company on a weekly basis. The orders will be placed to the suppliers three days in advance. The suppliers must deliver the materials within three days or 72 hours. The frequency of the delivery will be one week with the delivery being made in bulk. 4.0 Strategic improvements The differentiation of the products will be carried out through designing the supply chain to fit the needs of the products. This is through the developing an efficient supply chain that has the potential of delivering large volumes of the products. In some of the markets, the supply chain will be responsive in order to deal with the low volumes. This is considering that the company will be supplying its products to different markets throughout the world. The supply chain will also be agile for the purposes of dealing with any volatility. The organizational structure of the company will also be restructured in order to ensure that it supports the purchase and supply chain. The concepts of continuous improvements will be utilized in order to ensure that efficiency is achieved. The concepts of continuous improvements are usually aimed at ensuring that efficiency is achieved while at the same time the needs of the customers are met (Chicksand, et al, 2012). Product differentiation is beneficial to the company in terms of ensuring that the costs are reduced and efficiency is attained. The supply chain will also be flexible in order to meet5 the needs of the customers and the suppliers. Flexibility in the purchase supply chain will play a vital role in ensuring that different challenges in the market are addressed. Experts will be consulted from time to time in order to ensure that efficiency is achieved. Technology will also be used for supporting the supply chain. The purchase and supply software will be used for the purposes of promoting efficiency in the supply chain. 5.0 References Bozarth, C, C, & Handfield, R, B, 2015, Introduction to operations and supply chain management, Prentice Hall. Barney, J, B, 2012, Purchasing, supply chain management and sustained competitive advantage: The relevance of resource‐based theory, Journal of Supply Chain Management, 48(2), 3-6. Chicksand, D, et al, 2012, Theoretical perspectives in purchasing and supply chain management: an analysis of the literature, Supply Chain Management: An International Journal, 17(4), 454-472. Stadtler, H, 2015, Supply chain management: An overview, In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg. Wisner, J, et al, 2015, Principles of supply chain management: a balanced approach, Cengage Learning. Chopra, S, & Sodhi, M, S, 2012, Managing risk to avoid supply-chain breakdown, MIT Sloan Management Review (Fall 2004). Monczka, R, et al, 2015, Purchasing and supply chain management, Cengage Learning. Chang, P, C, 2014, The study on patent acquisition from complementarity and supplementarity: Evidence from Smartphones of Apple and Samsung, In Management of Engineering & Technology (PICMET), 2014 Portland International Conference on (pp. 2996-3003). 6.0 Appendices Jan 2015 March 2015 April 2015 May 2015 June 2015 July 2015 Market research Ordering and importing raw materials Product development Product testing Product marketing Launch of product Gantt chart Supply chain diagram Read More