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The Best Supply Chain Management Essay

Copyright © 2020 Teddy Ndhlovu


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Introduction

Over the past decade, supply chain management has focused more and
more on obtaining a competitive advantage in the markets as a vehicle
(Roushton et al., 2014). In the 1990s, many examples showed that
companies invested heavily in providing their supply chains, improving
customer satisfaction and increasing internal productivity. According to
Christopher (2016), competition is more between supply chains within an
organization than between organization. The supply chain aims to add the
highest value to customers at the lowest cost. This happens as the company
decides how to integrate chain features over time, geographically
distributed facilities, the chain of supply management opportunities
becomes the main key.

The supply chain is an integrated planning and control mechanism with


three key dimensions. The first dimension is a functional integration into
the company, and includes decisions on the acquisition, manufacture, and
distribution of companies and suppliers and customers. The second
dimension is the geographical integration of these functions into physical
installations in one or more continents. The third dimension is essential for
the decision making, strategic, tactical and operational decisions of the
chain. To this end, strategic planning and management are in charge of
resource acquisition, focusing on tactical planning and management of
resource allocation and improvement, and planning and operational
management of business performance (Hugos, 2018). Therefore, all parties
involved in the chain have a financial impact on the management of supply
companies. Dr. Bimal P. Nepal published a 2015 research aptly titled: Supply
Chain Management: Is It a Must Course for Manufacturing Engineering
Technology? From the surface, the researcher believes so due to their
importance to manufacturing companies in particular. For this reason,
research and application of the supply chain management principles are
essential for all current global companies.

Defining Supply Chain

Today, many organizations are forced to increase their global market share
to overcome and maintain growth goals. At the same time, the same
organization must defend the domestic market share from international
competitors. The challenge is to send customers products that require a
dynamic and fast set of channels to expand the logistics and distribution
network. The strategic positioning of the inventory is essential for the
customer's willingness to obtain products (Ellram and Cooper, 2014).
Rushton et al (2014) said that the supply chain should be really effective
and effecient. In this case, the aim is to obtain specific results that are
effective in reducing resource use, and effecient when designing
distribution channels. Efficiency is measured according to delivery
performance, product quality, and stock levels, and efficiency is measured
according to the quality of services and services. Long-term
competitiveness is based on the company's customer preferences in terms
of service, cost, quality, and flexibility, based on the design of the supply
chain that will be more effective and efficient than the competitors. This is
a constant challenge to optimize this balance for companies that are part of
the supply channel network, as shown in the figure below. To optimize this
balance, an organization needs to take a lot of strategic decisions and
coordinate many activities. It requires careful handling and design of the
supply chain. The layout of the supply chain is clearly demonstrated that
companies generate innovation, differentiation, and value (Hugos, 2018).
Designers and management of the supply chain are capable of designing
and describing active challenges, organizations, skills, and capabilities. This
involves the team, partners, products and processes.

Adapted from Ernst (2002)

According to Hugos (2018) the management of the supply chain is


established as a definition of supply chain management. In his diary, he
wanted to make a common definition of a supply chain based on a
comprehensive research investigation by several authors. The following
definition was obtained: "A supply chain involves three or more
organizations (organizations or individuals) directly involved with products,
services, financing and/or information from one source to another, directly
to the customer." The supply chain introduces the company's internal parts
and external suppliers to access a focused business. Providers of this
company supply the supplier (also called second-hand suppliers). The
supply chains are basically a group of suppliers and customers who are
connected to the final product (Jacobs and Chase, 2017). The supply chain
of a company forms an upstream provider network and its downstream
distribution channel. Institutions can be part of many supply chains.

According to the complexity of the stock market, Mentzer (2001, page 22) as
cited by Dahlman (2007) defined three types of supply chains:

1. Direct supply chain, company, supplier and customer.

2. Large supply chain, including instantaneous suppliers and immediate


customer clients.

3. The final supply chain, including all the participating organizations in the
upstream and downstream.

Defining Supply Chain Management

Although the industry and academy have investigated the SCM concept over
the past twenty years, the conceptual definition of the concept is still
unclear. As a result, the consistency of meaning and clarity lacks in the
definition of the supply chain available in the literature. Some of them are
listed. Rushton et al (2014) found that the supply chain provides an
integrated philosophy based on the marketing perspective of managing and
purchasing distribution processes. Persson (1997, p. 58) concluded in his
research, as cited by Jacobs and Chase (2017) that supply chain
management is homogeneous. The overall goal of supply chain management
is the improvement in the company's bottom line or profitability. Relative
goals, above all, reduce inventory and increase the cost of increasing
revenue by improving customer service, through coordination and
integration, by consolidating the flow of material, profit and customer base.
This means that individual companies must coordinate their activities with
other companies in order to achieve supply chain management goals and to
adapt their activities in the context of profitable material and work together
in the final effort of the customer.

