Supply chain management can be described as one of the most critical components of any firm in any industry. A sound management of the supply will help the firm in dealing with the consumer demands and enable them to provide the right goods to the right people in a right quality at a right price (Christopher 2016). Since the business era is changing, the technology has advanced and there exists many loopholes in the domain, which need to be taken care of. This essay throws light on the concept of supply chain management as well as logistics management both at the national and international level. Examples of the assessment of a supply chain have been provided with and the strategic supply chain management has been discussed using the example of the soft drinks company Coca Cola (Jacobs and Chase 2013). Various solutions to deal with the issues in supply chain management have also been discussed. The primary issue in a supply chain, which is inventory management, has also been discussed in detail
Logistics can be referred to as the activities, which occur within the domain of a single organization, and supply chain can be described as a network of businesses that work together to coordinate their actions in order to deliver a product to a market. The term supply chain management, acknowledges all logistics, which were present in the traditional terms, and includes marketing, new product development, customer service and finance.
Logistics can be defined as getting the right product in the right quantity, to the right customer at the right place and at the right time (Stadtler 2015). Logistics Management deals with the effective and efficient management of the daily activities in a company. International Logistics throws light on the management and control of overseas activities efficiently as a single business unit. In this way, the companies should try to harness the value of the foreign product, services, research and development, marketing and then convert them into a competitive advantage.
Supply chain on the other hand can be described as a network where various organizations are involved in either via upstream or downstream linkage in various processes and tasks that tend to give rise to value in the form of services and products in the hands of a consumer. Management if Supply Chain however can be described as the coordination of location, transportation and inventory in a supply chain to achieve the best response (Tayur, Ganeshan, and Magazine 2012).
Supply chain and logistics play a key role in a business on both national as well as international level. The role is discussed as follows. Supply chain can be described as a network, which links various activities within. It consists of various players like the retailer, supplier, wholesaler and the manufacturer. The next characteristic is that information must flow in the network. There is flow of information, material and finance in a supply chain.
Coordination plays a key role in the management of a supply chain network. There must exist coordination between all the parties to a network so that the chain can run smoothly (Monczka et al. 2015).
The next characteristic is that conflicting objectives need to be avoided in a supply chain. There are various parties in a supply chain however, only the need of the organization needs to be fulfilled on urgent priority basis.
The next role of supply chain management and logistic in a business is to balance the cost and service tradeoff. If the service has to be improved then the cost of the good goes up and vice versa. Prioritization of Key Performance Indicators is extremely important to maintain the required balance. Another important characteristic is to foster long-term relationship in the organization (Fawcett et al.2013).
Organizations with complex suppliers often make use of a portfolio matrix to prioritize their building of relationships. The next section describes how the supply chain must be assessed in order to benefit the business.
Assessment of Supply chain helps in identifying gaps that may exist in the business processes and can be solved with the help of a solution. In order to assess a supply chain the following four points need to be considered. The first point is the coordination level between various operations that can range from forecasting to manufacturing for order completion as well as affectivity of the supply chain operations. Collaboration is a crucial part of an effective chain process (Seuring 2013). When there exist certain loops, the process resulting from cross-functional teams then that causes excess stock or waste that could increase costs. For example, a break in the communication between the sales and the demand teams can cause excess or shortage of inventory resulting in high inventory costs or unsatisfied customers. Creating an efficient system would help in an efficient supply chain.
Secondly, a comparison of the current operations with the best operations has to be considered to determine the areas of improvement. This method is useful as it makes use of industry benchmarks and finds the areas for improvement (Ross 2013).
Thirdly, an assessment of the information technology system that is being used currently is also important to identify the prevailing gaps and working towards their improvement.
Lastly, the organizational needs and business process changes need to be built in a way that they support best in class operations. To sum up the assessment of a supply chain network is to document all the changes and needs in order to support the best practices. Analysis on the current trend needs to be made along with past so that a well detailed plan as to how to improve the supply chain operations can be figured out. In the next section, the concept of strategic supply chain will be discussed using the company Coca Cola as an example.
Coca Cola is a multinational company with operations all around the world. Coca cola`s chain of supply plays a great role ensuring that all their processes are carried on properly and tends to minimize the environmental impact of their activities and ensure that there exists sustainability in the value chain (Ahi and Searcy 2013).
The supply chain of Coca cola is involved in producing around 2 billion cases annually. Their supply chain is responsible for the procurement, planning, manufacturing and the sustainability also. They focus on expertise and tend to make quality there key selling point by continuously investing in advanced technology. They follow zero tolerance policy for failure to meet the required standards and have formed a mechanism to enable us to move the quality to the next level.
Strategic supply chain planning has become an essential part of the organization because of the current business climate. The companies need to re-evaluate the efficiency of their supply chain in order to maintain their position as a key player in the market.
