Description of the Project
The present project focuses on the development of a business plan for employing an integrated supply chain network between multiple companies. This project aims at developing a plan which when implemented, would augment the efficiency and profitability of the companies. It does so by addressing the issue of coordination both at the strategic level as well as at the operational level. It facilitates active coordination and collaboration between the different operational elements of the supply chain network via a process called the Logistical Execution System (Andersen, 2007).
The particular business plan takes into account such factors as “profit maximization, revenue generation and risk assessment” (Hendrix, 2007). This integrated supply chain network has been designed only after studying the existing supply chain, analyzing its drawbacks and taking corrective measures.
Introduction to the Project
Supply chain management, as a concept, is not a novel one. It has emerged as an alternative to the transaction model that has existed between buyers and sellers in the business and industrial sectors.
However, in the traditional model, the different components of the supply chain network like marketing, distribution, planning, manufacturing and purchasing, function independently. The various departments are concerned with fulfilling their objectives which often collide with each other. E.g. the primary objectives of the marketing department are to maximize consumer intake and increase sales. These objectives may interfere with the manufacturing department’s aim of manufacturing products by incurring minimum expenditure (Andersen, 2007).
Moreover, with the emergence of factors like the gradually shrinking global economy, economic uncertainty, higher customer demands and rise in input prices, the companies have realized the need to ensure that all the operations of the supply chain work collaboratively to produce the “right product at the right place in the right quantity at the right time”. (Williams, 2000)
It, thus, implies that all the operations of the supply chain must be integrated thoroughly across the companies via effective business processes. This has given rise to the concept of an integrated supply chain network. This particular project presents a business plan which offers a set of guidelines for developing a supply chain network that is integrated with organizational needs and objectives.
Purpose of the Plan
The key purpose of the plan is to develop an integrated supply chain network for companies which will help in optimizing the delivery process flow as well as in facilitating active collaboration between supply chain partners. This integrated supply chain network will help in enhancing the efficiency and competency of these companies while satisfying customer needs.
Need and importance of the Plan
This business plan will prove beneficial to the companies in more ways than one.
- It will help the companies maintain a balance between the available resources and the existing demands.
- It will ensure collaboration and direct communication between the various operative elements of the supply chain.
- It will also help the management in adopting measures for assessing the efficiency of the supply chain network and improving its effectiveness.
- It will take into account some of the major operative elements like transportation, inventory, assets, regulatory compliance, etc for optimization of the delivery process flow.
- It will suggest methods for aligning the supply chain management solutions with the financial solutions for accelerating the financial performance of the companies (Hendrix, 2007).
This is the first step in the development of the business plan. The target customer needs to be defined because the products offered are not meant to cater to the needs of each and everyone.
In this particular context, the analysis of the target market has been done by taking into account factors like their “age, gender, family structure, income, living conditions, profession” (Hendrix, 2007) etc. Additionally, comprehensive research has also been undertaken to evaluate the target customers’ “lifestyle, motivation, hobbies and size” (Hendrix, 2007).
However, the above factors are not general to all. Specific factors of the target market need to be taken into consideration depending on the type of products to be sold.
This will help the companies satisfy customer demands.
Studying the existing supply chain network in the environment
The existing supply chain network has been examined in order to assess how it is currently performing in certain key areas like
purchasing, planning and control, work structure, organization structure, product flow facility structure, management methods, power and leadership, risk and reward, culture and attitude (Andersen, 2007), etc.
Additionally, the other facilities that are being offered by the current supply chain network to the customers are also taken into consideration. It is imperative to evaluate the ways in which the existing supply chain network can be rendered more effective so that it can enhance the efficiency of the companies.
Analyzing its drawbacks
The drawbacks of the present supply chain network have been analyzed by examining the interactions between the different operative agents and business processes. On the basis of this analysis, three basic process dysfunctions have been recorded. These are:
- Dysfunction related to procedure/role. In other words, the roles and responsibilities of the different operative agents are not clearly defined.
- The process flow is unnecessarily long and complex and needs to be simplified. It has been found that there have been multiple interventions by different operative agents at different points of the process flow.
- There is ignorance regarding the process flow among some of the operative agents. This emphasizes the need for knowledge sharing (Andersen, 2007).
Explaining the reasons for the drawbacks
A mere analysis of the drawbacks of the current supply chain network is not sufficient. Explaining the reasons for the occurrence of the above-mentioned dysfunctions is more important. This is because an understanding of the reasons will help in designing the integrated supply network in a way so as to make it more effective for the companies.
The possible reasons for the above-mentioned dysfunctions have been stated as follows:
- The reason for the dysfunction related to procedure/role can be attributed to the fact that there has been a lack of planning/inappropriate planning at the strategic level. An important aspect of integrated supply chain management is increased visibility regarding the different functions.
- Multiple interventions by different operative agents at different points of the process flow are due to the fact that the supply chain network has not been effectively designed. An effective supply chain network addresses the issues of both cost and time.
- The third drawback regarding insufficient knowledge among some of the operative agents emanates from the fact that there has not been optimum knowledge sharing between the operative elements. This calls for ineffective collaborative planning, fulfillment and replenishment (Andersen, 2007).
Supply chain management and logistics in business in general
The concept of ‘supply chain management’ has been built up on the earlier concepts of works management. This involves activities like managing the suppliers, the flow of raw materials into the companies, the transfer of raw materials and components into the warehouses, processing of the materials into finished products, warehousing of these products and finally, the inflow of the finished products towards the target customers.
It is generally believed that the supply chain management:
Encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. …In essence, supply chain management integrates supply and demand management within and across companies (Hendrix, 2007).
All the activities involved in supply chain management need to be properly planned and implemented. It is at this stage that the importance of logistics management comes into view. Logistics management is often defined as “that part of supply chain management that plans, implements and controls the efficient, effective forward and reverses flow and storage of goods, services and related information…to meet customers’ requirements” (Xystouri, 2009).
Logistics management incorporates all levels of planning and development whether it is strategic, tactical or operational. It is primarily responsible for integrating all the activities of the supply chain network right from coordinating and optimizing the different logistic activities to integrating these activities to the other activities like manufacturing, sales, marketing and finance, and information technology (Andersen, 2007).
Thus, the planning and implementation of an effective supply chain management network is intrinsically related to successful logistics management and the functioning of one is rendered ineffective without the support of the other.
Andersen, T. (2007). Strategic responsiveness and Bowman’s risk-return paradox. Strategic Management Journal, 28(4), 407-429.
Hendrix, R. (2007). A Step towards Sustainability: BS 8901. International Journal of Nonprofit and Voluntary Sector Marketing, 42(2), 134-151.
Williams, M. (2000). Information and Teamwork—Keys to Supply Chain Success. Boston: APICS 43rd International Conference Proceedings.
Xystouri, T. (2009). A Case Study of Service Failures and Recovery Strategies within an International Airline. Managing Service Quality, 15(3), 306-320.