Essay on Supply Chain Management

Here is a compilation of essays on ‘Supply Chain Management’ for class 11 and 12. Find paragraphs, long and short essays on ‘Supply Chain Management’ especially written for college students.

Essay Contents:

Essay on the Introduction to Supply Chain Management
Essay on the Concept of Supply Chain Management
Essay on the Objective of a Supply Chain Management
Essay on the Decision Phase in a Supply Chain Management
Essay on the Process-View of a Supply Chain Management
Essay on the The Importance of Supply Chain Flows
Essay on the Classification of Supply Chain Processes
Essay on the Role of 3-PL in Supply Chain
Essay on the Development of Supply Chain through E-Commerce and E-Manufacturing

Essay # 1. Introduction to Supply Chain Management:

A supply chain consists of all parties involved indirectly or directly for fulfilling of customer’s requirements. The supply chain not only includes the manufacture’s and suppliers but also transporters, warehouses, retailers and end-users (i.e., customers) themselves.

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Within each organisation such as a manufacturer, the supply chain includes all functions involved receiving and fulfilling a customer’s requirements. These functions include new product development, marketing, operations, distribution, finance and customer services.

A supply chain is dynamic and involves the constant flow of information, product and funds between different stages. For example, one retailer provides the product as well as pricing and available information to the customer. The customer transfers funds to retailer. Retailer convey point of sales data as well as replenishment orders to the warehouse or distributor, who transfers the replenishment order via trucks back to the store.

Retailer transfers funds to the distributor after the replenishment. The distributor also provides pricing information and sends delivery schedules to the retailer. Similar information materials, and fund flows take place across the entire supply chain.

Here the customer is an a integral part of the supply-chain. The primary purpose for the existence of any supply chain is to satisfy customer needs in the process generating profits for itself. Supply chain activities begin with a customer order and end when a satisfied customer has paid for his or her purchase.

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The term supply chain denotes image of product or supply moving from suppliers to manufacturers to distributors to the retailers to customers along a chain. It is important to visualize information funds and product flow along both directions of this chain.

It is important about the supply chain that it may imply that only one player is involved at each stage. In reality, a manufacture may receive material from several suppliers and then supply to several distributors. Thus most supply chains are actually networks. It may be more accurate to use the term supply network or supply web to describe the structure of most supply chain as shown in Fig. 3.1.

A typical supply chain may involve a variety of stages.

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These supply chain stages include:

(a) Customers.

(b) Retailers.

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(d) Manufacturers.

(e) Suppliers of raw materials.

Essay # 2. Concept of Supply Chain Management:

The supply chain comprises all activities associated with the flow and transportation of goods from the raw material stage to end users, as well as the associated information flow. Material and information flows both upwards and downward in a supply chain.

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The supply chain includes system management, operations and assembly, purchasing. Production, scheduling, order processing, inventory management, transportation, warehousing and the customer services. All flows of information, product or funds generate cost within the supply chain.

The aim of each supply chain is to maximize the overall value generated. Success of a supply chain is defined in terms of supply chain profitability, the difference between the revenue generated from the customer and the overall cost across the supply chain. So for the success of a supply chain its appropriate management is necessary.

Supply chain management is an organisational concept whose primary object is to productively manage the two-way movement and co-ordination of goods, services and information’s from supplier to operators.

Physical distribution management focuses on the coordination of goods, services and information from manufacturer to end-user. So the supply chain management involves both materials management and physical distribution management.

Essay # 3. Objective of a Supply Chain Management:

The objective of every supply chain is to maximize the overall value generated. The value a supply chain generates is the difference between what the final product is worth to the customer and the effort the supply chain expands in filling the customer’s requirements. For most commercial supply chains, value will be strongly correlated with supply chain profitability, the difference between the revenue generated from the customer and the overall cost across the supply chain.

For example, a customer purchases a mobile from Nokia pays Rs. 6000 which represents the revenue the supply chain receives. Nokia and other stages of the supply chain incur costs to convey information, produce parts, store them, transport them, transfer funds and so on. The difference between the Rs. 6000 that the customer paid and the sum of all costs incurred by the supply chain to produce and distribute the mobile represents the supply chain profitability.

