Suррly Сhаin Маnаgеmеnt 11 Essay Example
Suррly Сhаin Маnаgеmеnt 11
Supply chain management refers to the design of the value added processes within all areas of an organization to meet the needs of customers. SCM requires not only the individual but also the collective commitment to achieving client’s demands. The research paper will focus on the UPS Supply Chain Solution’s case study where a brief summary is provided, including the solution given by the consulting firm. It is followed by outlining the main problems in the supply chain management, and finally a critical analysis of the case study is discussed to illustrate the flaws in the company. The paper seeks to show that companies need to conduct intensive operational analysis to have effective inventory management systems.
Analyzing UPS Supply Chain Solution’s Case Study
Supply chain management is the design requires not only an individual but also collective commitment to achieving customers’ demands. The bottom-line is to be proactive in developing inventory network by using advanced network model tools as well as having the competent workforce. Failure to be active in planning and designing of effective supply chain management leads to poor coordination of operations, poor communication, customer’s problem issues, wastage of resources and time, and incompatibility of systems among other problems. The paper focuses on the UPS Supply Chain Solution’s case study and seeks to show that companies should conduct intensive operational analysis to have effective inventory management systems.
Case Study: UPS Supply Chain Solution
Summary of the Case Study
UPS Supply Chain Solution is the world’s leading consulting company that provides services to firms on the establishment and formulation of effective supply chain management (Coyle et al. 2012). In this case, one of the leading manufacturers of the specialty automobile parts wanted to lower the cost of distribution and increase its competiveness in the market. In order to efficiently conduct the exercise, the company invited the UPS Supply Chain Solution team to analyze the North American distribution network and provide the solution and recommendations on how to improve e its services. The company has four branches in the United States of America, and the finished products are many too many dealers located in North America through the five distribution centers in the U.S. and one in Canada.
The big challenge for the company was that the leases for two distribution centers, one in the Southeast and the other one on the West Coast were expiring. At the same time, the economic slowdown and the stiff competition were affecting the revenue of the company. The company’s management was not sure if it had made the correct economic decision of renewing the leases of the distribution centers or not. Therefore, the company wanted “UPS Supply Chain Solution” to determining the optimal network as well as providing efficient supply chain process that would help in reducing the cost of distribution of the specialized automobile equipment and parts as well as maintaining the services at the highest level.
Solution Provided by the “UPS Supply Chain Solution.”
Based on the above scenario “UPS Supply Chain Solution” was hired to conduct a full analysis of the distribution network and provided strategies for improvement and recommendations. In this case, UPS Supply Chain Solution used advanced network tools of modeling and included its knowledge in the supply management to provide the company with the solution.
The team conducted an intensive analysis of the scenario by ran and closing some centers to make a well-informed comparison of the optimal nature of every center. The information illustrated that the network used by the company of locating distribution centers near factories was one of the most efficient models in the optimization of the outbound transportation. For instance closing, the southern center would add $1.4 million to the total distribution cost. UPS Supply Chain Solution proposed that the company should maintain the two distribution centers, as well as the one in Canada since the cost of distributing good direct from America to the customers, was higher than shipping in bulk across the border.
Further, after studying the inventory process of the company, UPS Supply Chain Solution noticed that the company could save money by enhancing the proper use of distribution network. The team observed that after products had been produced, the inventory was being moved from one center to another before reaching the final consumer. Therefore, the company could save a lot by avoiding unnecessary inter-facility transportation. In order to ensure the business was able to implement the recommendations, UPS Supply Chain Solution conducted training for the company’s officers on how to use the available specialized software in applying and the new the proposals.
Finally, after two months of the project, the company was able to implement the recommendations, which reduced the total cost of the distribution by 15%. At the same time, the company was able to maintain the high level of services to its customers.
Supply Chain Management Problems
Management is vital in the supply chain of any company. One of the main challenges that affect firms is the management of inventory (Hugos 2011). Additionally, effective management of stocks considers two elements, which include some products to be distributed, and when they should be circulated to get to the final consumer at the right time. However, the aspect of inventory control and management will be discussed in details concerning the above case study.
