Aim: Case Study of Supply Chain Management Johnson Skin Care

Summery:
The following report is an analysis of Supply Chain Management for Johnson Skin Care
company, in order to successfully establish a traditional approach to logistics involving retail outlets
for accessing customers.
The report begins with an overview of Supply Chain Management and its characteristic features that
assist with implementing effective supply chain networks. The five basic supply chain management
steps are also articulated for the benefit of readers, and for study purposes.
This is followed by the complete flow chart of all possible supply paths for the given case study. The
structural attributes as well as the functional ones are further elaborated through the medium of
tabular representation.
The recommended supply chain network compatible with the multi echelon system (Plant →
Staging Warehouse → Distribution Centre → Store) is discussed as part two of the case study
solution. That is, a Serial Multi-Echelon System Furthermore, part three of the solution revolves
around the opinionated modifications. As a suggestion, the benefits and possibility of both third-party
logistics and an integrated supply network with complete ownership are elaborated for the purpose of
comprehension.
This is followed by a brief action plan, modelled around the modification and recommendations
provided in the sections (Part II and Part III) of the report. This includes implementing a Serial Multi-
Echelon network, that minimizes the inefficiency and randomness emanated from the discretion of
third-party controllers of the critical echelons of the supply network.
This is followed by a Conclusion that has been summarized in order to stick with the prescribed word
count. The remarks highlight the possibility of reaping the full benefits of supply chain management
that occur due to ‘cooperation,’ ‘integration,’ and ‘communication’ between the dynamic essential
stages of the supply chain.

Introduction
The problem presented in the Case Study represents the classic principle features of Supply
Chain Management. It is a completely systematic approach for enhancing productivity, Supply Chain
Management is an approach that is directed towards managing the flow of Information, money and
materials in-between the suppliers and the customers (Erpint, 2014). The movement is processes
starting from the supplier, to manufacturer, to wholesaler, to retailer, and finally to the consumer. In
supply chain management, each level of the supply chain is described as a ‘tier,’ and several tiers can
exist beneath the final supplier. It involves the effective coordination as well as the integrating of
supply flows amongst all the echelons involved, for a productive, valued and profitable supply
structure (Masterclass Management).

The flow of materials atypically is from the Supplier to Customer (unless its RMA (see five
stages of SCM below)). The stages count from the warehouses to distributors, moving on to dealers
and lastly retailers before the consumers. The task of the SCM manager here is to ensure the adequate
flow of materials quickly, without any halts as inventory in the various nodal points in the chain. The
third-party logistics (3PL) involved in the process can also have a definitive and considerable impact
upon the total costings incurred in the Supply chain network (Erpint, 2014).

A very simplistic Supply Chain View incorporates:

 Plan -----> Source -----> Make -----> Deliver -----> Buy

The five basic Supply Chain Management steps are:

1. The Strategic planning that includes developing metrics for effectively monitoring the supply
chain, necessary for delivering high quality service and value to consumers (Masterclass
Management).
2. Sourcing from reliable suppliers for delivering goods and services, and also for managing the
inventory of the same that has been received from suppliers end, all done at the same time as
that of monitoring the metrics for continuously possible improvements (Masterclass
Management).
3. Manufacturing and scheduling activities for production, testing, packaging and delivery, in
consonance with optimum quality levels, worker productivity as well as production output
(Masterclass Management).
4. Delivering, coordinating and communication, all encompassed under ‘logistics,’ is necessary
for establishing proper supply chain management networks (Masterclass Management).
5. Return Merchandise Authorization (RMA). Receiving back the defective and excess products
(Masterclass Management).

Statement of the Situation

The primary situation concerns with the company’s decision to implement supply chain management
over a more so traditional market structure, with a supply network that includes sale and distribution
of network of retail stores.
 Products - Women’s Foot Care, Men’s Foot Care, Body Butter
 Manufacturing Plant - New Jersey, California
 Staging Warehouses - New Jersey, Kentucky, California
Basically, Supply Chain Management is a set of approaches that are adopted to efficiently integrate -
Suppliers and Manufacturers with Warehouses and Distribution Centres. The SCM operational
necessity dictates the minimization of system wide costs, and the adequate satisfaction of service
level requirements. To articulate for the sake of comprehension, the most basic aim of SCM is to
ensure the distribution of as well as ensuring that the production a) made in the right quantities, b)
shipped to the right location and c) is delivered at the right time (Verma, 2011).

The Analysis

Part I: The Flow Chart

The below given flow chart shows the supply chain’s distribution network, starting with the factories,
the central and regional warehouses and the trans-shipment points (CW, RW, TP) and ending with
the retailers.
The three core business processes inherent supply chain management are- a) The
Procurement/Sourcing of raw materials and components from the suppliers, and followed by delivery
scheduling as well as the management of inventory. b) Manufacturing the product, at a single
location or distributed geographically distributed. c) Retail and Distribution, that includes
transportation, packaging and warehousing. The 3PL come into play here, or the alternative of direct
shipping can also be exercised, however it’s not recommended from this paper’s perspective to
manage the shipping requirements
Horizontal and Vertical Integration: The most basic difference between the two is that the former
integration always occurs at the same stage, as that of the supply chain. Whilst the latter i.e. Vertical
Integration always occurs in between the different stages of the supply chain
Part 2: Recommended Supply Chain Network under Multi Echelon Structure.

Under this network, the supply chain management is regarded as being separately composed of
numerous different stages, each representing the physical locations, the activities encompassed under
processing and/or bill of materials (BOM); these stages are then further grouped into echelons
(Gordon, Small Business). The efficiency issues that arise in a supply chain, caused by the control
over echelons by different contending parties with competing and conflicting interests are ably
addressed under the serial multi-echelon system. This is an optimization technique in which
inventory positions at the different echelons are assumed to be driven by a common demand process
(Gordon, Small Business).
Part 3: Recommended Modification to Supply Chain Management
A tightly integrated supply chain, with complete control are some of the modifications that
ought to be adopted for efficient supply chain management. Alternatively, 3 LP’s (third party
logistics provider) are again immensely advantageous when it comes to reducing the costs of supply
networks, thus the overall transportation expenses. Let’s take a look
In order to effectively develop an adequate logistics strategy, the proper comprehension and
understanding of the inherent factors and characteristics becomes imperative. The aspects of pricing
and transportation economics are both concerned with characteristics and factors responsible for
driving up the costs Successful negotiation requires a full understanding of transportation economics.
Grasping a holistic overview of the transportation economics and pricing becomes crucial for
reducing costs, as it generally revolves around the following four topics: (a) Factors driving up the
transport costs, (b) Classifications or cost structures, (c) the carrier pricing strategies, and (d)
transportation ratings and rates As a simplistic hard and fast rule, logistic managers must strive for
dealings only with manufacturers (no independent distributors are contacted) and provide an
enhanced business situation. It all comes down to keeping the costs low and the services high. The
insertion of an additional level of logistics (3PL’s) imparts a growth in the savings. Take a look at the
below mentioned table, comparing the benefits and cost saving capabilities of both third-party
logistics and in-house supply chain management.

An Integrated Supply Chain Network

Action Plan
implementing a Serial Multi-Echelon network, that minimizes the inefficiency and randomness
emanated from the discretion of third-party controllers of the critical echelons of the supply network.
Conclusion
The complete Flow chart with supply chain network recommendations and suggestive modifications
to the currently implemented structural network have been satisfactorily presented. The Action Plan
further divests upon the essential steps necessary for effectively implementing supply chain
management for a traditional logistical approach.