Supply chain profitability is the total profit to be shared across all supply chain stages. The higher the supply chain profitability, the more successful the supply chain. The success of supply chain should be measured in terms of profitability and not in term of profit at an individual stage.

For any supply chain there is only one source or revenue i.e. the customer. All other cash flows are simply fund exchange that occur within the supply chain given that different stages have different owners. All flows of information, products or funds generate costs within the supply chain.

Essay # 4. Decision Phase in a Supply Chain Management:

Successful supply chain management requires many decisions relating to the flow of the flow of information, product and funds.

These decisions fall into following three categories:

(I) Supply chain strategy or design:

During this phase, a company decides how to structure the supply chain over the next several years. It decides what the chain’s configuration will be, how resources will be allocated and what processes each stage will perform.

Strategic decisions made by companies include the location and capacities of production and warehousing facilities, the products to the manufactured or stored at various locations, the modes of transportation to be made available along different shipping legs and the type of system to be utilized.

(II) Supply chain planning:

For decision made during this phase, the time frame considered is a quarter to a year. Therefore, the supply chains configuration determined in the strategic phase is fixed. This configuration establishes constraints within which planning must be done.

Companies start the planning phase with a forecast for the coming year’s demand. Planning includes decisions regarding which markets will be supplied from which locations, the subcontracting of manufacturing, the inventory policies to be followed, and the timing and size of marketing promotions.

(III) Supply chain operation:

The time horizon is weekly or daily for this phase and during this companies make decisions regarding individual customer orders. At the operational level, supply chain configuration is considered fixed and planning policies are already defined. The goal of supply chain operations is to handle incoming customer orders in the best possible manner.

During this phase firms allocate inventory or production to individual orders, set a date that an order is to be filled, generate pick lists at a ware house, allocate an order to a particular shipping mode and shipment, set delivery schedules of trucks and place replenishment orders.

Essay # 5. Process-View of a Supply Chain Management:

A supply chain is a sequence of processes and flows that place within and between different stages and combine to fill a customer need for a product. There are two different ways to view the processes performed in a supply chain.

(I) Cycle view:

The processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive stages of a supply chain.

Given the five stages of a supply chain shown in Fig 3.1. all supply chain processes can be broken down into the following four process cycles, as shown in Fig. 3.2:

(i) Customer order cycle.

(ii) Replenishment cycle.

(iii) Manufacturing cycle.

(iv) Procurement cycle.

(i) Customer order cycle:

It occurs at the customer/retailer interface and includes all processes directly involved in receiving and filling the customer’s order. Basically, the customer initiates this cycle at a retailer site and the cycle primarily involves filling customer demand. The retailer’s interaction with the customer starts when the customer arrives or contact is initiated and ends when the customer receives the order.

The process involved in the customer order cycle are shown in Fig. 3.3 and it includes:

(a) Customer arrival.

(b) Customer order entry.

(d) Customers order fulfillment.

(ii) Replenishment cycle:

It occurs at the retailer/distributor interface and includes all the processes involved in replenishing retailer inventory. It is initiated when a retailer places an order to replenish inventories to meet future demand.

A replenishment cycle may be triggered at a super-market that is running out of stock of particular commodity. This is similar to the customer-order cycle except that the retailer is now the customer. The object of this cycle is to replenish inventories at the retailer at minimum cost while providing high product availability.

The processes involvement are shown in Fig. (3.4) and include:

(a) Retail order trigger.

(b) Retail order entry.

(d) Retail order receiving.

(iii) Manufacturing cycle:

It occurs at the distributor/manufacturer or (sometime retailer/manufacturer) interface and include all processes involved in replenishment of the distributors (or retailer’s) inventories. The manufacturing cycle is triggered by customer orders, replenishment orders from a retailer or distributor or by the forecast of the customer demand and current product availability in the manufacture’s finished goods warehouse.

One extreme in a manufacturing cycle is an integrated steel mill that collect orders that are similar enough to enable the manufacturer to produce in large quantities. In this case the manufacturing cycle is reacting to customer demand. Another extreme is a consumer products firm that must produce in the anticipation of demand. In this case the manufacturing cycle is anticipation of consumer’s demand.

