Sourcing is one of the most crucial functions of a supply chain. It is both transactional and relational. Also, suppliers are part of the supply chain process who undertakes essential roles for the whole process. In this case, some attributes signify supplier relationships. One of the critical elements of suppliers is delivery, pricing, and negotiating on contracts. For one to qualify as a supplier in a supply chain, specific considerations should be made (Mikkola & Joetti-Larsen, 2003). Among them is that one should meet the required turnover to be eligible for being selected. In addition, they should demonstrate to have a record or history of the sourcing process. When supplying is done in the best time possible, this ensures that there is enhanced quality, promotes effectiveness and efficiency. However, some limitations are linked to early supplier involvement (Calvi, Le-Dain, Harbis, Bonotta, 2001). Some of the problems are a loss of control as well as ownership.
Supply Chain Facilities
In this context, one of the most facilities is the location. It is essential to choose the best place for a supply chain for various cost reasons. When a facility is located at the correct site, it helps reduce transport costs, labor, rent, operational costs among other associated expenses. The determination of a supply chain location takes various dimensions which should be exact to ensure that they do not operate at a loss. A location is considered effective when situated near the market, near the raw materials, and where the transportation costs are minimal. The other facility is the space or capacity. The best capacity to adopt is that which meets the requirements and the demands of a customer. Production of a product should always be cost-effective and ensure that the available capacity serves for the longest time possible.
Transportation and Information Sharing
Transport is a crucial aspect of the supply chain process. It is essential in determines the efficiency of the movement of products. It can be accomplished by the use of rail, truck, air, waterways, or even the use of pipelines. Transport strategies can either be in-house or outsource. The best policy is determined by the use of factor rating which gives the best option. The other plan is route selection and planning. In this case, the best approach is chosen that reduces the overall miles, fleet costs, and associated planning costs. On the other hand, there is information sharing used in demand forecasting. Forecasting is a core aspect in all strategic as well as planning decisions. Usually, it takes two approaches which are qualitative and quantitative forecasts.
Inventory is a list of the available stock at a given time. On the other hand, there is inventory management which seeks to ensure that inventory investment balances the customer service. The importance of keeping inventory is to reduce on costs which are reached by reducing the list. It is crucial to maintaining an inventory as it helps firms hedge against the effects of inflation and to take the benefits that accrue from quantity discounts. Also, lists prevent firms on the impacts of demand which are caused by product fluctuations.
Inventory exists in various forms such as raw material, work-in-progress, maintenance, repair, operating, and finished goods. Also, inventory can be classified into three classes known as the ABC analysis. They are grouped into high, medium, and low. All of these classes are based on the annual dollar volume. Proper inventory keeping is determined by the accuracy of records.
Mikkola, J.H. & Joetti-Larsen, S.K. (2003). Early supplier involvement: implications for new product development outsourcing and supplier-buyer interdependence, Global Journal of Flexible Systems Management, Vol. 4, No. 2, pp. 31-41
Calvi, R., Le-Dain, M., Harbis, A., Bonotta, H.V. (2001). How to manage early supplier involvement (ESI) into the new product development process (NPDP), Proceedings of the 10th International Annual Conference, pp. 158-162
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