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Supply Chain Management
Syed Faraaz - 22090444
A supply chain is the network created amongst different companies in the
transformation of raw material into finished products with value.
Supply Chain Management is moving the right items to the right customer at the
right time.
The single biggest frustration a customer will have with any business is waiting. The
need for on-time fulfillment, to generate high customer satisfaction levels, is key to
supply chain management. Delays can do a lot of damage to the reputation of a
company, so cleaning up any areas in the supply chain that are lagging should be
priority one.
An example of a well-known supply chain failure was Target expanding into Canada.
Instead of rolling out slowly, province by province, they chose to open everywhere
all at once to take advantage of a real estate opportunity. But it was too much, too
fast, and the supply chain couldn’t keep up. The result was empty shelves and
disappointed customers.
“A pink Barbie-branded SUV that seats two toddlers offers a surprising glimpse into
the myriad problems that jammed up Target Corp’s supply chain,The toy was one of
many products that piled up in bewildering volume at Target’s new distribution
centers,Goods were coming into the warehouses faster than they were going out.”
There were a lot of supply chain problems that caused the company’s entry to
Canada to fail(they pulled out in January 2015), to the tune of $2 billion in losses.
Long lead times, with retail choices made in the U.S. that weren’t popular in
Canada, contributed to those losses.
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Value Chain is a model that considers how supply chain activities can add value to
products and services offered to customers
Example:Software Developers must look at each step of the production from an
end-user [Link] the packaging to the usability of a product,each link is
enhanced from the customers viewpoint.
Walmart
Walmart has developed an efficient supply chain characterized by functional
demand and stable supply.
The company has always undergone an everyday low price, and high-volume
strategy, and this strategy gives results as customer satisfaction. Walmart's supply
chain is engrossed with cost, uncertainty with demand, logistics system, and the
information system that helps the management to track the sales data.
The company has also achieved economies of scale by setting up distribution
centers (DC) and stores in low-cost locations to maximize cost reduction.
Strategic factors
Understanding the need of the customer
Understanding Supply chain certainty and capabilities
Responsive vs. efficiency and inventory related issue
Demand and Supply Chain
Push-Pull
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As push view depends on the speculation of customer demand, it tries to push as
many products into the market. In this they take lot of time to react to the changes
in the market. Forecast plays a vital role in push view. Long term forecasting helps
the company to manufacture optimum level of products. The speculative nature of
the push process results in high production cost, high inventory cost and high
transportation cost because the firm would like to have buffer at every stage.
In the pull process of supply chain demand is real and firms react to demand. It
helps the company produce a required number of products. Pull system has
drawbacks, if there is excess demand from the customer and the company does not
have capacity, resulting in loss of opportunity cost. The lead time in the pull view of
the supply chain is less.
Amazon
Amazon has a wide array of products to offer ranging from unlimited categories
and subcategories of furniture, electronics, e-books, AmazonFresh and Amazon Go
grocery Stores.
Amazon Supply Chain relies on its own extensive network of warehouses /
Fulfillment centers and transportation fleet. It uses the latest technology to make its
operations more efficient. Amazon's strategy was to control the shipment of goods
across the entire supply chain from procurement to final customer delivery.
Bullwhip effect
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The bullwhip effect is present in a SC,if the variability of demand at one level of the SC is
greater than the variability of demand at the next lower level in the SC.
Responsive SC
For a variety of reasons product and technology life cycles are shortening,
competitive pressures force more frequent
product changes and consumers demand greater variety than ever before.
To meet this challenge the organisation needs to focus its efforts upon achieving
greater agility such that it can respond in shorter time-frames both in terms of vol-
ume change and variety change. In other words it needs to be able to quickly adjust
output to match market demand and to switch rapidly from one variant to another.
To a truly agile business, volatility of demand is not a problem; its processes and
organisational structure as well as its supply chain relationships enable it to cope
with whatever demands are placed upon it.