The processes involved in the manufacturing cycles are shown in Fig. 3.5 and they include:

(a) Order arrival from the finished goods warehouse, distributor, retailer or customer.

(b) Production scheduling.

(d) Receiving at the distributors, retailers or customers.

(iv) Procurement cycle:

The procurement cycle occurs at the manufacturer/supplier interface and including all processes necessary to ensure that materials are available for manufacturing to occur according to schedule. During the procurement cycle the manufacturer orders component from suppliers that replenish the component inventories. The relationship is quite similar to that between a distributor and manufacturer with one significant difference.

Where’s retailer/distributors orders are triggered by uncertain customer demand, component orders can be determined by precisely once the manufacturer has decided what the production schedule will be Component orders depend on the production schedule.

Thus it is important that supplier’s be linked to the manufacturer’s production schedule. So it is important that supplier’s lead time may be long but the manufacturer’s production schedule should be fixed in advance.

This cycle is shown in Fig. (3.6) and it includes:

(a) Order based on manufacturer’s production schedule.

(b) Supplier production scheduling.

(d) Receiving at manufacturer.

II. Push/Pull View of Supply Chain Processes:

The processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order or in anticipation of customer orders. Pull processes are initiated by a customer order whereas push processes are initiated and performed in anticipation of customer orders.

All processes in a supply chain fall into one of two categories depending on the timing of their execution relating to end customer demand. With ‘Pull’ processes, execution is initiated in response to a customer order. With push processes, execution is initiated in anticipation of customer orders.

Therefore, at the time of execution of a ‘Pull’ processes, customer demand is known with certainty whereas at the time of execution of a push process, demand is not known and must be forecast. Pull processes may also be referred to as speculative processes because they respond to forecast rather than actual demand.

The push/pull boundary in a supply chain separates push processes from pull processes. At Nokia, for example, the beginning of mobile assembly represents the push /pull boundary. All processes before assembly are push processes and all processes after and including assembly are initiated in response to a customer order and are thus pull processes.

A push/pull view of supply chain is very useful when considering strategic decisions relating to supply chain design. This view forces a more global consideration of supply chain processes as they relate to a customer order. Such a view may, for instance, result in responsibility for certain processes being passed on to a different stage of the supply chain if making this transfer allows a push process to become a pull process.

Pull/push processes are shown in Fig. 3.7:

Essay # 6. The Importance of Supply Chain Flows:

There is a close connection between the design and management of supply chain flow (Product information and cash) and the success of a supply chain. Retailer’s success is very much depends on the good supply chain practices. Nokia has, over a relatively short period of time, become the world’s largest mobile manufacturer.

They have generated margins, Profits and subsequently market capitalization beyond any of their competitor’s Mobile business. Nokia has attributed a significant pan of its success to the way it manages flows product, information and cash within its supply chain. Nokia’s basic supply chain model is direct sales to customers. As distributors and retailers are bypassed, the Nokia supply chain has only three stages-customers, manufacturers and suppliers as shown in Fig (3.8).

The success of Nokia supply chain is facilitated by sophisticated information exchange. Nokia provides real time data to suppliers on the current state of demand. Suppliers are able to access their components inventory levels at the factories along with daily production requirements.

Nokia has created customized web pages so that its major suppliers can view demand forecasts and other customer-sensitive information, thus helping suppliers to get a better idea of customer demand and better match their production schedules to that of Nokia.

Nokia has also managed its cash flows very effectively. By managing receivables and payable very closely. They are able to collect cash from their customers, on average, ten to fifteen days before they have to pay their suppliers clearly. Nokia’s supply chain design and their management of product information, and cash-flows play a key role in the company’s success. This approach has left Nokia very well positioned in the mobile industry.

Essay # 7. Classification of Supply Chain Processes:

We can classify the supply chain processes into following two broad categories:

I. On the Basis of Macro-Processes:

All supply chain processes in a firm can be classified into the following three macro-processes as shown in Fig. (3.10).

(a) Customers Relationship Management (CRM):

All processes that focus on the interface between the firm and its customers.

(b) Internal Supply Chain Management (ISCM):

All Processes those are internal to the firm.

