In March 2000, the Phillips Semiconductor plant (Albuquerque, NM) was shut down for six weeks after it was struck by lightning. The plant was responsible for producing electronic components for both Ericcson and Nokia. The six week shutdown led to a shortage of components and according to The Wall Street Journal, “company officials say they [Ericsson] lost at least $400 million in potential revenue” and “when the company revealed the damage from the fire for the first time publicly, its shares tumbled 14% in just hours” (Latour 2001). How is the severity of a supply chain disruption defined? An unplanned event slows down the flow (inbound/outbound) of products. The Phillip Semiconductor plant’s inability to ship conductors reduced Nokia and Ericsson’s ability to produce, distribute and sell products. In today’s business world, organizations frequently face difficult operating challenges. In order to meet customer demand, businesses need to develop an implementable strategy that directs the company during a crisis. Disruptions in the supply chain are one of the primary reasons these types of business strategies are needed. The number of natural or manmade disasters has risen considerably over the past ten years. According to an article in Armageddon Online, “during the 2000 to 2009 period, there were 385 disasters, an increase of 233 percent since 1980 to 1989, and 67 percent since 1990 to 1999” (2010). Some other common supply chain disruptors are transportation delays, port stoppages, and poor communication between the company and supplier. More times than not, these types of events cause a bottleneck effect in the company’s supply chain. The Need for Robust Strategy and Technology These unpredictable occurrenc... ... middle of paper ... ...e of dynamic pricing is how grocery stores reduce prices on goods that are close to or have met the shelf life stamped on the package. Assortment planning focuses on creating a display with the product that on entices customers to purchase the product. Silent product rollover is how some firms slowly and quietly add new products to the market. The idea is to continue to sell their product that is already part of the market without causing the customer to forget about the product because something newer is now available. Conclusion The technology and understanding make today’s supply chains more efficient and available than ever before. The slightest disruption in the supply chain can cost companies time, money and customers. This is the primary reason is imperative to construct a strategy/strategies that eliminates the effect of supply chain disruption.
Supply chain management is connected with the flow of products and information between supply chain members and organizations. New development in technologies enables organization to get correct information easily in their premises. Technologies used are helpful in coordinating the activities which manage the supply chain. By this the cost of information is decreased because now we have increasing rate of technologies. In an integrated supply chain where product or raw material and information flow in a bi-directional we as managers needs to understand that information technology is more than just computers.
...n Empirical Comparison of Anticipatory and Response Based Supply chain Strategies.” The International Journal of Logistics Management. 9: 2; 21-33. Lair, Noor Ajian Mohd, Awaluddin Mohamed Shaharoun and Mohamed Shariff Nabi Baksh, “JIT Implementation across A Supply Chain and It effects on Inventory Distribution”, http://www.moste.gov.my/kstas/NSFWorkshop/NSF/nsf%5CAAI16.DOC Lenzini, Joshua M (2002) “The Army's answer to supply chain management Army Logistician”; Fort Lee; Sep/Oct 2002 Li, Yuan, Fan, Zhiping and Zhao, Xuan (1999). “An Integrated Framework of Supply chain Management System.” Software Engineering Conference 1999. Proceeding sixth Asia Pacific. 196 – 199 Pagh, Janus D and Martha C Cooper (1998) “Supply chain postponement and speculation strategies: How to choose the right strategy”, Journal of Business Logistics, Issue # 2, Volume 19, Pg. 13-33.
A supply chain is a system through which organizations deliver their products and services to their customers. The network begins with the basic ingredients to start the chain of supply, which are the suppliers that supply raw materials, ingredients, and so on. From there, it will transfer the supplies to the manufacturer who builds, assembles, converts, or furnishes a product. The chain now needs to get the product to the consumer by transporting the finished product from the manufacturer through a warehouse or distribution center. An example is that Wal-Mart has a nearby distribution center where products are delivered there and then split up to be delivered to a retail Wal-Mart. “Wal-Mart will take responsibility for breaking down larger loads and delivering the product to other Wal-Mart stores” (Ehring 1).