Secondly, customer service is also a challenging aspect in managing the effective supply chain. The primary objective of having a good supply chain is to provide quality services to a client and thus attract more in the company. However, balancing all aspect to meet customers’ demands is a significant challenge to many firms (Simchi-Levi et al. 2007). Some of the main elements in satisfying customers include maintaining the production of good quality products or services, ensuring goods are at the right placed and delivering them at the right time. Therefore, coordination is critical in balancing the three factors mentioned and satisfied customers at any time.
The third challenge is the control of the cost of distributing the products or services to customers while at the same time maintaining levels of services (Hugos 2011). it is critical to understand that there are several factors that determine the cost of distribution such the differences and fluctuations in foreign exchange, changes in cost of fuels, tax charges, the number of customers or distance to be covered, freight charges, technology used , the rise in the commodity prices, and cost of labor among others. Therefore, it is important to ensure that proper management is conducted to minimize the cost, maintain the high level of services while at the same time increasing the revenue margins of a company (Simchi-Levi et al. 2007).
Further, the main factor in effective supply chain network is good planning and risk management (Simchi-Levi et al. 2007).For the firm to remain stable, continues to be competitive in the industry, regular planning, and redesign, and reviewed is critical. Coordination the production of goods or services, their distribution and final delivery, calls for efficient management strategies that will take noted of the risk involved in every step made by the company. The adjustments made could be due to the changes in the market such as introduction of new product, global sources, and protection of intellectual property among other considerations. Therefore, the risks involved should be quantified and analyzed in order to be controlled and mitigated.
Additionally, firms find it challenging to maintain good relationship with suppliers or partners thus destroying the supply chain systems (Plunkett 2009). it is critical to note that creating , understanding and following mutually agreed standards in a given industry is beneficial not only to the industry ,but also to the company since it helps in determining the current performance and opportunities, which can be used conduct SWOT analysis and improve competitive advantage. On this note, it is not recommended to have two different methods of communicating and measuring of performance or results since it wastes time and energy(Taylor & Brunt 2008). Firms are thus encouraged to have stems put in place that deliver consistent results and promote good supplier/partner relationship.
Case Study Analysis
As noted in the case study of the optimization of the distribution network for the company, UPS Supply Chain Solution expert noted that the big problem was inventory management. The concern of the company was how to maintain the same level of services while at the] same time closing the three distribution centers. The following section will discuss the key issues rose in the case study about the lecture notes provided and further readings.
Inventory management is the process of controlling materials, suppliers, goods or services to ensure that they reach the final consumer at the right place, time, and quality (Leeman 2010). Effective management of inventory is instrumental in ensuring that a company is secure by providing goods or services to the customer when needed. Additionally, inventory plays a critical role in enabling a company to take opportunities in the market by having goods already in the stores. Proper management of inventory is also important in promoting the competitive edge of a firm (Jacoby 2010). A company can as well reduce the cost of distributing products if the inventory network is well managed. However, in the UPS Supply Chain Solution’s case study, many problems can be observed as indicated below.
Inventory Management Problems in the UPS Supply Chain Solution’s Case Study
Inadequate Definition of Customer Service
Customer demands and needs are the key components in the effective management of inventory (Monczka 2011). As noted earlier, the main aim of inventory management is to ensure that customers are satisfied, and their needs are met. Therefore, the effectiveness of supply chain management is measured on its responsive to clients’ demands. In the case study, the company management fails to recognize the value of satisfying customers when deciding to close some of the distribution centers. The overall effect is that the distance the cargo will cover before the final customers gets the products would lead to the delay in delivery which may be costly to the company’s future business strategy.