(c) Supplier Relationship Management (SRM):

All processes that focus on the interface between the firm and its suppliers. The three macro Processes manage the flow of information, Product and funds required to generate receive and fulfill a customer requirement. The CRM macro process aims to generate customer demand and facilitate the placement and tracking of orders.

It includes processes such as marketing, sales, order management and call centre management. CRM processes include the preparation of catalogs and other marketing materials, management of the Web site and management of the call centre taking orders and providing services.

The ISCM macro process aims to fulfill demand generated by the CRM process in a timely manner and at the lowest possible cost. ISCM processes include the planning of internal production and storage capacity, preparation of demand and supply plans and internal fulfillment of actual orders.

ISCM process include planning for the location and size of warehouses, planning for products to carry at each warehouse, preparation of inventory management policies and the picking, packing and shipping of actual orders.

The SRM macro Process aims to arrange for and manage supply sources for various goods and services. SRM processes include the evaluation and selection of suppliers, negotiation of supply terms and communication regarding new products and orders with suppliers.

SRM processes include the selection of suppliers for various products, negotiation of pricing and delivery terms with the suppliers, sharing of demand and supply plans with suppliers, and the placement of replenishment orders.

II. On the Basis of Characteristics:

We can classify the supply chain into the following:

(i) Supply chain responsiveness

(ii) Supply chain efficiency

(i) Supply Chain Responsiveness:

It includes a supply chain’s ability to do the following:

(a) Respond to wide ranges of quantities demanded.

(b) Meet short lead times.

(d) Build highly innovative products.

(e) Meet a very high services level.

(f) Handle supply uncertainty.

These abilities are very similar to many of characteristics of demand and supply that led to high implied uncertainly. The more of these abilities that a supply chain has, the more responsiveness it is. Responsiveness, however comes at a cost. For instance, to respond to a wider range of quantities demanded, capacity must be increased, which increases costs. This increase in cost leads to the second definition.

(ii) Supply Chain Efficiency:

It is the cost of making and delivering a product to the customer. Increase in cost lowers efficiency. For every strategic choice to increase responsiveness, there are additional costs that lower the efficiency.

Essay # 8. Role of 3-PL in Supply Chain:

Third-Party Logistics [3-PL] concept is related with the transport service provider which is treated as third party rather than manufacturer and customer. Products or services are transported from supplier to the manufacturer and from manufacturer to the end-customer. At present, so many industries use an external transportation service provider or third party.

For example ‘LG’ relies on package carriers and postal system to deliver customer orders from centralized warehouses. Different automobile and computer related industries are using expertise of logistics provider companies to transport their products to end customers. These logistics (Third party) provider support the supply chain by using four major linkages shown in Fig. (3.11).

(i) Inbound logistics:

It includes all means and activities of inbound shipment between a supplier and buyer’s facilities.

(ii) Intra Organisational Transpiration:

This linkage is used by those companies which have multiple production and warehouse facilities. This includes transportation of materials and products between production facilities within the same organization as well as transportation to warehouse storage location.

(iii) Outbound Logistics:

It includes linkage between a company and its various customers (end-users). The transportation department controlled the shipment of outbound goods while suppliers arranged the movement of inbound freight. After the delegation of transportation industry, industry piepaies third party logistics for this task.

(iv) Recovery and Recycling:

The fourth link is related with recovery and recycling of obsolete products and goods from customers by suppliers.

Essay # 9. Development of Supply Chain through E-Commerce and E-Manufacturing:

E-Commerce:

In this discussion we discuss how E-commerce can be used to improve supply chain performance. E-commerce is based on both a company’s industry and their stage in the supply chain. Our goal is to enable manager to analyze their supply chains to identify if and how they can use E-Commerce most beneficially.

E- Commerce is the execution of business transactions via Internet. Supply chain transactions that involve E-commerce include the flow of information, product and funds.

For instance the following are all transactions that can be executed with E-commerce:

(a) Providing product information’s to the participants across the supply Chain

(b) Placing orders to suppliers.

(d) Filling and delivering orders to customers.

(e) Receiving payments from customers.

These transactions are obviously not new tasks that have come into existence through the creation of E-commerce. Rather, they are the traditional tasks performed by business for decades. E-commerce, however, can enhance these transactions by allowing them to take place over the Internet where they can often be executed more efficiently and with a higher level of responsiveness.