Several authors defined supply chain management. Christopher (2016),


defines supply chain management as the "integration of key business
processes between interdependent suppliers, manufacturers, distribution
centers and the network of commerce, to provide the newest customers of
the original suppliers of goods, services and suppliers to reduce system
costs by necessary service levels"(Jacobs and Chase, 2017). The Global
Supply Chain Forum (GSCF) defines supply chain management as
"integrating main end-user business processes by the original suppliers,
providing information that adds value to products, services, and customers
and other stakeholders" (Dahlman, 2007). SCM is described in the dictionary
as: "raw material processes that connect the end user's final consumption
processes with supplier-user companies."

Boonjing (2015) summarizes SCM "all raw materials which include product
raw materials and parts, manufacturing and assembly, storage and
inventory detection, order inclusion and order management. And all the
activities that deliver the raw material product that distributes, and
crucially the information systems for monitoring these activities.”

Shapiro (2001) as cited by Hugo (2018) says SCM's traditional goal to meet
fixed demand at minimal supply chain costs. These additional costs may
include:
• Raw materials and other purchase costs.
• Incoming transport costs
• Installation investment costs
• Direct and indirect manufacturing costs.
• Direct and indirect distribution costs
 Deposit cost
• The distance between transport costs
• Outgoing transport costs

Boonjing (2015) says that SCM's dual objective is to improve the functioning
of an individual organization and the entire supply chain. New research
supports this concept, depicting SCM as a strategic concept level. Jacobs
and Chase (2017) say that supply chain management is a strategic and
systematic coordination between business functions and supply chain
entities within the SCM institutions to improve the long-term performance
and the supply chain of individual companies as a whole. Each of these
definitions of SCM aim to create a distinct advantage by maximizing the
value of all products and services (Ellram and Cooper, 2014). SCM is a
discipline in the early stages of evolution (Ellram and Cooper, 2014). SCM
provides a specific training called "business ecosystems," and provides
companies with a framework of coexistence and competition (Christopher,
2016). The term was suggested by the above cited consultant and the
educator proposed the structure and theory of SCM's export.

The supply chain consists of all the phases that directly or indirectly
participate in the fulfillment of the customer's request. The supply chain
includes not only manufacturers but also suppliers, carriers, warehouses,
retailers and customers. Within each institution, the manufacturer includes,
for example, all the functions that the supply chain responds to customer
demands. These features are the development, marketing, operations,
distribution, financing and customer service of new products. Supply Chain
Management involves managing the flow included within a supply chain to
maximize overall profitability (Christopher, 2016). Supply chain
management, integration, and management of supply chain organizations
and activities, collaborative organizational relationships, effective business
processes and high sharing of information, which allow the generation of
high-performance systems. (Dyrud, 2016).

Supply Chain Management and Logistics Management

Dahlman (2007) states that the terms Logistics management and SCM are
often used as synonymous in many cases. SCM handles logistical
frameworks for raw materials, delivering the final product. The logistics
management function is to plan and coordinate the necessary actions to
achieve the minimum possible cost of service and quality decisions,
according to Christopher (2016). Supply Chain Management is an expansion
of logistics management. Logistics management is primarily an optimization
of flow within the organization, while the SCM is external.

Why Supply Chain Management?

Many companies find that effective Supply Chain Management is focused on


increasing profit and market share. There are companies that minimize
manufacturing costs and these are therefore the keys to SCM. The company
needs a complete supply chain to find new areas to reduce costs. Rushton et
al (2014) have committed themselves to improve SCM, to balance customer
demand so that growth is profitable. Hugo (2018) posits that the most
important aspec of SCM is that it offers better customer value and at the
same time reduces costs. Hugo (2018) says the SCM aims to improve the
efficiency of the product supply process, according to the customer's latest
clientele. The main objective of the efficient chain of efficiency is to meet
the costs to be as low as possible. SCM aims to improve the efficiency of
material raw material suppliers (Dyrud, 2016). SCM can also significantly
reduce the price of the customer's cost by reducing costs significantly.
Customer value is also important to determine the type of supply chain
needed to store the customer. Depending on the type of products or
services offered by a customer supply chain strategy, the value of the
various items of this offer of the customer is determined. SCM has a wide
range of options. Jacobs and Chase (2017) say that Supply Chain
Management takes into account all costs that affect the pricing and ensure
that the product meets the requirements of the customer.