Coca cola has a vast supply chain. Indulged in global operations the company needs to keep its chain agile so that it can adapt to the rapid changing markets (Prajogo and Olhager 2012). As the world is constantly changing and economies these days are not stable, the supply chain of a firm should be altered in a way that it can stand against the various changes. The recent increase in internet shopping has placed huge demands on the supply chain of Coca-Cola.
The key process in planning a strategic supply chain for coca cola includes the following. Analyzing the location of operations. Since Coca cola is, a multinational company the location of operations needs to be determined before hand and planned for accordingly. Since the online operations have increased tremendously it is important that the operations are present actively so that the needs of the customers can be met. The investments and costs involved also need to be determined. Since the operations have been increasing considerably, the amount of investment needs to be kept in mind before hand and the related costs have to be identified (Dyckhoff, Lackes and Reese 2013).
Next in line, the operational requirements of the company need to be analyzed. The operations of Coca-cola are on a large scale and due to globalization; the operations have increased 10-fold. Therefore, the future requirements need to be examined carefully in order to from the supply chain plan. Therefore, in Coca-Cola, various aspects of its operations need to be considered before making plans for the organization.
These plans vary from expansion of operations, differentiation, marketing, innovation, environmental policies and so on. While planning for strategic supply chain any company needs to make sure that all its requirements have been analyzed properly and that the costs and resources are in place to achieve the strategic objective of the firm (Slack, Brandon-Jones and Johnston 2013).
The next topic to be discussed is the solutions for effective supply chain management in an organization. In order to provide excellent supply chain management system in an organization, strategies and solutions need to be formulated so that the flow of operations remains smooth.
The introduction of smart phone and advanced analytics into the domain of business can disrupt any industry as it provides an exponentially growing consumer base and tends to provide easy access to information and goods. Various companies build ecommerce portals and the concept of one-click purchasing grew very important.
The changes that were brought about in the market place meant that supply chain system has been disrupted (Wisner, Tan, and Leong 2014). The dynamics of supply chain industry had changed and therefore new solutions and strategies were required to run the chain smoothly and effectively.
Various solutions and strategies were conceptualized which helped the market of supply chain management to remain alive. Therefore discussed below are some of the solutions that can help organizations in the domain of supply change.
First of all it is important to adopt a business operating model and demand driven planning system which is based on real time demand analysis (Barney 2012).As big data has taken over it becomes increasingly important for the companies to predict the demand based on the data of the past and engage in real time inventory. The risks involved in the system can be prepared for and then the companies can adjust their promotion and pricing strategies to form demand and move the product quickly through the market. The key point here s to have a foresight and act accordingly. As the technology has evolved, businesses can now analyze and keep a track of their inventory easily and take appropriate actions.
The second step or solution is to build an agile and adaptive chain, which requires rapid planning and integrated execution. As mentioned earlier once the executives are able to understand the demand and adapt their chains to the needs of the market, companies also must make use of dynamic planning capabilities and tune their operations in a way such that they can easily mould their chain according to the varying needs (Sarkis 2012). Earlier, the companies used to wait for over a month and then shift their supply chain trends, however, this is not the case in today`s world. Today, the shift needs to be immediate. The inventory level is suggested to be kept at the lowest possible so that these needs can be made easily. With the availability of cloud technology, these adaptations are not difficult to make.
Sustainability is the key to success. It is no hidden fact that innovation is an essential part of the organization and is necessary for the firm to remain a step ahead of its competitors. However, innovation cannot be achieved in this manner, as innovation requires goods being manufactured at the right place cost and time. Designs need to be optimized accordingly to achieve success in the domain of supply and operations.
The next solution is the alignment of the supply chain with the business goals. This can be done by integrating sales and operations planning with the core business planning. Integrated planning forms an essential part of the organization planning and therefore one should make sure that all the business processes are integrated properly (Mangan and Lalwani 2016). The resulted integration of end-to-end processes will ensure that the goals and budgets developed in finance have to be validated against a proper operational plan.
As stated earlier sustainability in the supply, chain management plays a key role, as it is essentially required across all chain processes. Ensuring predictable and reliable supply. Without reliable supply, the customer demands will be difficult to face and this could lead to a lag in the entire system.
Therefore, appointing the right tools and resources would go a great extent in helping the firm to excel. Inventory management as an issue in supply chain management shall be discussed next.
Inventory is referred to as a key to profitability. The capacity of the inventory can turn the assets into profits. It is a stated fact that the faster an inventory runs, the greater is the profitability for the firm. However, very often inventory is considered a key issue in a supply chain management process (Zhu, Sarkis and Lai 2013). It is the demand of the customers that their orders are shipped complete and on time. This demand requires that the right inventory is placed at the right time and at the right price. Inventory management in supply chain management is often referred to as the Gordian Knot of the supply chain, which is difficult to untie and to cut (Brindley 2017). The problem relates to all inventories, which range from finished goods to raw materials and components as well as work in progress. It consists of new as well as existing products and it takes under its shelter all kinds of business from manufacturers, distributors, wholesalers to retailers and others in every industry.
