Concurrent Product and Supply Chain Development - Essay Example

Concurrent Product and Supply Chain Development Student’s Name Code + course name Professor’s name University name City, state Date Introduction In business operations, monitoring the flow of goods and services from the point of procurement of raw materials to production of the final product is the key to realization of efficient operations, this is important in eliminating errors that may arise due to negligence. One such practice is the incorporation of business logistics like supply chain management in business operations, (Yale 1995, p. 58). This is the coordination of activities at all levels of production including the delivery of the product or service to the final consumer. Business logistics are distinct from humanitarian logistics in that the latter is focused on alleviation of suffering of the end user of a commodity while the former is mainly centered in the attainment of profit. There are two main types of supply chain management, the manufacturing supply chain management and the service supply chain management. Manufacturing involves the conversion of tangible raw materials to finished gods through a series of processes while provision of service involves intangible items that ensure full satisfaction of a given product. At Apple Inc. for example, assembly of electronic appliances to produce functional end user products, smartphones and other electronic devices is the manufacturing process while provision of data services and network is the service factor. All are aimed at satisfying the needs of the consumer, (Burrow and Kleindl 2012, p.33). In both aspects however, the flow of goods and service should be monitored. Various issues are presented in the case study on the importance of supply chains in product design. These include; inventory, logistics, transportation efficiencies, customs and duties, customer responsiveness and flexibility, (Hutt and Speh 2013, p. 103). In the design of a new or existing product there are two aspects that ensure efficient monitoring of the components through the various stages of manufacturing; the design chain and the supply chain. The design chain involves the scrutiny of the steps within the industry while the supply chain involves the receipt and the release of raw materials and finished goods respectively. Inventory in this context refers to the itemized list of assets or property that is desired to form components of a given product. During procurement, a list of the raw materials received should be made and a checklist done frequently so that the actual number and type of items that were ordered for is updated. This is important to ensure that an item for which the company spends money in its acquisition goes to the production unit without being factored in the cost of production; it is done to avoid over- expenditure. Logistics in the business context refer to the planning framework that involves implementation and control of the flow of material or service. Flow of materials within the production system should be monitored to avoid waste. In the design of a product, keeping track of the flow of materials ensures that the right type of products and the size required for the manufacture of a given product. Other supply chain considerations in product design include transportation efficiencies, both of the raw materials and the finished goods; customs and duties, to ensure that such costs incurred do not lead to losses, the raw materials to be supplied should less costly in terms of customs charged; customer responsiveness, monitoring the response of the customers to a given product aids in identifying the factors that may be altered in the design of the product so as to ensure maximum customer satisfaction is achieved. The case also focuses on the supply chain structure of TechCo. This is a company that assembles components of electrical products from various suppliers at different level, tier 1 or tier 2 suppliers. After assembly, these products are supplied to original equipment manufacturers for final assembly into finished products that meet end- users’ demands. TechCo receives its supplies from tier 2 suppliers, either printed circuit board assemblers or the mechanical sub-contractors. The two receive their materials from tier 3 suppliers. At each stage, the flow of materials needs to be monitored by integration of supply chains management in operations. The case notes that engineers involved in the initial assembly of products at each stage should document all the inputs so that future follow- up on the same in later stages of manufacture is possible. The characteristics of the supply chain is based on its various components; inventory, information, customer service, cost and collaborative relationships. Challenges may arise from any of the stages. The main challenge that arises with the inventory is duplication of stock by companies along the supply chain. The inventory should be efficient to ensure customer satisfaction is achieved but should also be in a way that supply chain management costs are lowered, balancing the two becomes a challenge in most instances. Inventory visibility along the chain should therefore be available to eliminate this challenge. Cost is the burden that businesses always want to lower at the same time maximizing profits. Supply chain management only becomes cost effective if the companies along the chain are in good coordination. For new companies, it might be costly to introduce supply chains management into their operations at first since the margin of profits they may be making might not be sufficient enough to meet the facilitation of supply chain management. The objective of supply chain management is to lower accumulated costs at the end of the manufacturing process. However, other companies along the chain may employ tactics that optimizes their supply chain costs at the expense of other companies. This usually occurs if