Logistics Within the Business Organization
Supply Chain Process
Q. 1. Why have supply chain management issues often been ignored by senior management?
A. The senior management is often not aware of the fact that a successful supply management encompasses a favorable impact to the five important performance areas of the business. The senior executives tend to ignore the fact because they basically lack the understanding of the supply chain. Another reason is the absence of a key individual that has enough expertise about supply chain that can be communicated in a manner of language that the senior management can understand (Rudzki , 2008, p. 2). There are several reasons that may keep senior management bothered even at sleep. However, they do not realize that all their worries can actually save by having a solid supply management operation (Rudzki , 2008, p. 1).
Supply chain management has an integral role in the five performance areas of the business, which are happen to be the senior executive's main area of concern. The senior management is often worried about the company's performance expectations, whether or not they would be able to meet of exceed previous earnings. Little do they understand that establishing a strong supply chain solution would help them meet their target. This is because the the company would be able to measure customer satisfaction associated to supply chain in terms of meeting customer demands. Once the company was able to measure their efficiency in delivering customer demands, they would be able to determine the revenue outcomes of the company (Zigiaris, 2000, p. 3). Doing so would also positively impact the other two important performance indicators, which are cash flow and return on invested capital. It should be allowed to take a leadership role to create a more responsive strategy. This is by means of helping the company win more business from its current customers (Rudzki, 2008, p. 2).
Q. 2. Describe the strategy you would employ to sell senior management on the benefits of focusing more attention on supply chain management.
A. Several approaches can be employed by the managers to convince the senior management about the benefits of focusing their attention on supply chain management. For example, the Abercrombie & Fitch was able to expand its business because of the present opportunity to drive down the company's involvement in cash. The company adopted the approach by developing a strong logistics process of getting the inventory at the right place at the right time. Thereby reducing the cost of inventory, allowing the company to use its cash savings from efficient logistics to expand the business. As a result, the company now has 1,100 stores across US, UK and Canada. The managers were able to sell the benefits of supply chain to its senior management by focusing on cost reduction gained from establishing a strong logistics process (Dutton, 2009, p. 34).
Another approach is to encourage the managers to read the company's annual report in order to understand the company's corporate goals. Managers are normally focusing their attention in meeting their respective department's initiatives without taking into consideration the bigger picture of the company's overall objectives. It is crucial that all managers also realize the level of revenue performance that the company has at the current time in order to determine the factors that affects the goal. Afterwhich, the managers would have to incorporate the principles of supply chain on the weak areas of the company based on the annual report. Once the managers were able to point out the source of the problem, necessary adjustments have to be put into perspectives. If the cost of transportation for example was shown to have contributed a lot in the operating expenses. Therefore, the managers should sell the opportunity of looking for better transportation alternatives to the senior management (Dutton, 2009, p. 35).
Q. 3. Discuss the benefits that might be gained from working closely with 3PLs, 4PLs and vendors in promoting supply chain management initiatives to senior management?
A. Working closely with the vendors, 3PLs and 4PLs would allow the supply chain managers to promote the initiatives of the supply chain to the senior management by accentuating the benefits that can be gained from the approach. 3PLs or otherwise third party logistics is the service beyond transportation. It includes transshipment, storage and other services (Kruse, 2003, Web). 4PLs on the other hand or fourth party logistics is also referred to as lead logistics providers. This involves the integration of all processes involve in the supply chain including control, planning and steering logistical procedures by a single provider (Kruse, 2003, Web). Companies can gain benefits in working closely with 3PLs and 4PLs because these providers offer expert services in terms of improving supply chain. They have adequate metrics to support their position in determining the trial and error aspects of the company's new endeavors (Dutton, 2009, p. 35).
The contrast in initiatives of key individuals in the company for example the CFO, which is more concern about the cost, while the sales manager is more concern about transit time demonstrates a need for collaborative effort to synthesize the initiatives into one effective approach. 3PLs and 4PLs providers are the main force that can have the CFO and sales manager's initiatives combined together, allowing the two parties to both have their ends meet. In terms of working together with the vendor, it encompasses an efficient working relationship in a mutually beneficial manner. For example IT companies consider developing web contents for Smartphones in order to serve markets that has limited access to personal computers. This approach correlates to close work initiatives combined with product design. Either of the approaches would serve better business opportunities through the supply chain.
References
Dutton, G. (2009). Selling the Supply Chain Upwards. World Trade, Troy, 22(9), 33-35.
Kruse, E. (2003, January 15). Finding a Place for Logistics Management. SCM - Supply Chain Resource Cooperative (SCRC) - North Carolina State University. Retrieved October 21, 2012, from http://scm.ncsu.edu/scm-articles/article/finding-a-place-for-logistics-management
Rudzki, R. A. (2008). Supply Management Transformation: A Leader’s Guide. Supply Chain Management ReviewSupply Chain Management Review, New York, 12(2), 1-2.
Zigiaris, S. (2000). INNOREGIO: dissemination of innovation and knowledge management techniques. Supply Chain Management: Report produced for the EC funded projec, 3.
