SUPPLY CHAIN MANAGEMENT

Supply Chain Management

Supply Chain Management

Changing economic conditions require flexible business models that allow organizations to adapt quickly and well. New knowledge for human resource development (HRD) can be gleaned through innovative supply chain management (SCM), noted above in announcements from SABMiller and IBM. Related, Wal-Mart, Toyota, and Dell develop human resource supply chains strategically, subject to on-demand conditions of the market. Notably, market-seeking behavior can be just as important a motivator of globalization as the search for lowcost productivity . There are synergies that organizations pursue when combining market-driven approaches to developing employee supply chains, but there are dangers too.

Argument

We argue that the key concepts and issues in supply chain management that Chandler highlighted remain highly relevant today. We integrate Chandler's detailed historical perspective on the evolution of the “visible hand” of managerial governance with more recent theories from organization economics and from engineering, yielding the following insights. First, aligning incentives of buyers and suppliers is important in achieving throughput and assured supply, but asset ownership is neither necessary nor sufficient for this. Second, vertical integration (and disintegration) decisions affect the internal operation of the firm and its future path. Third, firms need to design their value chains in such a way as to achieve coordination without information overload. The article demonstrates the continuing power of these insights in three phases over the last century. In the first phase (with the rise of mass production), Chandler himself noted a subtle array of make-and-buy decisions. In the second phase (with the rise of lean production), several varieties of non-integration (e.g. exit vs. voice) persisted because of the specific ways in which firms combined incentive alignment and information flow. In the third (“New Economy”) phase, management of information and material flows through the supply chain remains an important source of competitive advantage. In particular, disintermediation as a form of vertical integration, and successful outsourcing require investment in technical expertise over a wide range of technological fields and coordination of knowledge to manage suppliers. By noting that neither externalization through outsourcing nor flattening of managerial hierarchy is the same as decentralization, the article provides theoretical and empirical bases for the continuing importance of Chandler's principles in managing supply chains. (Bolstorff, 2003)



Question #1

What is meant by the expression, “All Inventory is Bad.” Explain why this phrase, while correct 80% of the time, needs to be selectively implemented. In addition, explain the pitfalls associated with excess inventory.

Answer #1

All Inventories is bad

Galloway and Waldron are based on the premise that “all inventories are bad” and postulate that profitability is a function of the inverse of response time manufacturing.

Thus the inventory, to be incorporated in the three traditional elements of cost, play an important role in determining the usefulness of the period by the valuation of the units were sold and those who remained at the end of the period.

However, according to Galloway and Waldron which hinders the synchronization is a combination of technology and external market forces, as would be the "seasonality" ...