Supply Chain Management is an efficient and cost-effective way throughout


the system. The cost-effectiveness depends on the total cost of the system,
transport, and distribution, by reducing the raw material, the work process
and the end of the product and the costs. The supply chain management is
not only a means of reducing transport costs and reducing inventory but
also of improving the system's perspective. SCM environment theories are
connected to different domains. From the theory of atomic induction
theory, the generation of holistic and transversal discipline is required
beyond the traditional milestones of SCM, according to Rushton et al (2014).
The SCM economy, engineering, operational management, production
management, and logistics must be taken into account.

SCM spreads it across all levels. Strategic strategy takes decisions in a long-
term company. These include decisions about warehouses and
manufacturing facilities and material flow through logistics. The level of the
keyboard contains the decisions that are updated every quarter. These are
purchase and production decisions, inventory policies and transport
strategies, including frequencies visited by customers. The operational level
takes into account daily decisions, such as schedules, lead, traces, and
transportation. Most research focuses on the operational and tactical
aspects of the supply chain, including customer contracting relationships
(Love et al., 2004). SCM has activities to buy, sort, produce and distribute.
All these areas include other activities. All activities must be taken into
account when introducing a supply chain. It is important that senior and top
management companies understand the management and applicability of
the supply chain. These people are the decisive company's strategies and
axes. SCM must show interest in the company and be visible to all
employees of the company to provide good care and good results. The
supply chain has worked in the industry for a long time and nothing needs
to be taken care of by the management. Supply chains are critical
dimensions. According to a survey by Price-Waterhouse Coopers, the largest
400 European companies can expect the biggest obstacle for changing
European supply chain projects, according to culture and language and IT
systems (Hugos, 2018). Fernie (1995) made an international SCM comparison
in grocery retail. In the United States and European trade, significant
differences were found in stock inventory quality in terms of SCM. It is
predominant in the development of the European supply chain and the
stock is reduced. The offerings of companies are at different levels of
knowledge. The levels differ in different business lines and in different
parts of the world. With the support of the SCM or especially the supply
chain, a great example of Zara. The company is a fashion vendor and
synchronized with the network of production networks with its customers'
requirements so customers can respond quickly to the changing taste of
fashion consciousness (Rushton et al., 2014).

Supply chain collaboration can be defined as two or more independent


firms jointly working to align their Supply chain processes so as to create
value to end customers and stakeholders with greater success than acting
alone (Dahlman, 2007). When chain members involve in collaboration, there
can be a dilemma between accommodating decisions that take into account
the interest of the Supply chain as a whole and preserving decisions in the
interest of an individual firm. Companies benefit from focusing on
identifying the constraint that prevents the chain members from achieving
overall profitability. The constraint can be either physical or non-physical
and internal or external. According to Boonjing (2015), Supply Chain
Management was still in the early 2000s a very popular development area
among companies.

The importance is especially significant in the area of the high tech


industry. To set up an excellent Supply chain strategy requires high
knowledge in the SCM area. Profit maximization, maximum competitive
advantage, select service level, and minimal asset deployment is part of the
strategy to set up in the Supply chain definition by Boonjing (2015).
Christopher (2016) posits that the whole purpose of logistics strategy is to
provide customers with the level and quality of service that they require
and do so at less cost to the total Supply chain. There are a lot of factors to
consider when deciding how to set up a Supply chain. Christopher (2016)
mention:

 Number of suppliers
 A number of sub-suppliers. Module suppliers or many sub-suppliers
 Distance to supplier
 Size of supplier
 Co-operation with the supplier
 Direct shipments
 Storage location local, regional or central
 3PL (third-party logistics) distributors (provides logistics services to
other companies)
 A number of distribution alternatives.

Processes Involved in Supply Chain Management

Identification of Needs
The first step in the supply chain management is to identify the material
needs of material, the number of supplies, the types of supplies, the
distance to be covered, the mode of transport used, the total financial
resources needed for the task and the human resources needed to complete
the necessary tasks. All these needs must be identified before the offer
begins (Jacobs and Chase, 2017).

Supplier identification

The next step is the identification of suppliers. Suppliers can be identified


among known old suppliers or through a market analysis. The list has been
made with potential candidates and will be sent to people with information
request (RFI) (Bonjing, 2015). Based on the information, the list of suppliers
is shorter and the proposal request (RFP) is sent to this limited number of
potential candidates.

