It’s the process of active management of the supply chain actions to achieve the better competitive advantage and maximize customers’ values. It shows an alert effort by the firms involve in the supply chain to run and develop supply chains efficiently and effective ways possible. Therefore, supply chain processes and activities comprise everything from the development of the product, production, sourcing, and even the logistics. Also, an information system that is needed to coordinate all these activities is included. Therefore, supply chain management can also be described “planning, design, control, monitoring and execution of the supply chain activities with goal and objective of creation of net values, leveraging logistics worldwide, building infrastructure that is competitive, measuring performance and synchronizing demand with supply.” Thus the functions of the supply chain management involve the management of the raw material by the firm or organization, internal processing of the raw material into finished products and the movement of those finished products to the end user or consumer. At some point, some of the function is normally outsourced for better performance of the organization.
Current there exists a new form of management paradigms that extends to organize the entire business processes throughout the value chain of the multiple companies, (Drucker’s 1998). For example in the question, three firm plan to corporate for better performance on the market, that is Jean firm ( Central Transport), Susan firm (SAB Distribution) and Wegman’s Food Market. The firm’s plan cooperates to expand their markets and also improve their performance on the market for effective competition. The firms that are in the supply chain are linked together through information flow and also physical flow.
Characteristics of the effective supply chain
In the successful supply chain firms like Central Transport, SAB Distribution and Wegman’s Food and Marketing always embrace innovation, where leaders of this firms normally look for the big thing that will next improve their performance and operations. It can be adopting new technology that will keep the firm ahead in the competition.
The supply chain of this firm is data-driven. Previous information and data about the performance of the firm’s supply chain are very significant. They normally analyze that information by use of the data software like data optimization software and data visualization software, to track the movement of the firm supply chain that assists in increasing the efficiencies in its operation, (Kildow, 2011).
Employees Central Transport, SAB Distribution and Wegman’s Food and Marketing are empowered for better performance of the supply chain. It’s through effective management of labor; employees are encouraged to give their best service for better performance of the firms
These firms should be prepared for unexpected like risk. As the firm expands its supply chain on the market should be aware of some issues may arise that will hinder its operation. Therefore possible solution issues should be put in place for faster recovery in case it occurs.
Transparency between this joint firms for the supply chain as means of growth is very important. It assists in the better way to strategize for future.
Issues in customer service and demand management
The following is some of the issues Central Transport, SAB Distribution and Wegman’s Food and Marketing supply chain faces on the market:
Customers’ big events are not forecasted or managed. The demand and need of the potential customers are not taken into consideration that results in shifting of the customers to other goods.
At some time they may arise abnormal demands for the products. However, the firms may not have identified that demand growth at the correct time. This will lead to scarcity of the goods to the consumers. In another case, they may exist erratic demand which is very difficult to plan for it. In that situation, the firm should maintain its production level.
Incorrect forecasting of the firms. This is based on the strategic plan of the firm on its operation according to the previous information. At some time the firms may increase production while the demand is low. This lead to a high surplus of goods on the market that may interfere with a targeted price.
In some supply chain firms, there may be no sale plan or forecast. In this situation, other firms do not have the strategic plan for its operation. Also, the firm does not have objective and goals to achieve. Therefore the firm may lack mission and vision to do business. In this case, the overall service to the customer is poor. And the customer complaint is not handled.
Order fulfillment: It is the process from when the order is the inquiry to the point when that order is delivered to the customer. In some case, it is used to define logical functions. Therefore it refers how these firms’ responds to the order placed by the customer. The firms should develop the strategic plan for order fulfillment that may assist improving services derived to the customers.
Order management: It is the process of keeping track all the process involving an order. This involves keeping track of all orders, keeping details of the previous order, managing labor involve, partner with another firm to fulfill orders delivery and other services provided to the customer if needed. Hence, Central Transport, SAB Distribution and Wegman’s Food and Marketing firm have well-defined order management strategy to facilitate their operations. Order management is complex. Currently, there is software that is used to assist in the management of orders and document details in the database. They exist order management software like NetSuite’s and Trade Gecko’s order management software that automatically handles some of the order tasks also analyze previous detail that assists the management to make decisions.