Inefficient Network Model Tools
Efficient systems in maintaining an effective supply chain is instrumental in ensuring that a firm offer good services to its customers and other partners (Taylor & Brunt 2008). The key role of efficient network tools is to bring reliability and trust from all stakeholders and to make a firm remain competitive in a given market. The case study points out flaws in the systems used by the company in distributing the automobile parts and equipment to the customers. It is for this reason UPS Supply Chain Solution proposes the review of the company systems and policies to streamline the management of inventory and avoid unnecessary wastes. A good inventory management system needs to ensure that no delay of products or service delivery and that the level of services is maintained at the highest level at all times (Lambert 2008). Additionally, the systems should ensure that customers are always updated on the dispatch dates, distribution process, and delivery dates and times. This way, the company gains trust and good reputation from the public.
Incomplete Shipment Method Analysis
As indicated earlier, it is important for businesses to ensure that regular review and analysis of inventory management is done (Lambert 2008). However, this analysis should be detailed enough to cover all stages or areas to uncover the wastes or unnecessary costs. Changing the mode of transport and distribution of products to the customers can be costly if not all considerations are taken into account. The cases study reveals that the company’s management had not done extensive analysis of inventory control. If proper analysis of the economic viability of closing the two centers of distribution had been done, the company would not have invited the experts to conduct the analysis. In addition, in-depth investigations by the UPS Supply Chain Solution showed that the company was losing savings due to unnecessary inter-facility transportation. Further, the company’s management had not done the proper comparison on the cost of distributing the equipment and automobile parts in bulk from America and from the centers that located near factories. This pointed out inefficient and inadequate analysis of inventory operations. Therefore, it is important that companies conduct proper analysis of shipment inventory process to unearth the cost and benefits factors to make well-informed decisions (Taylor & Brunt 2008).
Incorrect Assessment of Inventory Costs
The cost of operation in the inventory management should not be underestimated (Lambert 2008). As shown above, failure to make the proper analysis of inventory processes can lead to poor decisions, which could make a company lose its competitive advantage in the industry. It is important to include all components when calculating the cost of inventory operations (Monczka 2011). In the case study, the company’s management is not able to determine the cost the company would incur if the distribution centers are closed. As indicated, the ripple effect is that the total cost of operation would increase by $1.4 million. At the same time, the reduction of more than 15% of the cost of managing inventory is a significant figure.
Competent Human Resource
The above UPS Supply Chain Solution’s case study shows that having skilled work force is a critical component in the management of inventory. The whole process of balancing all aspects of efficient systems calls for skillful human resources that will ensure the company maintains its competitive advantage as well the high level of services customers and partners (Plunkett 2008). The case study illustrates that companies can save money if they have qualified and competent workforce instead of outsourcing services from consulting firms such as UPS Supply Chain Solution.
In order to have effective supply chain management, organizations should conduct an intensive operational analysis. The case study shows that in the supply chain, several factors determine efficient delivery of services to the end customer such as the method used for shipment, analysis of cost and benefits factors, customer satisfaction, having the competent workforce.
Coyle, J. (2012). Supply chain management:Mason, OH, South-Western Cengage Learning.
Hugos, M. H. (2011). Essentials of supply chain management. Hoboken, N.J: Wiley.
Jacoby, D. (2010). Guide to Supply Chain Management. London, Profile.
Lambert, D. M. (2008). Supply chain management: processes, partnerships, performance.
Sarasota, Fla, Supply Chain Management Institute.
Leeman, J. (2010). Supply Chain Management: fast, flexible supply chains in manufacturing and
retailing. Düsseldorf, Institute for Business Process Management.
Monczka, R. M. (2011). Purchasing and supply chain management. Mason, OH, South-Western.
Plunkett, J. W. (2009). Plunkett’s transportation, supply chain & logistics industry almanac
2009: the only comprehensive guide to the business of transportation, supply chain and
logistics management. Houston, TX., Plunkett Research Ltd.
Plunkett, Jack W. (2008). Plunkett’s Outsourcing And Offshoring Industry Almanac 2009.
Plunkett Research Ltd.
Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2007). Managing the supply chain. New
Taylor, D (2008). Manufacturing operations and supply chain management: the
LEAN approach. London, Thomson Learning.
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