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Overview
Economies of scale are the tried and true methods for creating discounts. But in an industry where customization, competition, changing tastes and the pursuit of new and cool products are critical, large inventories can be cumbersome and forecasting can be impossible. Luckily, there is a company that satisfies all these needs while reinventing supply chain relationships. This company is PCH. PCH is an organization that aids companies in managing their chain of supplies. They do this by increasing information transparency along the supply chain through their many services.
Between a Rock and a Hard Place
For many years, companies were vertically integrated; they owned their entire supply chain. Necessary in industries heavily laden with proprietary information, this method of management was incorrectly applied to industries that had only a limited number of exclusive parts and shared the rest with other products. As companies learned their products and their competition’s products shared a significant number of parts, a new wave of manufacturing methods was developed. Electronic Manufacturing Services (EMS) was developed as a method to create asset-light companies. Necessary when changing tastes meant large inventories would be costly paperweights in a short time, this method created many unforeseen problems. The economies of scale necessary to lock in low rates were eliminated as companies ordered fewer products more frequently. Also as companies forfeited the control over their entire supply chain, issues with logistics, manufacturing, and procurement proved troublesome.
A Multi-Stage Solution
Companies were in a quandary. Manufacturers were still producing the same number o...
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... rewards. Besides Manufacturing, Postponement, and Fulfillment services, PCH also offers services in creative, engineering, logistics, and compliance management. With all these services, PCH has taken a sizable chunk of liability. If any aspect fails along the supply chain, it is PCH’s responsibility to fix it. At the forefront of PCH’s risk management strategy is knowledge. Furthermore, PCH has implemented an aggressive environmental policy and supply chain security policy as well as requires all of their suppliers to be ISO Certified. With these requirements to work with PCH as well as their relentless effort to gain knowledge with their suppliers and clients, PCH has been able to manage their risks and make them a minimum. Though forecasting in such a volatile industry is tough, with proper supply chain management, PCH has avoided being under the weather.
On many occasions, Apple Inc. has been voted to boast the most efficient supply chain in the world. By leveraging wealth and pure business strength, Apple has been able to construct a supply chain that is both efficient and highly profitable. While much of this supply chain construction has come from great investing and business decisions by Steve Jobs and Tim Cook, it has come at the cost of many factory workers’ well being overseas. Overall, the construction of the highly organized supply chain has given Apple a competitive advantage over the rest of the market.
In the 1960s through the 1970s, companies realized strong engineering, design, and manufacturing functions were strong market strategy keys to create and capture customer loyalty. As the demand for new products rose in the 1980s, these market requirements were to increase their flexibility and responsiveness to adapt existing products and processes or to develop new ones in order to meet customer needs. As manufacturing improved in the 1990s, managers began noticing material and service inputs involving suppliers and their major impact on an organization’s ability to meet customer needs. As a result of these changes, organizations now find that it difficult to manage their own organizations. First, they must be involved in the management of their network of all upstream firms that provide directly or indirectly, as well as the network of downstream firms, which are responsible for delivery and market service of the product to the end customer. In order to succeed, managers have to realize that they cannot do it alone and they must work together on a daily basis with the whole organizations in their supply chains. Because supply chain management involves all functions within an organization, managers need to know what a supply chain is, why it is important, and the impact of supply chain management on the success and profitability of their organization. Today, Wal-Mart topped the list of the America’s biggest companies on the Fortune 500 list, “with sales of almost $345 billion — more than a quarter of a trillion dollars” (Forbs). Wal-Mart’s supply chain management is becoming recognized as a core competitive strategy.
Understanding the changes in the market and the growth of e-commerce prompted the organization to invest heavily in its supply chain management forecasting and management system. The development of a network of distribution centers and Direct Fulfillment Centers to position the company to capitalize on the growing e-commerce market indicate a strong understanding of the need to adapt to changing market forces. The company spent over $300 million on new distribution center facilities in 2014 alone, and continues to expand to maintain efficiency in product movement (Cassidy,
Royal Caribbean Cruise Ltd (RCCL) has two distinct supply chains which create a unique challenge. Each supply chain is managed by a Provision Master. The first supply chain includes all food, beverage, and lodging inventories that needed for the trips. The second supply chain encompasses “corporate spend” materials, such as office supplies, printing services, hardware and software, printed materials, computer supplies, marine consumables (spare parts, fuel, lubricants, any and all services associated with the ship maintenance and etc).
