Terms of reference
The group of investors’ management has actually requested this business report on the various challenges of making sure that all the business units in supply chain posses the right quantity of the right product in a place that is right at the correct time and at the precise cost. With the implementation of this business report, the supply chain operation should actually achieve results that are synergistic hence they will provide a dominant competitive advantage that is sustainable in nature. This business report focuses on the concerns of this investor group.
The Strategy to be adopted
There are various strategies that the supply chain can adopt but vertical integration is the correct strategy to be applied in this case. This is actually a style that is employed in management control. In simple terms vertical integration is a business strategy where companies at different production stages merge. This will be important in this supply chain since the different production units will put resources together for a common objective which in this case is profit maximization through the use of the least costs possible. The strategy is also imperative because every member in this supply chain will be in a position to produce a dissimilar product hence the products from different production units will actually combine to satisfy the supply chain’s common need which in this case is the success of this entire supply chain.
The other reason as to why the supply chain needs to adopt this strategy is because the described management styles in it will be in a better position to bring the supply chain large portions to a common ownership and corporation. Since the chances of this company experiencing hold-up problem is high, vertical integration strategy with help the supply chain to avoid this prevalent problem in many businesses.
In addition, this strategy will be important in controlling the cost. Through the distribution process, the supply chain will be able to control the costs that it is going to incur. The supply chain will be able to optimize its resources utilization and as a result avoid wasted costs. The adoption of this strategy also will lower the transportation costs in the entire supply chain.
Furthermore, the adoption of this strategy will bring competitive advantages. The use of this strategy in the supply chain will increase the advantages over competition and hence will block the competitors from accessing the important markets and the scarce resources. The supply chain will gain direct access to its customers in a market that is highly competitive before its competitors do. Thus, it is important for the supply chain to adopt this strategy as it offers the best guidelines for the supply chain to achieve its objectives without much difficulty.
Metrics to be used in measuring the performance of the supply chain
Measuring the performance of the supply chain is the only way through which the management will be able to determine its performance. The supply chain can utilize various metrics in measuring its performance. This will actually help to provide a good overview of how this supply chain will be performing not only in terms of cost and its spending but also in terms of the supplier information as well as its operational aspects. The use of these metrics will be important in ensuring that its performance will meet the business general requirements.
The various metrics to be used in this case include; delivery, cost, productivity, and quality. Since delivery is critical to this supply chain, delivery will be a very important metric since the schedule adherence will be measured for both the customer and supplier deliveries. The supply chain also needs to use the cost metric since it will provide information on whether the cost incurred are more than the realized profits. The productivity metric will in addition provide information about the supply chain efficiency. Finally, the quality metric will help the supply chain to know whether its products are of standard quality.
Issues that could complicate development of an efficient and integrated supply chain
The three issues in this case are incentives, local optimum, and bullwhip effect. In the supply chain, incentives that are responsible for motivating its workers may not be present hence this will complicate the development of an integrated and efficient supply chain. In addition, the supply chain may lack the various ways of ensuring that it optimizes its production costs and profits locally and this will in fact lead to various problems. The bullwhip effect is the other issue that is likely to complicate efficient and integrated supply chain development. It is likely that a trend of larger swings in inventory in response to the changes in the demand will develop hence this will hinder its development.
Concepts and methods for effective management in an integrated supply chain
Effective management of the supply chain is the only way through which an effective and integrated supply chain will be achieved. It is therefore important for the management to apply effective management techniques. Therefore, the managers in the supply chain have to know their limits, listen first before they speak, be decisive, responsive, communicate frequently, and manage passion if this supply chain is to continue being successful.
Actions that should be taken to mitigate one possible risk for; (a) Process
A process risk is likely to be experienced in the supply chain. Thus, the management should provide products that fetch good prices in the market to mitigate the risks present in its process.
(b) Control
There is also a likelihood that a misstatement can occur in the account balance or in an assertion concerning the supply chain transactions. Therefore, to mitigate this risk, the management should employ a team that is qualified in handling the supply chain business transactions.
(c) Environmental
Environmental risks are also likely to occur in the supply chain. Therefore, this supply chain should insure all of its properties to control the environmental risks like fire, floods among others.
A functional organizational structure for the manufacturing facility
Organization is the key for the operations of this supply chain to be successful. It is important for each person in this supply chain to understand his or her role. The management should consider many factors in structuring the organization of this supply chain. In the structural decision categories, the managers should determine whether the supply chain’s technology, facilities, and capacity are in a better position to contribute to the success of the manufacturing facility. The other operations function component that needs to be considered is the infrastructural decision category where the control or information systems, workforce, and organization of the manufacturing unit need to be considered.
Strategic operations management decisions that would support the implementation of the firm’s mission and strategy
In the implementation of this supply unit mission and strategy, there are various strategic operations management decisions that need to be employed. The three strategic operations management decisions include product quality, its location, and its job design and human resources. The management should select a good location that is accessible and is not associated with various risks. The location should be strategic in such a way that there is enough water, lighting, source of raw materials, and security among other important factors.
In addition, the quality of the products should be high to attract many customers. The management should at least ensure that the products in the supply chain are of standard quality hence this will attract new customers and retain the old ones and as a result of this, the profit maximization objective will be achieved easily. Finally, the management should use a job design that will ensure that there is a job specification in the firm. The human resource manager should also ensure that the employees are full motivated for them to improve their services.
Adoption of a consumer-focused mass customization process
The company should adopt this process to ensure that it reaches many consumers. Therefore, this process will increase the number of customers hence it should be adopted.
Actions to improve cost effectiveness in the, (a) Manufacturing facility
Cost effectiveness is required in the firm’s manufacturing facility. This will be important in ensuring that there will be no wastage of resources. The action that the supply chain needs to take to control the wastage in the manufacturing facility is to employ a technology that is effective.
(b) Supply chain
In the supply chain the management needs to use cost effective advertising programs and distribution channels which will ensure that there is no wastage.
References
Ballou, R. H., & Ballou, R. H. (2004). Business logistics/supply chain management: Planning, organizing, and controlling the supply chain. Upper Saddle River, N.J: Pearson/Prentice Hall
Vollmann, T. E., & Vollmann, T. E. (2005). Manufacturing planning and control systems for supply chain management. New York: McGraw-Hill.
