Supply Chain Management



Supply Chain Management

Introduction

Supply Chain is a process where an organization develops a product; enable an efficient operational system in order to response to the demands of the customers. Supply Chain network depends on the variety of the products; the greater the variety provided by a particular company, the more dynamic would be its supply chain network. Another mechanics of supply chain system is the potential predictability of the forecasts; the easier it is to forecast demand, the easier it will be to set up a supply chain process. The next mechanics of a supply chain network is a particular product's product life cycle, the longer the life cycle of a product, the easier it will be to keep a company's supply chain stable. Another mechanics of a supply chain network is the risk of obsolescence of a particular product; the lower this risk, the easier it will be for any company to plan for its supply chain for the long run.

Discussion

A. Supply Chain Strategy

There are various supply chain strategies that the company can choose from. These range from virtual company and vertical integration to a Keiretsu Network. Each of such strategies has drawbacks and benefits attached to them. For example, vertical integration, which can be either forward or backwards, has the potential to greatly reduce production cost and transport cost, and improve inventory control and product quality.

However, such a strategy involves a very high capital investment for purchasing a production facility or a retail outlet. It also increases training costs of the managers and employees to allow both to work efficiently the in the new facilities and outlets. Such a strategy also required a consistent demand; in case demand falls, both the supply production facility and the manufacturing facility will incur massive losses. The benefits of such a strategy include cost cutting, low capital investment requirement, flexibility and speed.

Keiretsu Network

After a lot of thought, the best supply chain strategy, in my opinion, would be the Keiretsu Network. The Keiretsu Network is essentially the middle ground between vertical integration's low number of supplier, and the Virtual Company's high number of suppliers. In the Keiretsu, the supplier becomes part of the company, providing the supplier with a guaranteed customer. The benefits for the manufacture employing such a strategy would be enormous. There are several other benefits of the Keiretsu. Keiretsu assures a continuous production supply to prevent excess production leading to high inventory holding cost or to prevent consumer problems caused by low inventory. Keiretsu also lowers the risk of damage caused by fluctuating and volatile demand. As mentioned, Keiretsu also promotes close ties between suppliers and the manufacturer; hence suppliers are less like to disclose company strategies to competitors.

B. Supply Chain Metrics

There are various performance metrics, which would be used to measure the performance of the supply chain network of an organization (Patel et al, 2003). The first performance measure would be given to the order lead-time, which is the time it takes for the final ...