1. Integration of supply chain activities provides the competitive advantage to the company and facilitate company to fulfill changing demands of the customers. Opportunity of the growth and profitability resides within the supply chain of the company. This statement has proven not only once but in several cases. Efficient supply chain is directly linked with the quality of products and services that companies are offering. In competitive business environment, customers want companies to be responsive towards their needs, which can only be achieved with effective supply chain management.
Growth and profitability of any company can be measured by analyzing different indicators such as market share of the company, annual return on the assets, overall reduction in the cost & expenses, increase in customer service and satisfaction, and improvement in market value. Performance of all indicators can be achieved by mastering global supply chain management. Efficient supply chain management enables the company to deliver customer satisfaction, drive innovation, and achieve operational efficiencies. Companies such as Zara, Dell, Unilever, HP, P&G, Nike, Wal-Mart, Tesco, and Ikea deliver customer satisfaction through efficient supply chain management (Lee, 2000).
Supply chain management covers all activities starting from procuring raw material, production of the goods, and delivery of the goods to the end consumers. All different levels of supply chain add value to the company. For example, procurement of raw material from a foreign supplier who delivers quality material at low price, will add value to the product while reducing the final price.
2 I agree with the statement as optimization of supply chain performance cannot be achieved without effective flow of information. In competitive global business environment, customers want value from the companies. Companies are continuously focusing on performance by addressing cost, adaptability, traceability, delays, and the variety. The performance cannot be attained in the absence of real-time information. All stakeholders involve in supply chain should share actual and updated information to improve performance of supply chain.
Dell closely deal with its customers and share real-time information with its suppliers in order to maintain right inventory level of the components. Dell’s direct dealing with the customers enables company to forecast accurately, and reduce inventory level. SEJ also made record profit during the economic slowdown by using real-time information in managing supply chain. Accurate demand forecast and sales trends allow companies following: to keep low inventories, reduce cycle time, reduce operational cost, deliver customer satisfaction, increase market share, make higher profits, and provide higher returns to the investors.
Sharing of information attracts challenges when information is exchanged between different partners of the supply chain. These challenges can be a deal by adopting knowledge sharing and information coordination among supply chain partners. All partners involve in supply chain should exchange basic information such as demand forecast, production schedules, capacity plan, promotion plans, and shipment schedules. Close relationship among supply chain partners and binding of trust facilitate information exchange and knowledge sharing.
3 The major objective of any supply chain is to maximize the value it’s creating. ‘Supply chain profitability’ is an important metric that measures the value created by a supply chain. Supply chain value or profitability refers to the profit that company generated by supply chain. Supply chain profitability can be calculated by deducting cost involved in running the supply chain from the revenue generated from that supply chain. Through the supply chain company requires to pay to the different supply chain partners such as suppliers, warehouse service providers, logistic service providers, and sellers. It is only customer who pay to the company. Which means positive financial flow to the company occurred because customer purchase products.
Measuring supply chain profitability is very important for the company in order to understand performance of the supply chain. Company understand efficiency of the supply chain by measuring profitability. Profitability also inform if company is require to deploy more efforts to reduce the cost of supply chain. For example, the company can reduce the cost involve in the supply chain management by reducing inventory level, or outsourcing some of activities, or adopting alternate transport methods etc. Therefore measuring the supply chain profitability can help company in understanding and improving supply chain efficiency.
4 Globalization increased competition significantly and compelled companies to bring innovation, variety, and latest technology to the consumers. This trend shorten product life cycle significantly. Companies continuously bringing new products to the market to retain market share and attract new customers. However, managing large portfolio of the products that have shorten life cycle is very challenging for supply chain management. Various companies design their supply chain strategy by considering cost reduction and to improve efficiency. Companies do not match their supply chain strategy with product strategy (Aitkena et al., 2003).
Technology companies such as Apple and Samsung have short life of its products. Apple has positioned itself as an innovation driven company that brings latest technology to the consumer. Samsung who is leader in Smart phone market also bring innovative products to the consumers. Both companies have designed their supply chain strategy according to their marketing strategy. Smart Phone market observes significant variations in the demand of different products. For example, launch of i6 impacted the demand of other smart phones already operating in the market. The demand of i6 after launch was very high and various stores went out-of-stock due to high demand. High uncertainty in demand and uncertainty in supply makes make the supply chain unstable. Bothe companies responded to the changing customers’ needs by adopting agile supply chain strategy.
5 Responsive supply chain emphasizes on maintaining flexibility to accommodate changes in the demand of the products. Companies who are dealing in the products that have high uncertainty in demand and short selling period, adopt responsive supply chain. Responsive supply chain attains performance by eliminating bulk inventories and forecasting. Responsive supply chain achieves performance by adopting rescheduling and build-to-order strategies. In responsive supply chain strategy the supply processes are stable, but demand of the product is uncertain. Therefore, companies first wait for the demand.
Agile supply chain deals with the uncertainties in the product demand and also compete with the uncertainties associated the supply. Agile supply chain emphasizes on pooling inventories and also capacity resources. In agile supply chain, information sharing between supply chain partners play critical role in achieving performance. Information sharing allows company to forecast the demand more accurately and develop planning strategy accordingly. Proper coordination between supply chain partners deals with the challenges of supply chain.
Performance of Agile supply chain is different from the performance of responsive chain as agile supply chain improves company’s capability not only to deal with uncertainties associated with the demand but also with the supply. HP adopted agile supply chain which makes various changes in company’s lifecycle management. Company integrated its feedback process with product development process. HP closely analyze consumer’s feedbacks and respond to their needs by implementing their ideas in HP’s products.
6 BMW is an automobile company and its supply chain is global in terms of nature. Global supply chain of the company brings value to the products, provide quality, and facilitate innovations. In automobile industry life cycle of the products in not very short like technology products such as smart phone and computers. The demand of the products is also not highly uncertain because of high value and prices of the cars. Customers very carefully analyze the functions of the cars available in the market before purchasing the car, and use the car for few years after purchase (Fleischmann et al., 2006).
BMW has large supplier base across the globe which allows company to procure quality raw material with in the desired time and cost. Efficient coordination between supply chain partners allow BMW to achieve operational efficiencies and respond to the changing customer’s requirement. Large supplier base may have some challenges but have huge opportunities for BMW as company use strengths of its supplier in deliver quality products to the customers. BMW also have manufacturing locations in countries that are capable to provide competitive advantages to BMW such as cost, technology, quality and infrastructure. BMW has established standards for the suppliers to ensure that all suppliers adopting sustainable practices and developing products as per quality standards of BMW. Overall BMW supply chain is responsive to the customers’ needs by providing innovative technology in its car, and stable as demand of the product are not very uncertain.
References
Aitkena, J., Childerhouseb, P., and Towill, D. (2003). The impact of product life cycle on supply chain strategy. International Journal of Production Economics, 85(2), 127–140.
Fleischmann, B., Ferber, S., and Henrich, P. (2006). Strategic Planning of BMW’s Global Production Network. Interfaces, 36(3), 194 - 208.
Lee, H. L. (2000). Creating Value Through Supply Chain Integration. Supply Chain Management Review,, 40-46.
