Introduction
A supply chain is the systematic organization of an organization’s resources, including the labour, information and efforts geared towards achieving smooth and effective distribution of products and or services from the point of supply to the intended customers. As the name suggests, supply chain is a series of connected activities, which must not be broken at any point without affecting the ultimate goal of making the product or service reach the consumer (Anning, Okyere & Annan, 2013). It therefore requires a well framed and structured design for easy management and eventual gain of profits and avoidance of unnecessary losses. Being one of the disciplines of supply chain, supply chain design makes use of all the resources in the organization, which must also be effectively managed. An example is the inventory management, which records the purchased materials, applied resources, products supplied and the gains from the supply. This memo intends to explain the various advantages of an effective Supply Chain Design.
Impacts of Effective Supply Chain Design on Profitability and Stakeholders’ Value
An effective supply chain design focusses on the way in which the available assets are put into use. To achieve a desirable design, the design must balance the needs and the goals of production, the customer fulfilment and profitability to the business with less effort and speedy completions of tasks. The relationship between a well-designed supply chain and profits is that when the design is effective, the profits are high and the organization obtains competitive advantage. A good example of an effective design, which results into high profits must be clear and simple. Such a design recognizes various team efforts. The procurement, manufacturing and the logistics team must ensure that the necessary supplies used in the production of the goods are accessed in time to avoid wastage of time and other resources, the production is speedy and the end products are of the desired quality, and any difficulties encountered are dealt with as they are presented without delay. With no delays, the produced products reach the customers fast enough; thereby, reducing expenses incurred for storage of the products in the company. Avoiding storage expenses leads to increased profit margins (Anning, Okyere & Annan, 2013).
The sales and marketing team is an important tenet of the design. The supply chain design must be in a position to set achievable goals and plan, and implement various methods of growth intended to be used. The packaging, design and price must conform to the requirements and needs of the customers. If the sales and marketing team have an effective and implementable ways of reaching the customers through packaging, which fit the customers’ needs at affordable but profitable prices, the organization gains more profit. The profits come in in two ways; one, the design takes into consideration and make products according to the wants and needs of the customers who will in turn buy the products in large numbers. Secondly, prices which are affordable enables the products to sell faster thus profits are gained at a high rate (Alvarado, Rabelo & Eaglin, 2008).
All these various stakeholders are required to stay at their top notch performance to avoid slackening or dropping of performance in the supply chain. With such kind of set standards and continuous high performance, the stakeholders tend to be initiative, innovative and engaging themselves in learning new and relevant skills; thereby, increasing their value. An effective supply chain design and the consequential effective management, production and supply of the products to the customers increase the profit margin (Alvarado, Rabelo & Eaglin, 2008).
The latter creates value for the organization. Such an organization becomes marketable and appealing to both existing customers and potential customers. The design of supply chain in place ensures that the human resource in the form of inputs of various stakeholders is improved. The stakeholders in the design includes indirect contributors who merely share their ideas into the chain (Alvarado, Rabelo & Eaglin, 2008).
Effect of Supply Chain on Distribution of Assets and Resources
The sales and marketing teams depend on the engineering teams to come up with the desired designs while the human resource teams generally engage their skills and knowledge to find ways of new methods of increasing the overall production of the products. The finance team must be able to promptly and easily finance the sales and marketing team, the engineering team, the human resource teams, the manufacturing team and the procurement teams. This chain must be maintained to ensure smooth flow of operations and ultimately effective supply chain and eventual profitability of the whole exercise (Muckstadt. et al, 2001).
Behaviours of Supply Chain Networks and Supply Chain Drivers
Supply chain networks and supply chain drivers are not always stable, and disruption may occur at any point, if the chain design is not stable or effective or flexible enough to contain such contingencies. These behavior of supply chain network is normally caused by failures in the acquisition of raw materials, production processes, and distribution and marketing strategies in place. Sometimes, the customers might also refuse to accept the products as given and causes breakage in the line of supply. On the other hand, supply chain drivers are the factors, which motivate the production and supply processes such motivation of the production, managerial or the sales and marketing teams through incentives in the work place (Muckstadt, et al, 2001). These two aspects of supply chain design are vital for an effective process, which results into economic and competitive advantage in any given organization.
A Sample Supply Chain Network
References
Alvarado, K. P., Rabelo, L., & Eaglin, R. (2008, January). Stakeholder value mapping framework for supply chain improvement when implementing IT solutions. In IIE Annual Conference. Proceedings (p. 1320). Institute of Industrial Engineers-Publisher.
Anning, K. S., Okyere, S., & Annan, J. (2013). Demand Chain management Model: A tool for stakeholders’ value creation. International Journal of Business and Social Research, 3(12), 37-47.
Muckstadt, J. A., Murray, D. H., Rappold, J. A., & Collins, D. E. (2001). Guidelines for collaborative supply chain system design and operation. Information systems frontiers, 3(4), 427-453.