Today, the Internet plays a significant role in many supply chains and companies are using the internet to conduct a wide variety of supply chain transactions. Companies display all its product information over the internet so customers are able to identify all options available for a product that they want to purchase along with the price of the configuration they select.

E-Commerce can be divided into four main categories:

I. Business-to-Customer (B2C):

E- Commerce involves transaction between a company and a customer.

II. Business-to-Business (B2B):

E-commerce involves transaction between two companies.

III. Customer-to-Business (C2B):

It involves transaction from customer to company.

IV. Customer-to-Customer (C2C):

It involves transaction from customer to customer.

The E- commerce frame-work consists of a score card that can be evaluated by a firm to gauge the impact of E-commerce and gain insight into whether or not E-commerce makes sense for them.

At its most basic level, this scorecard can be broken into two categories:

(A) Impact on responsiveness (which primarily affects a company’s ability to grow and protect revenue).

(B) Impact on efficiency (which primarily affects a company’s cost).

(A) Impact on responsiveness:

Improve responsiveness primarily enables a company to earn new revenues or to protect existing revenue and it includes following responsiveness:

(i) Direct sales to customers.

(ii) 24- hours access from any location.

(iii) Wider product portfolio.

(iv) Faster time to market.

(v) Flexible pricing, portfolio and promotions.

(vi) Efficient funds transfer.

(vii) Lower stock-out levels.

(viii) Automated processes, etc.

(B) Impact on Efficiency:

On the cost side, E-commerce impacts all four supply chain drivers as:

(i) Inventory-at lower levels.

(ii) Facilities-cost reduces.

(iii) Transportation cost and time saving.

(iv) Information sharing possible.

E- Manufacturing:

As compare to past decade, now the impact of web-based technologies has added velocity to the design, manufacturing and aftermarket service of a product. Today’s competition in manufacturing industry depends just not only on manufacturing, but also to the ability to provide customers with total solutions and life-cycle costs for desired quality and value.

Manufacturers are now under a huge pressure to improve their repulsiveness efficiency in terms of product development, operations and resource utilization with a transparent visibility of production and quality control. Lead times must be cut-short to their extreme extent to meet the changing demand of customers in different regions of the world. Product are required to make to order with minimum inventories.

So the E-manufacturing is a transformation system that enables the manufacturing operations to achieve predictive near zero downtime performance as well as to synchronize with the business systems through the use of web-enabled technologies. It integrated information and decision making among data flow of machine-process level, information flow of factory and supply system level and cash flow of business system level.

E-manufacturing system is basically a transformation system that enables E-business system to meet the increasing demand through rightly coupled supply chain management, enterprise resource planning, computer, aided, design, computer aided process planning etc. as well as environmental and labour regulations and awareness.

E- Manufacturing is a business strategy as well as a core competency for industry to compete in today’s e-business environment. It is aimed to complete integration of all the elements of a business-including suppliers, customer service, network, manufacturing enterprise and plant floor assets with connectivity and intelligent computing to meet the demands of e-business practices that earned greater acceptance and momentum.

E-manufacturing includes the ability to monitor the plant floor assets, predict the variation of product quality and performance loss of any equipment for dynamic rescheduling of production and maintenance operations and synchronize with related business services to achieve a seamless integration between the manufacturing and higher level enterprise systems.

Dynamically updated information and knowledge about the capabilities, limits and variation of manufacturing assets for various suppliers guarantee the best decisions for outsourcing at the early stages of design. In addition it enables customer’s order processing flexibility and visibility to production process, reducing inventory, excess capacity and uncertainty.

These intrinsic values of E- manufacturing system is to enable real-time decision making among product designers, process capabilities and suppliers. It provides tools to access life cycle information of a product or tools for continuous design improvement. Traditionally product design or changes take weeks or months to be validated product attributes but now this validation can complete within hours using process and machine capabilities.

E- Manufacturing fills the gap existing in traditional manufacturing system that is gaps between product development and supply chain consists of lack of life-cycle information and lack of information about the supplier capabilities. So E-Manufacturing is now being used in industry for gaining all the mentioned advantages.