the companies involved in the supply chain are not in coordination. Information is crucial in business operations. In the supply chain, information regarding the flow of goods should be bi- directional, towards the customer from down the primary suppliers and from the customers towards the bottom suppliers. Information should be accurate and sufficient to avoid uncertainties that may lead to errors. The main challenge that arises from this characteristic of supply chain is that some companies may crucial information regarding production and supply of a product confidential so as to gain a competitive edge over other companies. This leads to inadequacy of data needed in the supply of the given product. In some cases, companies find it challenging to retrieve data that is in complex form, for example the use of bar codes. This later leads to uncertainties over what should be done at a certain stage of supply. Collaboration among members of the supply chain is another characteristic that ensures success of the supply chain. Companies however have differing objectives and planning strategies, making relationship ties with other companies in the same supply chain tense. This becomes challenging in integration of the supply chain into business operations. The supply chain development is in five levels, the ad hoc, defined, linked, integrated and extended. Challenges are mainly in the first two stages of supply chain development. The ad hoc stage is composed of start- up business whose management systems and structures are not well defined. The main challenge at this stage is that the supply chain performance is unpredictable, pushing management cost to an upper edge. In the defined stage, businesses are quite mature with structured management functions. Outcomes of the supply chain performance are predictable. The main challenge however is those businesses engage in stiff competition which makes collaboration problematic. To ensure the problems that occurred at TechCo do not occur at Apple, I would modify the way operations are done at various points; at the point of receipt of initial components from primary suppliers that need assembling by the company engineers, in the production unit and in the distribution of finished products to customers. One of the problems at TechCo was lack of involvement of the engineers involved in the initial assembly processes in the production units, (Chopra and Meindl 2010, p. 49). To ensure this does not occur at Apple, I would ensure all steps, all components assembled are documented by the engineers so that no component goes through the manufacturing without being factored in the manufacturing costs or being duplicated in the evaluation of costs. Another alternative to eliminate this challenge would be inclusion of the engineers involved in the initial assembly in the production processes of the product, this is because they are the ones aware of the details of all components assembled hence duplication or subtraction of some components during accounting does not occur. I would flow ensure of information is efficient and adequate, in both directions. To balance the demand and supply of products used by the company, information regarding these two aspects is crucial. I would therefore design mechanisms of receiving information from the customers of Apple’s products and channel them to the manufacturers in the production unit for the purposes of modification of current production designs. At the same time, I would develop mechanisms through which information from the suppliers reaches the company so that rectification may be made whenever there is a complaint. I would ensure there is effective collaboration among the teams that comprise the supply chain, the suppliers, the company’s management and the customers. Even within the company, I would ensure there is coordination among various groups involved in assembly of the components to make the final products. At TechCo, the New Product Introduction (NPI) group had no coordination with the engineers involved in the initial assembly of the electronic components; this led to errors in subsequent manufacturing processes, (Jacobs and chase, p. 213). At TechCo therefore, I would ensure there are mechanisms to cater for effective collaboration among all groups. To lower logistics costs and make supply chain more agile, three main areas are targeted by the design for logistics concepts, this are; packaging and transportation, concurrent processing, and standardization. At the same time, customer service efficiency should be the the ultimate goal.(Boyer and Verma 2010, p.413-416) During packaging and transportation, consideration should be on the nature of the materials used, whether fragile or rugged. In the design of the product’s packaging material, rugged materials should be used to lower transportation costs. Fragile materials are difficult to load and unload hence increases transportation costs. Despite the costs of the parts of stronger materials being higher, the overall cost of both packaging and transportation is the determinant, stronger materials reduce these costs in total. Concurrent processing targets processes that could be done at once but are currently done separately. If processes are done in many steps, costs incurred at each step sum up and ultimately accumulate to higher figures, this leads to overall increment in the cost of production. Performing such processes concurrently reduces the cumulative costs that would have been incurred. Additionally, if processes are merged, it becomes easier to monitor the flow of goods since centralization ensures this is possible, this lowers logistics costs. Standardization can be incorporated in the design of logistics concepts. This mainly is targeted towards maximizing economies of scale hence lowering costs and ensuring the supply chain is efficient. The design should be modified in a way that common parts are used for the production of more than