Supply Chain Management at Dimco the Supply

Supply Chain Management at DIMCO

The supply chain relates to the entire cycle and process through which raw materials are purchased, processed and developed in to goods and services which can be traded in the market. The management of such a process would involve creating improvements in the supply chain itself to make it more profitable and efficient for the company (Davis, 1993). Therefore the supply chain encompasses not only raw material providers or experts that provide their services during the production period but also the distribution channels the company adopts, and its internal production departments and channels.

The Durham International Manufacturing Company has the option to either improve its supply chain with its suppliers or its distributors, and considering that DIMCO has already settled in to the markets it is currently trading in; it would be more beneficial to work on the company's connection with its suppliers.

By improving relations with suppliers as well as better organizing how raw materials reach the production plant, DIMCO can be sure to decrease production time for each unit produced as well as decrease wastage during production. Also by having a better network of suppliers in place DIMCO will be more likely to source products more cost effectively and also be able to manage the right materials when they are needed rather than wasting time either searching for the raw materials or purchasing them at a higher cost. Not to mention that once the supply process of the raw materials has been ironed out the production process can also be tailored to suit the supply, so as to produce most efficiently. By enhancing relations with the suppliers it may also be possible for DIMCO to find substitutes for raw materials they are currently using, or to find superior products altogether which they can use both to increase the end products' quality, or to lower its price. In order to improve its current relations with suppliers DIMCO may consider issuing some form of extrinsic incentive for its suppliers which may include things such as smaller credit periods. By paying off their credit to suppliers faster they are decreasing the risk for suppliers and so suppliers would be more interested in working with a party which involves less risk than others. The company might choose to develop contracts with its suppliers, so that the suppliers will be doing business for a certain amount of time. This would make DIMCO a more reliable party to do business with as there is a contract which both parties will adhere to. DIMCO can also choose to give its suppliers a larger prepayment for each consignment so that the amount the suppliers have to recover is smaller (Cyert & March, 1963). One of the most beneficial things that can be done to improve the relation between DIMCO and its' suppliers is to create a B2B e-commerce system.

Through this online inter-business trade and communication platform it will be far easier for both firms to stay up-to-date with each other's needs and requirements. For instance through the B2B e-commerce system it is possible for production managers or operational managers to easily view how much raw material is available in the inventory, how much money is due to a certain supplier and how much has already been paid. They can also either place an order for anything they need, or they can view when the next shipment is due to arrive, and both these things can be done 24 hours as it is an online system. Also since everything will be computerized it will be much easier for both companies to keep a track of their trading history with each other. By having an electronic B2B communication channel with its suppliers DIMCO can also choose to allow more of its departments contact with suppliers as that will be more feasible. In this regard each department related to the production process, or any other department for that matter can contact suppliers directly and make sure that they have everything they need rather than relying on the resource departments to facilitate their needs. With a B2B E-commerce mechanism in place it would also be possible for the company to implement an Electronic Data Interchange (IDE) system to further consolidate and organize the business operations. There are two main parts of the supply chain on which the business can focus in order to reduce extra costs, namely, order processing and reimbursements or compensation processes. During the order process, a new order is received, it is entered in to the system and management is informed about the new order. For firms the size of DIMCO it can be a lengthier and more complex process and with the electronic system in place ordering can be done much faster, less paperwork would lead to less of hassle and better management, there are lower chances of incorrect orders occurring and it saves a lot of money on the cost of a physical stock valuation. The compensation process can also be improved by shifting to an electronic system there are great savings in office equipment and stationery, and the same task of managing all sorts of invoices and payments going in and out of the firm can be done more efficiently. All the data can also be centrally stored not to mention that most system automatically update all accounts that are part of the system. Payments can also be made with greater ease through the use of electronic mediums such as electronic funds transfers and it also makes the process much safer for the client and company (Cohendet, 2005)