Selection of suppliers

The most important step in the process is to take care of providers to


prevent errors in the company's long-term effects. There are two ways to
decide to choose two providers: competitive offers and negotiations. When
requesting RFPs, the buyer decides to analyze the information sent to the
suppliers or suppliers to ensure more negotiations (Boonjing, 2015). The
most effective offer is when the price is dominant and the product
specifications are well defined. Negotiations, however, are sensible only if
the purchase conditions are complex, there are several performance factors
agreed, or there are some risks to be discussed. (Elram and Cooper, 2014).
After the offer and negotiations or both, a selection proposal is made.
Supplier Evaluation and Selection

Among the most important parts of the procurement process is the


evaluation and choice of suppliers. This is the first step to evaluating and
selecting a supplier of an item or service. The need to evaluate test
providers can be recognized in many ways. Selection of suppliers begins
with the formulation of the criteria used to select suppliers. The second
step is to identify the keys to access, which is the stipulation program. A
distinction is made between functional and technical specifications.
Functional specifications specify what a good or service an organization can
actually make or deliver. The technical specifications describe the
product/service they are looking for. This includes management ability;
employee skills; cost structure; Quality of performance, systems, and
philosophy; process and technology ability; compliance with environmental
regulations; financial stability; production planning and control systems;
suppliers' strategies, policies, and techniques, and long-term potential
relationships (Monczka et al., 2005).

Nellore et al. (2009) add that the specifications is a document that is used to
build a product. To minimize communication errors and confusion and to
avoid related errors, minimum redundant statements are required. Clark
and Wheelwright (2003) show ways of communication that have a broad
meaning in the relationship between four specifications and suppliers. The
third step in the selection and evaluation of suppliers is to determine the
procurement strategy. This is not the only strategy for obtaining strategies
to meet the needs of all purchases (Telgen et al., 2005; Monczka et al.,
2005). For this reason, the approach is followed by the supplier's
assessment and the selection process will be affected by the contracting
strategy adopted by a particular offer or service. One of the decisions that
the buyer develops in developing a strategy includes more than one source;
short-term, long-term contracts, etc. It is clear to understand the differences
in purchases. The company that operates in the company's organization;
supply market; product market; purchased product or service and purchase
status (Telgen, et al., 2005). The fourth step is to identify potential sources
of supply. The level of search the buyer must seek information or the
search attempt is the function of multiple variables that the supplier meets
cost, quality, or other performance variables. Suppliers are the sources of
information for the identification of suppliers: suppliers, sales
representatives, and information databases.

The fifth step is to re-evaluate. The purpose of this step is to limit the
selection pool providers. By means of an information request (RFI), the
buyer obtains basic information of many suppliers from his organization or
from the product range. Due to the limited resources and versatility of
suppliers' provision, buyers first cut off sources of supply (Telgen et al.,
2005). After that, the request for quote (RFQ) is a list of the requirements
required to request an offer (LOR). In practice, mention is sometimes
referred to as offers or bidding (Telgen et al., 2005). From Boer et al. (2001)
summarizes this summary in the classification, to reduce the collection of
all suppliers and to classify the process for reducing the set of acceptable
suppliers and predicting the pre-calculation. Sarkar and Mohapatra (2006)
suggest that the pre-vendor's supplier has several items in stock provision.
Provision of a strong supplier development provider is to have a small
number of suppliers. In most procurement entities, the number of
registered suppliers is high, but only a small part of the suppliers get
business year after year.

Rushton et al (2014) continue to send out a large amount of information


about unnecessary providers gathered on the internet to unnecessary
quantitative measurements for customers and visitors. No information
about known vendors is stored in the form that converts it into a
quantitative conversion. To evaluate these suppliers against the factors, the
sales team must be subjectively and qualitatively evaluated.
Final Selection for Suppliers

This phase is provided by Monczka et al., (2005). Monczka et al. (2005) state
that it should consist of a list of vendors 'suppliers' assessment and list of
approved supply provider. As a result, the selection of suppliers is more
than one decision. Purchase management is one of the main features of the
selection of suppliers. Selection of suppliers is one of the most important
issues in decision making, the choice of the best suppliers reduces
purchasing costs and improves corporate competitiveness.

Dyrud (2017) openly specified that it is more important than choosing the
right source under all the responsibilities that the responsible buyers can
say. It is considered an acquired operating mode after the supplier has been
selected. Access to a single product request or routine requires more time
to cover conventional repositories. In the latter case, it is called an order or
a framework agreement. After the request, especially for products with long
delivery periods, it must be continued. The application will be permanently
monitored or monitored on a number of occasions in the case of
verifications made by telephone or by e-mail, in order to enable the supplier
to use it in accordance with the agreed delivery.