Customer service: It is the process taking care of the customers’ needs by delivering and producing helpful, professional, assistance and high-quality service during, before and after customer requirement are met. This meet the desire and needs of each customer. The characteristic of good customer service involves politeness, promptness, personalization, and professionalism. For these firms to satisfy the needs of their customers, and develop customer loyalty. Each firm must have good customer service that would handle customer demands. There should exist section that would handle customer complaints and use them to develop quality product and deliver the best service to the customer. Therefore customer service is significant to maintain long-term customer relationships that are essential to increase revenue generation to the firm.
Costs of inventory
It’s the cost related to maintaining and storage of the inventory on the specified period. It’s seen as the percentage of inventory value. The inventory costs are categorized into the following category ordering costs, stock-out costs, and carrying costs. Therefore inventory cost of the Central Transport, SAB Distribution and Wegman’s Food and Marketing firm is taken into consideration to reduce cost.
Fixed order quantity is the system of arrangement in that the level of inventory is continuously monitored. This is done to maintain the stock level. The firm should set its maximum and minimum levels of the stock level depending on the available space. When the stock reaches the minimum point, the firm should place an order for the product depending on the sales trend.
Fixed order interval its system where the stock level is regularly reviewed at the fixed interval. However, when the stock level is below a certain level set by the firm, the order is placed to replenish to maintain the required level of stock.
Economic order quantity is the process to determine the quantity of order the firm should purchase the stock at a given set of production, customer demand rate and another variable that may affect inventory. Economic order quantity is used to reduce variable inventory cost. It’s an essential tool used by the management of the firms to minimize the amount of cash tied and cost of inventory in the inventory balance.
Economic order quantity model
It’s the strategy developed by the firm that is used in inventory management to calculate the number of units the firm should add to the inventory. The cost of the inventory includes order cost and holding cost.
Total inventory cost = holding cost +ordering cost
The total inventory cost of the Central Transport, SAB Distribution and Wegman’s Food and Marketing is reduced when both holding cost and ordering cost is minimized. There are several EOQ model, but we concentrate on one model that is basic EOQ model. It illustrates formula that is used to determine the optimum order size which will reduce the sum of the ordering cost and carrying the cost. The assumption of this model is as follows: no shortage of product is allowed, demand is constant over time and is known with certainty, there is a constant leading time of the receipt of order, and order quantity is got at once.
Basic warehousing decisions
Warehousing is the processes of storing goods in the warehouse. The process is facilitated by broad factors that include the wide spectrum of locations and facilities which provide warehousing. Product stored in the warehouse include raw material to the firms, finish product to consumer and industrial products for the firms like Central Transport, SAB Distribution and Wegman’s Food and Marketing. Warehouse play the significant role in macroeconomics. It usually creates time utility for all products which increase the availability of goods to the customer.
Basic warehouse decision is done the leaders of the firms. Therefore, a CEO like Susan has a responsibility to decide which warehouse suitable for SAB Distribution’s goods by considering factors like type of warehouse, cost, and location. There is two type of warehouse that is a public and private warehouse. The public warehouse is rented to individual or firm at specified charges, and the government owns it. However private warehouse is owned by the individual. Therefore, it operates under regulation and policies the owner. It is very costly to store good in the private warehouse because of the cost of operating the warehouse and another charge they give to the government as tax.
Another factor that firm manager or CEO should put into consideration is the location of the warehouse. The firm should store his product near the customer if its finished good or keep them near the firm if its raw material. It will assist to reduce time and transport cost when there are needed for processing or consumption.
Blanchard, D. (2010). Supply Chain Management Best Practices, 2nd. Edition. John Wiley & Sons.
Kildow, B. A. (2011). Supply Chain Management Guide to Business Continuity. American Management Association.
Mentzer. (2001). Define Supply Chain Management. Journal of Business Logistics.