Supply Chain Management Related to Dimco Supply Case Study

Excerpt from Case Study :

Supply Chain Management related to DIMCO

Supply Chain Management and other issues related to DIMCO

In this paper, we will determine whether integration efforts should start with suppliers, distributors or both for the firm DIMCO. We will also attempt to explain the rationale for our decision, after this we will recommend ways that DIMCO could benefit from leveraging B2B e-Commerce. We will then determine what steps DIMCO could take in order to improve its relationship with suppliers and finally look out for the most effective ways for our chosen firm to eliminate waste in its supply chain.

Integration efforts

For our chosen case of DIMCO it is more appropriate to start integration efforts with the suppliers. Since DIMCO uses approximately one thousand three hundred and fifty different raw materials or components in manufacturing line which are purchased from approximately three hundred and seventy five different suppliers throughout the world, it is very essential to manage all of this with great efficiency. Also, since the distribution greatly depends on the supply factor therefore it must be considered as a prerequisite to the integration efforts with distribution. Now, lets focus on the integration efforts with the suppliers in some detail.

"It is very important to recognize that the process of supplier integration must be properly managed so that optimum efficiency regarding the deals being done is achieved" (Brudney, 2000). Some of the important practices and strategies for the successful management of supplier integration are as follows.

First, "the usage of supplier integration must be done selectively" (Byrnes, 2003). Second, "it is very important to choose the correct suppliers to deal with" (Earl, 1998). Third, a firm commitment must be built towards the integration efforts in the buyer as well as the supplier organizations. Fourth, the targets and metrics must be clearly defined, the suppliers must also be given a voice in the overall establishment of the targets and metrics. Fifth, the suppliers must be provided the chance to perform an active role towards the development. Finally, any information regarding all of these mentioned operations being conducted must be done extensively as well as openly among all of the stakeholders involved since this greatly helps in increasing the trust factor among the business partners and also allows the sharing of ideas among each other.

Most firms expect that the supplier which is involved at the design process would also supply a portion (at least) of the entire production requirements for main firm's items, therefore the supplier selection criteria which is relevant for any type of sourcing decision would also be relevant here. However, there are other additional criteria which focus on the consideration for the supplier's integration into the main designing effort.

These might include the supplier's willingness to be properly involved at the design effort, the engineering and design capability, the ability to meet up with the schedule regarding the development effort, the desire to co-locate design or engineering personnel, cultural capability regarding with the buying firm and the willingness to share technology and cost information.

The fundamental objective here is to achieve proper alignment between the supplier's capabilities and the buying company's needs both from the cultural standpoint and the technical standpoint. This objective must not be limited to just short-term alignment. The future capabilities of the suppliers might also be as important as its current capabilities if in any case the buying firm wants to get involved in a long-term relationship with the supplier.

Three main conclusions could be drawn from the assessment of any standard process regarding supplier integration. First, "the whole process of supplier integration is worth extreme importance and is also regarded as a very useful tool for achieving competitive advantage at any environment which is changing rapidly" (Culp, 2001). Here, the firms plan to make much usage of supplier integration in future, therefore they would be integrating suppliers during the earlier stages of product development process.

Second, companies must be able to use their processes of supplier integration in a selective manner. "Success in supplier integration demands great management effort from the buying company's part" (Selmer, 1998). The decision regarding the integration of supplier must be made very carefully in order to ensure that the benefits would justify the overall efforts. Also, the decision regarding the integration of a supplier must be made from the company's strategic business priority context as well as its core competencies. Third and final point here is that for firms which have decided to follow a strategy regarding supplier integration, the efforts regarding integration must be managed very carefully. This can be done via many management practices or strategies.

2. Benefiting from B2B e-Commerce

There are many ways through which DIMCO can benefit from leveraging B2B e-Commerce. The main purpose here is to save capital, although this can also be done to assist in immediate decision making. The business can set up its website which the suppliers can use to respond to the comments made by the buyers as well as to send additional catalogs. It is commonly observed that e-commerce in business activities greatly increases the productivity of the business as whole and therefore is a must recommendation for the big businesses of today.

Distributors, retailers, suppliers, customers, transportation, products, competitors, product catalogs, marketing, sales alliances, supply chain and business information alongside many other things have formed themselves at the online union. For many of these, the main purpose is to bring more easiness in doing their businesses. These online facilities also greatly favors any mobile user to update, modify for change its status or any other actions.

For a common customer who wants to purchase any equipment from DIMCO, it can just look at the online catalog regarding the items being offered with their relative price which can update automatically, from here it can choose which product to buy and can also place any order in advance if it thinks that the stock could run out later on. For the suppliers of DIMCO, they can quickly update their statuses regarding their materials so that DIMCO could find it easy to do business with them. As for the distributors, they can update their positions regarding deals being done with DIMCO which can involve demanding more products, inform if any item is found defective, if any batch is not received yet and so on.

3. Relationship with suppliers

The relationship that exists between the buyers and suppliers is often a very complex one where every party wants to increase its resources, time and cash investment; all of which can be competing priorities than might even strain the relationship between them. Therefore for any such partnership to succeed, there should be mutual business understanding alongside respect and a wish for prosperity for the opposing party. Creating this balance is difficult and involves recognizing the fact that one side can greatly help in the success of other. For our chosen firm DIMCO, this relationship can be improved by the following methods.

By compliance with international and local regulations, since the international trade community is facing tight scrutiny in today's business environment it is essential to know who exactly the supplier is, who supplies to the supplier and so on. The U.S. government alongside many other governments have different lists of parties on which it advises the business firms not to do business with.

Therefore all the necessary actions must be taken in order to follow the proper rules and regulations since it is the most basic fact regarding the achievement of a successful and proper business especially concerning with the suppliers.

To conduct deals in a respectful and open way, by this the firm DIMCO can earn more respect from its suppliers. This also allows the business to have more flexibility and cases where one party is failing to meet up with its…

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