Essay Sample on Optimizing Supply Chain: Demand Planning, Sourcing, Product Flow & Distribution

Introduction

Supply chain management is the broad range of activities required to plan, control and execute a product's flow, from acquiring raw materials and production through distribution to the final customer, in the most streamlined and cost-effective way possible.

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Supply chain management encompasses the integrated planning and execution of processes required to optimize the flow of materials, information and financial capital in the areas that broadly include demand planning, sourcing, production, inventory management and storage, transportation and return for excess or defective products (Christopher, 2016). Both business strategy and specialized software are used in these endeavors to create a competitive advantage. Supply chain management is an expansive, complex undertaking that relies on each partner, from suppliers to manufacturers and beyond, to run well. Because of this, effective supply chain management also requires change management, collaboration, and risk management to create alignment and communication between all the entities.

Figure: Supply Chain Management Model (Meixell, 2015)

Supply chain integrity management ensures the provision of quality and safe products to the end user. Its flow is divided into three main flows; production flow, information flow, and financial flow. Before beginning a supply chain management, the managers spend time meeting with senior managers from all the departments within the company to formulate overall company strategies and also begin developing vendor relations, delivery times, warehousing staffing and other procedures. By aligning supply chain plans with all departments, the supply chain manager earns the support of sales, company executives and customers which is the company's goal that ends up being more valuable to the company's overall success.

When making the decision on the type of the supply chain management to be effected they should take into account various parts of the supply chain process that will affect performance which includes technical improvements on the company's plans to initiate, an analysis of the competition, what customers need and want, and what trends may affect the supply chain in the future (Meixell, 2015). This is acquired by conducting research which is performed in-house or through an outside consultant and includes best-practice ideas from diligence sources. It's also important to make sure front-line supervisors and employees utilize the proper sequencing and information entering processes so that no information is lost along the supply chain.

To ensure that the supply chain management is as effective as possible and contributing as much as possible to the company's bottom line the following are needed: first identify supply chain stakeholders and establish a committee to engage stakeholders in supply chain issues and establish a workgroup comprised of departments, then make sure the supply chain itself has suitable staffing, technology should be the immediate friend to the company, establish synergistic relationships with key suppliers, involve in cooperative strategic sources, consider the total cost of ownership not just considering price when making supply chain decisions, Supply chain frontrunners should have some contribution and control with contracts offered by the company, account optimization is essential, Establish appropriate controls throughout the supply chain system to minimize risk, lastly Keep the supply chain sustainable with social responsibility and green initiatives.

Risks of products entering the supply chain can include counterfeit materials or products, expired products that are relabeled and sold to end-users or materials or products meant for the destruction that is diverted for sale. The management system is designed and implemented to identify and control risks within the supply chain and provide a response when counterfeit products are detected, or a deviation is observed from label environmental conditions during transportation and storage. The management conducts a risk-based assessment of their supply chains to identify risks, estimate the likelihood of them occurring, and their consequences.

Based on the risk assessment, the management designs and implements a plan to maintain supply chain integrity and formulate a response when an integrity breach is discovered. The management considers these key factors in maintaining and improving the relationship between the supplier and the departments; (Uygun, 2016) incentivize ethical behavior, the troubled relationship between the procurement operation and a third-party supplier has real consequences. Conflict creates distractions that inhibit other important work, and it can also negatively impact profit. As a result, both procurement leaders and their suppliers have an incentive to minimize friction in the procurement process, set standards; a supplier should meet the integrity standards that are set for the entire company.

If the suppliers are not operating to meet the company's standards, the operation's integrity may be compromised by association. As such, the company should be well served by setting clear standards for the supplier relating to expected behavior that mirrors what the company expects from its team. Setting standards for suppliers has vibrant advantages for the business. One advantage is that the company can create objective measures to assess suppliers and use those measures to dismiss suppliers who operate in ways inconsistent with the company's brand or expectations. Another potential gain is staying ahead of the regulatory game by creating rules that accommodate more restrictive government action. Moreover, setting standards for suppliers will minimize the likelihood of guilt by association.