one product, (Greasley 1999, p. 21). At Apple Inc. for example, common parts may be used for production of smartphones and laptops. This minimizes wastage hence lowering costs. Standardized products that serve the same purpose for the customers could be substitution in case there is an issue with the current product, instead of incurring huge costs in trying to rectify the issues with the current one. This ensures efficient customer service while keeping the costs down. Standardizing procurement processes also has the same effect. The postponement concept in supply chain management refers to the delay of processing of a given product’s components until later stages when demand goes higher, it is a strategy used by many companies in execution of their operations. The push- pull strategy on the other hand to the way products flow from the company to the customers, the factors that lead to the movement of this products is the main focus. Pull factors refer to those that lead to increased demand by the customers which necessitates increased production of the given product, (Heizer and render 2013, p. 30). On the other hand, push factors refers to mechanisms used by the company to ensure movement of goods to the final customers, increased supply of raw components being an example of such factors. The intermediate level between these two extremes is called push- pull boundary or the decoupling point. Assemble- to -order strategy is one in which final components of a product are assembled only after a demand from the customers, this is depended on the postponement and push- pull strategies. Adjustment of these two strategies on the other hand depends on the existing demand, which varies from region to region. Demand for Apple Inc. products in different parts of the globe is used as an example to illustrate this concepts; Africa, Asia, Europe, North America and South America. In Europe and North America, the demand for Apple’s products is high owing to the advancement in technology in these geographic locations, (Keller 2010, p. 79). The pull factor is therefore weigh up above the push factor. The boundary/ decoupling point is closer to the assembling factor than the demand. In these regions, the company need not rely on the postponement concept but rather reposition the push- pull boundary closer to the push factor because the pull factor is large enough, the demand is high. To optimize the use of assemble- to- order strategy in Africa and South America, areas in which the demand for electronics products like those of Apple Inc., the company needs to adopt the postponement strategy and reposition the push- pull boundary closer to the pull factors. Since the demand for the company’s products is quite at a lower margin in these regions, the company has to establish mechanisms by which it ensures movement of goods to the final customers, the push factors. Postponement on the other hand will help the company minimize risks, this it achieves through delaying the assembly of the final components of its electronic products until the same are demanded by customers. In Asia however, the demand for electronic products, those of Apple Inc. included varies from country to country, (Myrmingos 2011, p.20). The demand for such products can therefore be roughly estimated to be intermediate compared to the demand in Europe or North America and Africa or South America. For the assemble- to- order strategy to work well in this regions, the push- pull boundary should be positioned in the mid of push and pull factors, the factors should be at balance. Postponement strategy will work best in countries like China where demand of such products is quite low. In a technological state like Japan, the strategy is similar to the one that would be employed in Europe and North America. Conclusion Supply chain management is an important component that should be integrated in business operations, (Norton 2006, p.9- 11). The various factors considered in supply chain management include inventory, information, relationships, costs and customer service. The supply chain should be involved in product designs. The main aims being to reduce logistics costs and maximize customer service. To ensure this happens, design focuses on ; packaging of products, materials used should be ones that encourage easy handling to minimize transportation costs; concurrent production of commodities, this reduces the number of process that would have been undertaken in the production of a given product hence lower costs; and standardization. The assemble- to- order strategy is used by a number of organizations in their operations. It involves delaying assembly of the final components of a given product until it is demanded by the customers. This helps the company in which this strategy is employed avoid risks that could arise if mass production of the product was done with a consequent fall in demand, (Bowersox, Closs and Cooper 2010, p. 79- 81). Two factors are incorporated in the assemble- to- order strategy; push- pull boundary position and postponement. Reference list Bowersox, D., Closs, D. & Cooper, M. 2010. Supply chain logistics management. Boston: McGraw-Hill/Irwin. Boyer, K. & Verma, R. 2010. Operations & supply chain management for the 21st century. Mason, OH: South-Western. Burrow, J. & Kleindl, B. 2012. Business Management. Mason, US: Cengage Learning. Chopra, S. & Meindl, P. 2010. Supply chain management: strategy, planning, and operation. Boston: Prentice Hall. Daniels, J., Radebaugh, L. & Sullivan, D. 2011. International business: environments and operations. Upper Saddle River, N.J: Pearson Education/Prentice Hall. Greasley, A. 1999. Operations management in business. Cheltenham: S. Thornes. Heizer, J. & Render, B. 2013. Operations Management + New Myomlab with Pearson E-text Access Card. City: Pearson College Div. Hutt, M. & Speh, T. 2013. Business marketing management: B2B. 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