Hence, in today`s challenging environment it is extremely important to understand the needs of the customer and make smart decisions as to the right amount of inventory. To summarize, the biggest challenge in knowing one`s inventory is to understand where the inventory is in what part of the chain, the manager must have a clear understanding of what is present in the stock, what is to be ordered and the shape and size of that particular order. Inefficient Processes are also a problem because various management systems, which are related to inventory, rely on manual processes or obsolete software. This tends to create a challenging work environment for everyone who is involved in the management of inventory process. The step should start by analyzing the current standard operating procedures and then determining where gaps may lie in one`s systems (Zhu, Sarkis, and Lai 2012).
The third main issue is that customer demand is unpredictable. The customer needs change continuously and thus they look at their distributors and suppliers for flexibility in orders. As the competition is growing, it becomes difficult to manage these varying needs and manage the inventory (Myerson 2012).
However, even though inventory control is considered it be one of the biggest issues in supply chain management, effective inventory management is important to the profitability and growth of the business. Effectively managing inventories requires proper processes, people and technology. It also requires integrated management from the supplier’s door to the customers dock. The inventory must be constantly moving.
Therefore, from the discussion it can be stated that supply chain management plays a key role in the management of a business. Since supply chain is related directly to the customer`s demand, this component of the business needs to be taken care of by experts and it has to be made sure that proper solution is provided as per the customer demands. There are various issues that often arise when the concept of supply chain is discussed however; these need to be dealt with strategies. It is advised that in order to keep up with the changing customers needs, that the inventory is kept as low as possible in order to avoid overstocking and wastage. However, customer demands being volatile, this is a hard task and proper care needs to be taken.
Ahi, Payman, and Cory Searcy. "A comparative literature analysis of definitions for green and sustainable supply chain management." Journal of Cleaner Production 52 (2013): 329-341.
Barney, Jay B. "Purchasing, supply chain management and sustained competitive advantage: The relevance of resource?based theory." Journal of supply chain management 48, no. 2 (2012): 3-6.
Brindley, C. ed., 2017. Supply chain risk. Taylor & Francis.
Christopher, Martin. Logistics & supply chain management. Pearson UK, 2016.
Dyckhoff, Harald, Richard Lackes, and Joachim Reese, eds. Supply chain management and reverse logistics. Springer Science & Business Media, 2013.
Fawcett, Stanley E., Lisa M. Ellram, and Jeffrey A. Ogden. Supply Chain Management: Pearson New International Edition: From Vision to Implementation. Pearson Higher Ed, 2013.
Jacobs, Robert, and Richard Chase. Operations and supply chain management. McGraw-Hill Higher Education, 2013.
Mangan, John, and Chandra Lalwani. Global logistics and supply chain management. John Wiley & Sons, 2016.
Monczka, Robert M., Robert B. Handfield, Larry C. Giunipero, and James L. Patterson. Purchasing and supply chain management. Cengage Learning, 2015.
Myerson, Paul. Lean supply chain and logistics management. New York: McGraw-Hill, 2012.
Prajogo, Daniel, and Jan Olhager. "Supply chain integration and performance: The effects of long-term relationships, information technology and sharing, and logistics integration." International Journal of Production Economics 135, no. 1 (2012): 514-522.
Ross, David F. Competing through supply chain management: creating market-winning strategies through supply chain partnerships. Springer Science & Business Media, 2013.
Sarkis, Joseph. "A boundaries and flows perspective of green supply chain management." Supply Chain Management: An International Journal 17, no. 2 (2012): 202-216.
Seuring, Stefan. "A review of modeling approaches for sustainable supply chain management." Decision support systems 54, no. 4 (2013): 1513-1520.
Slack, Nigel, Alistair Brandon-Jones, and Robert Johnston. Operations management. Pearson, 2013.
Stadtler, Hartmut. "Supply chain management: An overview." In Supply chain management and advanced planning, pp. 3-28. Springer Berlin Heidelberg, 2015.
Tayur, Sridhar, Ram Ganeshan, and Michael Magazine, eds. Quantitative models for supply chain management. Vol. 17. Springer Science & Business Media, 2012.
Wisner, Joel D., Keah-Choon Tan, and G. Keong Leong. Principles of supply chain management: A balanced approach. Cengage Learning, 2014.
Zhu, Qinghua, Joseph Sarkis, and Kee-hung Lai. "Examining the effects of green supply chain management practices and their mediations on performance improvements." International journal of production research 50, no. 5 (2012): 1377-1394.
Zhu, Qinghua, Joseph Sarkis, and Kee-hung Lai. "Institutional-based antecedents and performance outcomes of internal and external green supply chain management practices." Journal of Purchasing and Supply Management 19, no. 2 (2013): 106-117.