The overall aim of the report is to show how Zara while trading in a highly competitive market has produced a supply chain model, which is unique. This uniqueness has led to the overall success of Zara and helped to make the organization a worldwide success.
Ferdows, K., Lewis, M., & Machuca, J. A.D., 2003. Zara. Supply Chain Forum: International Journal, 4(2), 62-66.
...e highest in the industry (Figure 3). The design team plus representatives of each of the other redesign teams were brought together to develop a systemic analysis of the bigger picture of the company. Figure 4 illustrates the systems map which revealed that the root cause of the company’s high supply chain costs was ongoing effort by the sales and marketing organizations to increase product mix to improve profitability. The increasing of the product mix led to many unplanned consequences that both increased supply chain costs and eventually reduced revenues as well. From this new acquired knowledge the management streamlined its product line and achieved both higher revenues and lower costs. (Stroth, 2012)
[8] Supply chain lessons for the new millenium: a case of Micromax informatics Integral Review –by Salma Ahmed, A Journal of Management-ISSN: 2278-6120, p-ISSN: 0974-8032, Volume 5, No. 2, Dec.-2012, pp 53-61) .
It is undeniable that Inventory Management is an important key to success at Walmart this paper will discuss the two main methods of Inventory Management used by Wal-Mart: Material Requirements Planning and Just-in Time. Next we write about the technical means of keeping track of inventories like RFID tags. We conclude with discussing how
Quickly becoming apparent after only a few rounds of play was in the absence of coordinating direction the individual supply chain links immediately focused upon acting in their own best interests much more so than the organization as a whole. Whether the end use customer was satisfied became secondary to avoiding stock outages for the next link in the chain, or their specific “upstream customer”. The real world application of this example is that focus on the end use customer must be consistent and maintained throughout the process up to and including delivery. Undoubtedly internal customers, such as retailers to wholesalers and distributors to production, must be serviced along the way for the transaction to ultimately occur. However, unless an end use customer is involved no profit can be realized by anyone.
Hoyt, D., & Silverman, A. (2008). Crocs: Revolutionizing an industry’s supply chain model for competitive advantage. Palo Alto, CA: Stanford Graduate School of Business.
These major supply chain components that have shaped Walmart’s success over recent years are their buyer bargaining power (one of Porter’s Five Forces), focus on the overall customer experience, and investments in emerging technologies along with the implementation of these technologies in their business plan. The third and final key trend in which all of the top 25 supply chain companies possess emerging digital business models. Over the past couple of years, Walmart has boosted its e-commerce operations and brought in a large portion of revenues from online sales (Aronow & Burkett, 2015, p. 20). Gartner Inc. describes Walmart as a “supply chain pioneer” that has continued its push into e-commerce and has expanded investment in multichannel drive-thru pick-up centers and a ‘click-and-collect’ grocery service offered at some of its stores (Aronow & Burkett, 2015, p. 20).
The second way is to achieve low direct and indirect operating costs is gained by offering high volumes of standard products and offering basic no-frills products. Production costs are kept low by using less parts and using standard components. Limiting the number of models produced to ensure larger producti...
The business environment is increasingly becoming competitive and challenging. In the recent past, manufacturers have found themselves facing the threat of dwindling profit margins due to unfortunate global events such as the 2007 global financial crisis and the on going Europe economic crisis. The need to improve operation efficiency so as to ensure current and future investment yield the highest rate of return has therefore become extremely important. Manufacturers are now actively engaged in, managing their costs, Research and Development, adopting best procurement strategies, among other Actions. While such actions might eventually lead to positive results, additional business value can be achieved through proper management of the supply chain (Waymer, Ivanaj & Mussa 2009; Krivda 2004).
EC offer an effective communication between supply and manufacturing, and companies are able to respond efficiently and quickly to demand. (Turban, 2006)