Isues Associated With Supply Chain Management

¶ … Supply Chain Management At a basic level efficient supply chain management (SCM) will make sure the right products are in the right place at the right time (Stadtler, 2014). However, efficiency does more than just this, it helps to achieve these goals in an optimal manner. SCM can utilize forecasting approaches to optimize production and logistics schedules to create cost efficiencies.

This may be achieved through an examination of different processes in order to reduce waste, either eliminating processes and do not add value, or identifying areas of wasted resources which will save costs (Roberts, 2015). In addition, where there are effective advance planning, there is also increased potential for flexibility in the supply chain, which may allow for a greater level of tolerance for shifting demand levels (Stadtler, 2014).

Supply chain management may also be utilized to increase efficiency, with forward planning allowing for more production, and better flow of goods between points of the supply chain (Christopher, 2011). Increased efficiency may also lead to a higher potential level of output, and when these different characteristics, or associated with efficient supply chain management are realized, the result is likely to be increased profits (Roberts, 2015). Question 2 Vertical and horizontal integration provide different advantages, and support different strategies (Mintzberg, Ahlstrand, & Lampel, 2008).

The organization undertaking vertical integration seeks to manage the various stages of the supply chain, both upstream and downstream (Kimmons, 2015). Within this strategy and organization has a strategy to control the supply chain, including the quality, quantity, and cost of production associated with the provision of the products (Lahiri & Narayanan, 2013). This strategy is effective at reducing exposure to the power leveraged by supply chain partners, as well as controlling or constraining costs associated with the upstream chain (Mintzberg et al., 2008).

Vertical integration has been seen within the automotive industry (The Economist, 2009). Horizontal integration is seen when organization diversifies through operations which are at the same stage of the supply chain. A good example is seen with fast food restaurant companies, such as Yum! Brands, who own KFC, Pizza Hut, and Taco Bell (Yum! Brands, 2015). Horizontal integration supports a strategy helping minimize competition from other firms, providing the firm with the ability to capture different sectors of the market, as well as spread risk across a number of different brands (Kimmons, 2015).

Therefore, vertical integration is seen when the greatest threat is from members of the supply chain, whereas horizontal integration is utilized where the greatest threat is from competition. Question 3 Effective SCM recognizes, and where possible mitigates the potential impact of uncertainties on the supply chain functioning (Christopher, 2011). For a supply chain canned peaches, the major sources of uncertainty may be seen in both the upstream and the downstream elements. In the upstream there is the uncertainty regarding the availability and price of the inputs (Slack, Chambers, & Johnston, 2010).

Peaches are a seasonal product, and production may vary depending upon many factors, including the weather, which could not be predicted, the availability will then influence prices. Likewise, other commodities are also utilized as input materials to the process, including sugar for the syrup and preserving processes, as well as the cans which are utilized, which are made out of metal. These are all major components, and create uncertainty.

Other inputs, such as overheads including power costs and labor, will present a lower level of uncertainty, as the proportional cost for each product produced will be less (Nellis & Parker, 2006). Downstream uncertainties will include the demand for the products, not only from the consumers themselves, but also from wholesalers or supermarkets, as they have a choice of potential suppliers (Mintzberg et al., 2008). Question 4 The scope and complexity of supply chains has increased significantly.

Globalization has facilitated the ability for organizations to benefit from comparative advantage; the ability to produce goods in a different country at a low-cost due to lower overhead and labor costs (Mintzberg et al., 2008). Those who do not want to set up operations in other countries, who do not want to be involved in vertical integration, may simply choose to utilize suppliers who are also benefiting from the lower input costs, and can provide products or supportive services, in a more cost-effective manner (Christopher, 2011; Mintzberg et al., 2008).

The complexity has also increased as a result not only of globalization, but increased ease of transportation and communication, supported through technology (Mintzberg et al., 2008). For example, in the past only larger retailers in the U.S. were likely to undertake direct importing, with others relying on wholesalers, due to the difficulty the process, including locating suitable suppliers, and arranging delivery. Today the process is much easier, facilitated through sites such as Ali Baba, where even the smallest retailer is able to import directly.

Complexity is also created through other technology, such as RFID, allowing increased levels of control and tracking. Question 5 In efficient SCM marketers and supply chain managers should work together. This is important as marketers are responsible for increasing awareness and stimulating purchases of products. The supply chain managers are responsible for providing those products, therefore, where they work together marketers are able to provide input to facilitate effective forecasting, so supply chain managers can ensure there are sufficient goods available to meet demand (Christopher, 2011).

Knowledge of potential demand can also help to create an efficient supply chain, with all the benefits discussed in question one. Conversely, marketers also need to understand the potential capacity and ability of the organization to supply demand.