Supply Chain Management Strategy: Theoretical Aspects

Background

Supply chain management refers to all the activities and processes that are involved in the production of a good or service to satisfy the customer. The supply chain process involves various activities such as sourcing raw materials, storage, keeping inventories/records, and transportation of the finished goods to the final consumer.

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A supply chain is a network that involves all the stakeholders of a business; its suppliers at the top of the chain and its clients at the bottom. The supply chain forms the basis of operation of any business as it maps the pathways in which a business attains its commodities, manufactures/processes, stores, and transports to its clients (Leong, 2010).

There are two types of supply chain models, namely the supply chain operations model (SCOR) and the global supply chain forum model (GSSF).

The GSSF model is based on the assumption that all supply chains begin from a manufacturing firm/industry and all other activities are as a result of the firm’s presence. This model states that there are eight activities in a supply chain namely customer relationship management, management of customer service, management of demand, fulfillment of orders, management of manufacturing flow, management of supplier relationships, development and promotion of new products, and the management of returns gained from the sale of commodities (Schoenfeldt, 2008).

The SCOR model on the other hand is based on the premise that the main objective of SCM is to improve the performance and effectiveness of the chain; by adequate planning, proper sourcing of materials, production of high-quality goods, delivery of the goods to the client in good form and by the effective management of the returns that result from the chain (Leong, 2008).

The purpose of this proposal is to identify the aspects of supply chain management that have not yet been highlighted by the previous studies. After the ‘missing links’ in supply chain management knowledge have been established the study will create new knowledge on these missing links.

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Key Issues

There are various key issues in supply chain management and these are yet to be covered by scientific study. Conventional supply chain management only covers the physical aspect of sourcing, processing, and delivery of commodities to the customer. However, this theory does not give room to non-conventional supply chains. The research will cover and highlight such aspects.

Supply chain management of services

The business has evolved over the years and in today’s world, there are more service-centered businesses than there were a century ago. Most businesses are moving from goods production to service production. Services on the other hand have become more expensive/costly to buy.

It is in respect to this that services in current business have become commodities; just as valuable as goods. If the supply chain theory is to work it has to encompass all types of supply chains; goods and services supply chains (Kilger, 2008).

Competition with other businesses

The SMC principle does not consider the presence of other similar businesses to a manufacturing firm. It ignores the presence of a constant and aggressive threat to a business’ supply chain. Competition threatens/affects the relationship of a business with its suppliers and customers. Such interference would greatly affect and even halt a business’ supply chain. It is for this reason that the proposed research will study in-depth how competition affects a business’ supply chain (Schoenfeldt, 2008).

E-commerce

Due to the gradual change in how and where business is done the supply chain has been making some changes over the years. The supply chains of today have taken different forms; aspects such as procurement and supply have taken an online/remote form. This is a result of technological advancement that has forced many businesses to change how they operate. Supply chains are therefore interrelated and interdependent on electronic commerce. E-commerce has changed how goods are purchased, transported, stored, marketed, and delivered to the client (Langley, 2010).

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The proposed research will study the relationship between supply chain management to e-commerce. From this study, a modified SCM model that suits an e-commerce setting will be proposed.

Literature Review

The process of managing supply chains is understood differently from one scientist to another.

Supply Chain Management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole…” (Langley, 2010).

A supply chain is a group of organizations and acquaintances who trade with a firm. They form the basis of a firm’s operations and activities. There are two types of flow in a supply chain namely, upstream flow and downstream flow. A supply chain involves the exchange of goods and/or information (Schoenfeldt, 2008).

Factors of a good supply chain

For a supply chain to work and be effective, the intended distribution network is configured. The configuration of a distribution network involves the determination of the number of warehouse facilities, transport facilities, clientele distribution, distribution centers, and supplier networks. The second factor that must be monitored is the distribution strategy of a supply chain. The distribution strategy maps out how an organization intends to distribute its goods and services to its clients effectively and efficiently. The distribution strategy covers how the goods will be delivered to the client, the mode of transport, the methods through which transportation will be monitored, and the method of replenishing supplies.

The logistical operations of the firm should also be well organized and trade-offs must be maintained. Trade-offs reduce overall costs for the company and this helps boost the overall performance and profitability of the firm. It is far much logical and economical to transport a full truck’s load of a commodity than a partial load as the transport charges are usually the same. Appropriate systems are therefore put in place to ensure that there is logistical planning of a firm’s operations (Kilger, 2008).

Inventory management is another important aspect of supply chain management. This enables a firm to know what it has in stock and what it doesn’t. From the inventory records, the flow patterns of goods can be established.

Finally, the cash flow patterns and techniques should also be considered in SCM. This is because in a supply chain the manufacturing firm needs to facilitate payment options and techniques that are favorable to its suppliers and its clients. The payment terms should always be agreeable to both parties in a transaction within the supply chain.

Functions of a supply chain

A supply chain has 3 main functions namely strategic, tactical and operational. Strategic functions are long-term functions that are realized in the long run, tactical functions are mid-term functions while operational functions are those functions that are realized in the day-to-day running of a firm’s supply chain. Strategic functions involve strategic planning, life cycle management activities, and long-term resource planning. Tactical functions of SCM involve transport strategies, transport routes, contracts, agreement sourcing, and the making of milestone payments. Operational functions on the other hand include production and transportation plans that are done daily (Schoenfeldt, 2008).

Proposed Methodology

Data for the proposed research will be collected from an assortment of test samples. The data will be collected by the means of interviews and questionnaires on select British firms. 15 firms will be selected. Studies will be done on the firms, their SCM techniques assessed, and adequate discussions made on the data collected. Various aspects of the study will be covered in unique ways as listed below:

The supply chain of services

Several companies that deal in service provision will be studied. The studies are going to be done by the use of questionnaires and interviews. The respondents are going to be selected from all tier levels of the organization. Random questions will be asked and the respondents’ answers recorded. Companies in consultation and advertising will be assessed to gain an understanding of the unique characteristics of their supply chains. In such a situation the commodity will be information and its SCM activities addressed. A new definition of SCM will be acquired from this (Kilger, 2008).

Competition with other businesses

During the data collection process, top management officials will be asked various questions that pertain to the effects of competition on their businesses. From the responses, it will be defined as to what extent competitors affect the performance of a business’s SCM. This will be supported by the use of graphs and tables that show the relationship between

E-commerce

The electronic commerce activities of the interviewed firms will be noted and tallied. A relationship between their supply chain management activities to those firms that do not implement e-commerce will be done. From such analysis, results can be acquired and discussions based on these results.

Project Management

The proposed research will take a total of 12 months from the time of commencement. The giant chart below gives a visual representation of the activities to be conducted and the expected time to be taken.

Month from Commencement
Activity 1 2 3 4 5 6 7 8 9 10 11 12
Project preparation X
Literature review X X
Acquisition of research materials X X
Collection of data from interviews and questionnaires X X
Tallying and organization of data X X
Interpretation of data X X
Writing Research papers and thesis X

Reference List

Kilger, Christoph. 2008. Supply chain management and advanced planning: concepts, models, software, and case studies. Beijing: Beijin Academia.

Langley, John. 2010. Supply chain management: a logistics perspective. New Jersey: Cengage Books.

Leong, Keong. 2008. Principles of Supply Chain Management. California: Cengage Books.

Schoenfeldt, Thomas. 2008. A practical application of supply chain management principles. New York: American Society for Quality.

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