Supply Chain Management (SCM) or supply chain management - a term that became commonly used only recently. This concept is voluminous and includes specific definitions, such as ECR (Efficient Customer Response) and DRP (Distribution Resource Planning). Actually, the SCM implies no simple definition, and the new strategy of the company. SCM refers to the formation of this sales network, in which the right products are delivered at the right place at the right time at the lowest cost. SCM aims at the establishment of optimal communication channels with distributors and final customers of ready-to-sell products. Its particular purposes are:
This theoretical basis is crucial for our research group. We are to draw up the chain supply analysis for the fabricated company. In order to achieve more up-to-life results let us imagine that analyzed company has some similar features as the real company to have access to some precise data. We decided that our company strategy, environment and structure are similar to the ones of the Soft People Company.
That is why for our supply chain management expansion plan; we may use statistic data and other information of Soft People that is available for public. The name of our company is Air Executives.
Environmental analysis
In order to be correct while conducting further research let us first of all define the specific factors of the environment of the country X. It is the host country for our company. For this end let us use the most effective tool – PEST-analysis.
It is also important to define some issues relating to logistics in case of setting its subsidiary wholly in the country X. To this end let us analyze the logistic infrastructure of the country X.
Freight transport logistics are also a prerequisite and a "consequence" of economic and social activities. They are the backbone of the production of labor economics, the efficiency of logistics systems and networks - is a critical success factor for companies that operate in the circles of the world market. Country x is situated in the middle of Europe and ranks as the transit country and the leading economic nation, but in particular: it is necessary to increase the efficiency of its transportation system, to strengthen the economy and support structural change and sustainable development, as well as to long-term development. Appropriate demand and adequate communication lines, network of Railways and transport nodes are required. They must fill special form of transport, and critical needs. Inside the country supply of customers 24-hour Service delivery is possible with 1-step distribution using truck transport, it is impossible in Europe (and especially Russia) because of time-consuming transportation. In the European Union (EU) activities directly related to logistics, there are about 41 million professionals, including 4.5 million in country X, where each year requires 80 thousand managers, including 8 thousand of the highest qualification, and only 75% of this demand able to fully meet the logistics company of X. Freight transport logistics and trade has the third-largest automotive industry sales in country X, an estimated 2.6 million workers. Logistics market is very dynamic and growing about the future of the market. The competitiveness of X business is a decisive influence of the experience of the local logistics industry and the efficiency of their interaction and transport: road, rail, water, air, and their significant link in the logistical nodes as freight centers, airports, maritime and inland ports. The main criteria for the choose of city of country X:
Highly-developed infrastructure
Active operation of big companies
Beneficial regional legislature
Good geographical position
The plan including the recommendations above is a part of the general executive plan.
Executive summary
The purpose of this report is to provide the plan of supply management of the company and recommend solutions to be taken. Solutions of the company aim to establish long-term relationships with customers and distributors, together with elements that allow optimizing production processes, SCM solutions.
The company is aimed at development of schemes of relations, developing a specific policy on relationship with clients and the establishment of "priority orders". Its solutions contain a set of tools for planning, to determine the minimum possible volume of goods in stock, to calculate the volume of shipments for different destinations and etc. The tools included in the SCM solutions allow you to streamline the entire process of distribution of goods from order (billing, notifying the customer) before delivery of goods to customers.
The advantages of solutions may be founded as elements of a single system and to allow the administration, control, planning and optimization of the supply chain. At the same time, experts noted a number of disadvantages of using integrated systems: the cost of the solution; the high cost of support (according to the experts sometimes support costs 3-5 times more than buying); the duration of implementation (the experience of many companies has shown, for example, that the R/3 implementation took more than three years); there have been cases when universal solutions could not account for all the peculiarities of the industry and to automate all the process in full.
In context of the research it is recommended to diversify the systemic elements of the supply chain management and use more innovative approach to this particular case. In order to simplify our plan formulation we have omitted some additional data which is not essential for better understanding.
Supply Chain Plan
Availability and quality of suppliers Ensuring the continuous supply depends on the correct choice of supplier. In the General case the vendor is selected after analyzing the market condition on the basis of the tender procedure. Sometimes this is done at trade fairs or through personal contacts supervisors or managers. The relationship between the customer and the supplier shall be in the form of a contract.