Maintain control of contract is another key in which, one of the best ways to manage the integrity of a supplier is to weave the elements you require into the supplier contract. With existing long-term suppliers, the company may require help to weave new standards or expectations into the contract, particularly when it is not yet time for renewal.

Supply chain management tools and techniques make it possible for users to reduce errors and costs while optimizing the entire supply chain. Technology is essential in the management (Korpela, 2017); here are some of the different types of supply chain management tools that make these supply chain management software packages valuable to companies.

Shipping status tools which alert and updates all shipping activities. It is important in the large companies which have high-volume supply chains with many different types of cargo shipped to customers around the country or around the world. These alerts can be sent to your mobile device to inform you of the status of your supply chain at any time.

Order processing tools. These tools support all functions across order processing like sales order processing, order management, order fulfillment, billing, and order to cash hence making the ordering task easier and more efficient.

Bid and spend tools. Helps in digging down and taking a granular look at what the company is spending on each item that is taken in and sent out during production and also automates much of the procurement process, thereby reducing errors and resources spent.

Supplier management tools. They show the history of a business partnership and how it affected the supply chain hence contributing to decision making whether to change or manage supplier relationships. In additional, supplier management tools often offer a workspace to perform bids, auctions, and negotiations for more centralized procurement.

Demand forecast tools. Helps the company to anticipate their customers' demand and providing the essential information to make crucial decisions regarding production planning, labor management, and supplier relationships to meet this demand.

Security features tools. Data theft can cause you to lose your position in the market as well as damage your relationships with suppliers to prevent that most vendors today offer security assurances to let their clients know what efforts have been made to safeguard their information.

Transportation and logistics tools. To achieve a complete supply chain management solution, the company needs to have some sort of transportation management. Transportation and logistics tools help users manage the movement of inventory and materials from one location to the other. Also, these tools help users address issues as they arise.

In supply chain management quality of the products is very important because it directly impacts on the overall profitability of a company (Monczka, 2015). Quality control in the supply chain is critical for maintaining a competitive edge in the marketplace and reducing operating costs, without quality control, waste becomes prevalent beyond a tolerable amount. If the raw materials are faulty, they will require extra machining or refining, which adds to employees' workloads and total manufacturing costs and also make entire production lines inefficient and increase defect rates in finished goods inventory. When supply chain quality control is poor, products are more likely to break or wear out before their warranty period expires. There are a large number of failures that can occur once a product leaves a manufacturing facility; depending on the nature of the business hence customers who are forced to return items may disrespect the company from which they purchased the product. Quality control in the supply chain ultimately helps to protect a company's reputation and also the better the control over supplier inputs, the less risk of returns and potentially dangerous product failures.

Inspections raise operating costs and are unnecessary if quality controls are functioning properly. Quality control procedures and audits of supplier relationships are critical for avoiding regular inspections on the production line. Companies that experience large quantities of defects and other forms of waste produced during manufacturing, often implement manual inspections to ensure product quality. Thus, labor hours will be lost inspecting materials and finished-goods inventory that could be allocated to value-added activities in the company.

Supply chain management helps in lowering the cost of doing business as it provides a way for a business to form a competitive advantage without needing to lower its prices while allowing it to deliver orders more quickly to customers. Supply chain management allows a business to decrease the cost of purchasing and production, customers receive the products they ordered quickly and on time, and control and reduce supply chain cost. For instance, U.S. consumers eat 2.7 billion packages of cereal annually, so decreasing U.S. cereal supply chain costs just one cent per cereal box would result in 13 million dollars saved industry-wide as 13 billion boxes of cereal flowed through the improved supply chain over five years (Teeboom, 2018).

Supply chain management is not only used in business but also used in health care (Adebanjo, 2016). It involves the regulation of the flow of medical goods and services from the manufacturer to the patient. Health care supply chain management involves obtaining resources, managing supplies, and delivering goods and services to providers and patients whereby they usually go through several independent stakeholders, including manufacturers, insurance companies, hospitals, providers, group purchasing organizations, and several regulatory agencies.

However, by promoting efficiency in the healthcare supply chain, hospitals and physician practices can create substantial cost-reducing opportunities across their organization, for example, medical rescue helicopters can save lives by quickly transp...