While the circumstances of Maria were unique, due to Puerto Rico's location and political standing, there were still many basic supply chain tactics that could have been used to make relief more efficient and effective. An example of the impact a poor supply chain decision can have is evident by the fact there were 10,000 cargo ships filled with critical supplies that were left in port, while the people on the island struggled with no form of communication (Gillespie et al., 2017). In the end, using supply chain management practices such as emphasizing communication, understanding a system's weakness, and employing risk mitigation tactics early on could have drastically changed the relief efforts impact, and potentially decreased the $90 billion cost the storm was estimated to have
Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations along the supply chain operated independently. The objectives of these organizational divisions are always different and conflict with each other’s objectives. . Marketing puts a higher emphasis on high customer service and maximum sales dollars conflict with manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts are often negotiated with very little information beyond historical buying patterns. The result of these factors is that there is not a single, integrated plan for the organization---there were as many plans as businesses. Clearly, there is a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such an integration can be achieved.
Loss of customers due to production outages caused by various events, such as natural disasters, change management, unstable software, and so on
The furniture company Somerset needs to retain its customer service record and remedy any of its global supply chain issues before it has an adverse effect on the brand and start losing customers. With a frequent change in the product catalog, keeping an excessive inventory will cut its profit and some of the product may become obsolete even before the furniture hits the retail outlet stores. In order to achieve profit and success, business employee many strategies and the supply chain strategy are one of the operational management techniques that use analytical decision making process to achieve the company goals and provide tools to effectively compete in the market (Taylor and Russell, 2014).
Lean manufacturing and just-in-time processing are great business strategies that can severely stress a supply chain. The supply chain and supply chain management is a critical operations management element for any major company to succeed and remain competitive in the global market. The supply chain is one of many pieces critical to maximizing value to the end customer and requires close management to minimize external impacts. If a company is relying on another company to supply the raw materials needed for their production line, then impacts to this other company could impact their supply chain. Careful risk management is needed to optimize performance. As a company expands into global markets and global suppliers, this risk and management challenge is multiplied. The global nature of the company could impact important activities such as transportation, funds transfers, suppliers, distributors, accounting and information sharing. Disruption to the supply chain can significantly reduce revenue, cut market share, inflate costs and threaten production. A major disruption would have obvious impacts to profit, but could have additional intangible impacts to the credibility of the company if products are not delivered on time.
Conclusion Overall, the consequences of not having a Disaster Recovery and Business Continuity Plan can become costly in the event of a disaster. Most companies will find themselves in financial disarray when having to rebuild and/or replace any portions of the IT infrastructure that were destroyed during a disaster event. Hence, companies invest in insurance to cover such costs; however, there must be a balance because even with insurance an organization may still incur high expenses. Having a good disaster recovery and business continuity plan will keep your company up and running through any kind of interruptions such as power failures, IT system crashes, natural or man-made disasters, supply chain/vendor problems and more.
With most aspects of life it is frequently the failures, as opposed to successes, from which we learn the most indelible lessons. With this approach in mind, The Beer Game to a large extent serves as the very antithesis of a properly functioning supply chain. In other words, the exercise demonstrates how NOT to manage a logistic operation. Hopefully, an examination of the pitfalls and shortcomings of a worst case scenario and avoiding the same types of mistakes will lend insight how to correctly manage a supply chain. What otherwise appears as a simple classroom exercise actually represents a powerful training tool with enduring lessons directly transferable to real world application.
Inventory management can enhance the efficiency in operation of the supermarket. Supermarket must ensure that the correct levels of inventory are being maintained throughout the store, and that merchandise is purchased at the best price point as possible. Holding too much inventory on hand generate costs like carrying costs. Whereas having too little inventory on hand makes customers dissatisfied and it leads to declining
The key performance drivers of Supply Chain Management (SCM) are - facility effectiveness, inventory effectiveness, transportation effectiveness, information effectiveness, sourcing effectiveness, pricing effectiveness, delivery effectiveness, quality effectiveness and service effectiveness. These drivers include various performance markers that may be measured quantitatively by gathering information and applying them in SPSS. The works here may principally be quantitative with spellbinding measurable investigation. In the current world, practical supply chain management to help the triple primary concern, (nature, domain, and economy) is likewise included in the extent of supply chain performance drivers. This is relatively a quite new research region.
A supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then final products, and deliver the products to customers through a distribution system [1]. The basic objective of supply chain is to “optimize performance of the chain to add as much value as possible for the least cost possible.
assortment has to include items that will get consumers into the store and products that
19. Sodhi, Sunil Chopra and ManMohan S. Managing Risk to Avoid Supply Chain Breakdown. MITSloan Management Review. [Online] October 15, 2004. [Cited: February 25, 2010.] http://sloanreview.mit.edu/the-magazine/articles/2004/fall/46109/managing-risk-to-avoid-supplychain-breakdown/.