The next step in the process is to receive the product and analyze the order
that meets him (Dyrud, 2017). Inspections are very important because the
scarcity and damage to the use of the product are detected. The final step is
payment. However, the buyer does not have the order before the product is
checked and the equivalent of invoices. If not, the order can be closed
(Dobler et al., 2006). The last step is to keep records. This, of course,
involves the collection and preservation of documents generated in the
process, as well as knowing which documents are relevant. Document
management is an easy access point. The company must have at least
purchase orders, products, and suppliers (Dyrud, 2016).
Efficiency in the Supply chain

What is the Supply Chain Efficiency and Supply Chain Effective? According
to Christopher (2016), leaders of the future market will be the ones who
have initiated and achieved double peak excellence. The leaderz in costing
and the leaders in services. Supply Chain Management is intended to
maximize the company's money. It means the least cost, and at the same
time sells it as much as possible. Low costs mean that the cost of the supply
chain is as low as possible. To obtain low-cost of supply, the company must
have the best internal and external performance. Internal performance, for
example, can be output, production lead time. External performance is the
impact of customers. Examples of external performance parameters include
delivery accuracy, lead time, customer service and price. In order to achieve
leadership in the network market, competitors should pay attention to
network management and internal processes by Christopher (2016). In order
to continue to be competitive in the new global environment, businesses
must find ways to improve and lower cost of service. This means that the
efficiency and effectiveness of the supply chain will be even more critical.

Efficiency is the measure used according to various sources (Rushton et al.,


2014). Thanks to this discretion, the company optimizes the Supply Chain
to maximize profitability. The main objective of each logistics system is to
maximize profitability, as Dyrud (2016) writes. With the excellent supply
chain, the company can deliver high-quality customers at a low cost, in the
short term and the customer requested the service (Rushton et al., 2014).
According to Collin (2003) as cited by Jacobs and Chase (2017), the chain of
supply chains is three-dimensional:

• Customer service

• Employed capital
• Customer service and cost are reverse poles, which must be balanced for
the best results of a company.

Cutting costs in the supply chain, for example, maybe a longer extension
because the company cannot have a buffer inventory. Lead time
improvements can be made to install a stock buffer, but it is a cost to link
money between capital and risk variations. It is very important to find a
company with a supply chain cost and a balance between customer-oriented
performance. There is no general balance that can be used by all companies
and all products. Each company must find its balance to maximize company
profits. Some companies have different balance sheets in relation to their
product portfolio. Some clients require very high customer service and they
are willing to pay. As far as other customers are concerned, the most
important factor and these companies reduce customer service. Christopher
(2016) means that the analysis of the efficiency of supply chains often finds
that more value is added that many activities. The relationship between the
cost of customers and the level is essential when an offer strategy is drawn
up. According to Boonjing (2015), it is necessary to evaluate the relationship
between the levels of customer service and related costs when completing
the logistics strategy.

The concept of the entire cost is one of the fundamental principles of the
current SCM. Excluded consumers, none of the SCM theory will reflect the
real world, as the result of the successful SCM consumer is an important
key. What is the customer service in the supply chain view? Customer
service is an activity and performance that adds value to the customer. The
low price, the short period and the delivery dates are the three important
areas that are relevant to customers. Rushton et al (2014) Supply chains for
the generation of value for at least three prospects are:

• Economic value

• Market value
• Value of relevance

There are different measures that can be used to assess the effectiveness of
a different supply chain. Collin (2003) describes the stock rotation that tells
how moving the material in the supply chain most used by the performance
indicator for the analysis of the supply chain. According to Collin (2003),
internal states and processes have environmental features to be dependent
on the efficient supply chain. There are not the only providers, tailored to
all customers. Client environmental requirements must define the correct
structure of a supply chain. It is not enough for a company to have
competitive products and have only a good average customer supply.
Jacobs and Chase (2017) state that the supply chain is a customer's need. To
reduce costs and improve service levels, consideration of the efficiency of
Supply Chain Strategies at different levels of Simchi Supply Chain are
imperative (Dyrud, 2016). The supply network can be accessed logically.
Supply Chain suppliers, manufacturing centers, warehousing, distribution
centers, and retail sales, as well as raw materials, labor advances, and
facilities. In the supply chain for external actors, it is important that
Efficiency enhancements be taken into account in the entire Supply Chain.
When the company makes a profit, there is no cause as the supplier himself.
This includes short-term profits and long-term price rises. One individual,
optimizing their success, takes into account how best to use inborn
resources and best match the Supply Chain efforts.

References

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Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
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Dyrud, M.A., 2016. 2015 Engineering Technology Education


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Ellram, L.M. and Cooper, M.C., 2014. Supply chain management: It's all
about the journey, not the destination. Journal of Supply Chain
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Hugos, M.H., 2018. Essentials of supply chain management. John Wiley &
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