Next, we consider the following equally important criteria:
the ability to increase production;
a flexible system of discounts;
the mechanism of changes in pricing policy depending on prevailing market conditions;
logistical capabilities which depend on the periodicity and timeliness of deliveries.
It is also necessary to define the suppliers which at least at ones failed to fulfill their obligations.
Availability and quality of third party service providers
The controlling of choosing providers of services should be increased by organizing the effective work of the special department. The quality should be guaranteed by third parties, the ability to get refurbishment in case of problems during supplying process.
the practical problem of optimization of resources in logistics systems must be addressed through information and computer support within the corporate information management system of the firm when there is a sufficiently powerful means of modeling and optimization (for example, in systems based on MRP II/ERP) in the context of high dimensionality and a high level of uncertainty.
Sourcing and procurement strategy Resource optimization can be performed on different hierarchical levels of drugs (logistics system), for example within the functional area, subsystem, SLS (level logistics system), separate logistic functions, etc. These factors predetermine the necessity to use one of the fundamental methodological principles for the analysis and synthesis of drugs, namely: a systematic approach. Methods of system approach (analysis) are the most efficient and effective in solving complex optimization problems of resources, structure and methods of decision making in PM. Thus, the optimal (rational) decisions can be taken by logistics managers at different levels of FS and management, for example at the level of the functional area, subsystem, link, logistics network, logistics channels, functions and even individual logistics operations. Sometimes to get the optimal solution can be difficult and even impossible for the reasons mentioned above, so the staff of the logistics management companies are often forced to accept sub-optimal (optimization) solutions.
Planning and forecasting strategy For effective planning at the enterprise there should be a planning system, i.e. an ordered structure of individual species planning. The main requirements for such a system are documentary support, the organization, precision, consistency, continuity, flexibility and circularity completeness.
Inventory management strategy The first five steps to be implemented are as following: standardization of working with suppliers, deficit estimation, organizing improved system of forecasting and finally implementation. We consider that strategy percent of demand is useful for our company. The basis of this strategy is the analysis of the frequency of demand on inventories according to the results of work in one day. Data on the quantity demanded is entered in the schedule of distribution of products on a cumulative basis. Then set the portion of the total number of periods of delivery of orders for which a valid and complete expenditure of reserves, not entailing violations of the production process.
Inbound and outbound transportation strategy
In order to stimulate this two ways of logistics, it is important to implement the improved system of transportation (IST).
Warehouse/distribution center strategy
It is necessary to make analysis and assessment of the processes occurring in the warehouse and their impact on production. We need to define and harmonize the flow of products. After considering these factors, the company can create a new or improve an existing management system of products.
Outsourcing / 3PL strategy One of the most efficient ways to reduce the cost of logistics business processes within the logistics strategy of minimization investment in logistics is the use of outsourcing logistics scheme.
Customer Relationship Management For the end to increase the level of loyalty of clients we need to implement CRM - fangled concept of building a business around its customers, in accordance with their requirements and expectations. This is an opportunity to "industrialize" the processes of interaction with customers, make them manageable and predictable.
Supply Chain Integration Our plan is as following.
Promptly communicate with vendors and suppliers which have established long-term relationships.
Performance management strategy MGMT The cut of some inefficient departments such as ecological is required. It is important to apply the most innovative managerial practices.
Short list of further actions to be taken
The main steps to be taken after the plan approval:
The practical implementation of new supply chain strategy
Establishing controlling department
Cutting off ineffective departments
Cooperation with new partners
Developing the system of social responsibility
Implementing the system of continuous evaluation
Conclusions
As the outcomes of our research we have analyzed the system of the supply chain for the fabricated company, drew up the supply chain management expansion plan and gave specific recommendations on the steps to be taken by the company in order to enhance its logistic and supply systems.
References
Lawrence, S. (2013). Why well motivated employees succeed. London: Management Library.
Lee, P. (2009). An effective worker. Chicago: SNT.
Mill, D. (2015). Why some companies are effective. London: LNU.
Moon, R. (2012). The purposes and functions of the supply chain system. Chicago: CNP.
Stevenson, R. (2014). Increasing the logistic operations within company. Berlin: BRX.
