Report Sample on Supply Chain in the Manufacturing Sector

Introduction

The supply chain is one of the major processes in the manufacturing industry, and it determines the competitiveness of the company as well as its reputation. Customers prefer a company whose supply chain is efficient as this ensure s that they are able to receive their orders on the agreed time. The major role of the supply chain is to ensure that the customer’s requirements are fulfilled in the best manner possible. It includes the suppliers, manufacturers, retailers, warehouses, transporters, and the customers themselves, who are the end-users (Chopra, 2020).

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The supply chain entails the constant flow of funds, products, and information between different stages. In the manufacturing sector, customers communicate about the kind of products that they require, and once the supplier gets this information, they start the process of ensuring that the product reaches the customer, as shown in the process map in the methodology section. There several challenges of the supply chain in the manufacturing industry. They include increased costs, technological uncertainty, complexity as a result of multiple channels, risk, and volatility. While all these challenges have the potential of affecting the supply chain negatively, the two major challenges from the list are increased costs and supply chain complexity due to multiple channels to the market.

Methodology

The analysis of the supply chain may be conducted using different theories sourced from sociology or economics. Some of the supply chain theories associated with sociology include resource dependency theory and decision-making theory, while those related to economics include game theory and agency theory (Chopra, 2020). However, for the purpose of this task, resource dependency theory will be used as it looks at the interaction between different players in the supply chain as well as the relationship between an organization and another in a bid to satisfy the supply chain. Besides, the resource dependency theory was chosen because it is the best suited to address the identified challenges of the supply chain in the manufacturing sector. The process map below will be used for this study.

Analysis

To state the obvious, the business environment is becoming more and more uncertain every new day. The preferences of the consumers have become more diverse and keep on changing with time thanks to the changing technological advancements. In current times, the preferences of the consumers have become transient and more diverse. As a result, new products need to be introduced into the supply chain to satiate these changing tastes and preferences (Templar et al., 2020). The manufacturing sector has responded to the changing demands by utilizing technology at almost all the levels. Thus, it is not a surprise that a majority of the manufacturers feel challenged by technology uncertainty.

To ensure that the supply chain is relevant, the manufacturing sector has been forced to explore new technologies to achieve stability and efficiency as well as avoid market obsolescence. The technological uncertainty has created a rift in the supply chain with various attempts instituted meant to balance between demand and supply. The challenge of technological uncertainty can be addressed by the application of resource dependence theory. The theory posits that for an organisation to survive, it needs to collaborate with other actors and organisations for it to be able to acquire the required resources. In the manufacturing sector, organisations are not equally endowed (Ross, 2008). There are those that have more and better resources than others. Therefore, to address the technological hitch in the supply chain, an organisation can request for the requisite resources from another organisations. With such kind of collaboration, it is easy for a company to manoeuvre through and remain competitive. However, this process should not be misused by some organisations to create undue dependencies.

Increased costs in the supply chain is another major challenge, especially in the manufacturing sector. As shown in the process map, there are several stages of the supply chain that a product needs to undergo before it reaches the customer. What begins first is the communication from the customer to the supplier, indicating the required product. The communication process goes through a lot of departments such as sales planning, production planning, product design, purchasing planning, among others, all of which require personnel and resources to operate (Habib 2016). After the customer’s information has reached the supplier successfully, the product is sent to the customer, which again goes through several stages before it can reach the customer. It goes through inventory, and testing, among other stages, before it is delivered to the customer. All these stages require costs to operate.

While an organisation may be willing to serve its customers well, the various transactions involved in the supply chain may diminish its resources crippling its operations. To address the increased costs in the supply chain, the resource dependency theory may be used. Through the use of the theory, an organisation may decide to increase its scale of production or diversify to ensure that more goods move through the supply chain to reduce costs in the supply chain (Christopher 2020). Diversification of the supply chain offers companies a competitive advantage over their competitors and also ensures that materials are readily available in the warehouses.

The resource dependency theory rests on several assumptions. One of these assumptions is that the business environment consists of scarce as well as valued resources, which are important in ensuring that an organization survives. Thus, the environment in which an organization operates poses the challenge of organisations facing uncertainty, especially in the process of acquiring resources (O'Sullivan, 2019). Through the use of this assumption of the supply chain, the problem of increased costs can be solved by streamlining the ordering process (Gattorna, 1998). When the ordering process is streamlined, products will reach the customer faster and more efficiently. There will be reduced cases of products being returned by the customer for being faulty, and this will not only affect the reputation of the organisation but also come with increased costs in the supply chain.

Operation Management Concepts

Some of the operation management concepts include flow and planning. Flow is a major concept in supply chain as its nature determines the effectiveness of the supply chain. The information flow from the customer to supplier and back as well as the flow of products from the supplier to the customer through the supply chain, is a major factor for consideration (Autry and Moon, 2016). The tedious and rougher the flow of information and products in the supply chain, the more the cost. This is even more adverse where the customer has to return the product because it is faulty, as shown in the process map with the broken red lines. In such a case, the cost rises. Thus, to ensure that cost in the supply chain is cut to as low as possible, it is necessary that the flow of information and products be made smooth between the customer and the supplier.

Additionally, flow may be made easier by employing technology. As stated earlier, technology uncertainty is a major challenge of the supply chain. Thus, to make the supply chain easier and more efficient, there is the need to ensure that high-notch technology is used. Data shows that the use of supply chain management software (SCMS) is one of the mostly used solution to impact the supply chain, especially in the manufacturing sector (Dittmann, 2013). SCMS is usually software tools or modules that are essential in the completion of supply chain transactions as well as the management of supplier relationships (Chan et al., 2012). Besides, SCMS is particularly important in the control of business processes that are associated with supply chain management. By using SCMS in the supply chain in the manufacturing sector, it is possible to identify activities that can reduce as well as eliminate non-value-added activities.

Frazelle (2017) noted that with the manufacturing sector, products flow through procurement, manufacturing, and logistics before they are delivered to the customer, who is the end consumer. As identified in figure 1, the supply chain is influenced by the 4 V’s of Volume, Variety, Variation, and Visibility are key considerations when it comes to addressing challenges that affect the supply chain. For instance, in areas where the demand is high, volume tends to be higher, and it would require a properly developed supply chain compared to a situation where the demand is low and volume low.

Planning of resources is an essential concept of the supply chain as it ensures that the required resources for the smooth operation of the supply chain. It includes planning on distribution, manufacturing, and procurement operations (Chan and Lee 2005). With proper planning in the supply chain, costs are reduced to a great extent. Additionally, planning can be streamlined by the use of resource dependence theory in the supply chain.

Conclusion

Supply chain is an essential part of the manufacturing sector. Without a properly developed supply chain, the connection between the supplier and the customer would not proceed well. Despite its effectiveness in an organisation, the supply chain is affected by several challenges, with the key among them being technological uncertainty and increased costs. Resource dependence theory is a major theory that is used to help address some of the challenges of the supply chain. By and large, for maximum output and higher competitiveness, the supply chain has to function properly. The concepts of flow and planning must be employed to ensure that the supply chain function as it should without incurring unnecessary costs.