Supply Chain Management 2

  • Category:
    Management
  • Document type:
    Assignment
  • Level:
    Undergraduate
  • Page:
    4
  • Words:
    2466

Report for consideration by senior management on the need for an agile approach to supply chain management in defense industry project.

Index Page

EXECUTIVE SUMMERY 2

INTRODUCTION 2

DEFENSE INDUSTRY CHARACTERISTICS 3

Rapid Emergency Response 3

Unstable Demand 3

Advancing Technologies 4

Transportation Challenges 4

Safety and Security Related Materials 5

Constrained Military Budgets 5

AGILE SUPPLY CHAIN APPROACH 5

RECOMMENDATION 7

CONCLUSION 8

REFERENCES 10

EXECUTIVE SUMMERY

Defense industry demands are unpredictable and variable in nature. There are great challenges sustaining correct inventory amounts. The industry is characterized by delays in shipping especially for the unique military gadgets, this delays performance especially during wars.

Supply chain management manages the supply of defense goods and services from the suppliers to the consuming military troops. Military supply chain is unique in such a way that there is supplies diversity, readiness for war at all times, orders handling and supply is according to priority, unpredictable demand and unpredictable supply points due to high mobility. In order for the military demands to be met, proper planning, sourcing and delivery must be done.

Agility in supply chain management is the achievement of rapid response to a constantly changing market demands. It is the ability to effectively react and adapt to the dynamic changes in the demand and supply chain.

The report has comprehensively highlighted the challenges faced by the defense industry in supply chain management and how the challenges can be mitigated through agility approach.

INTRODUCTION

Supply chain management has been defined as the «design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally” (Blanchard, 2007). It refers to the supervision and coordination of supplies, information and financial resources as they move from the supplier to the target consumer. Supply chain management therefore ensures there is effective management of supply chain activities in order to maintain high customer value as well as achieve a sustainable competitive advantage (Handfield and Nichols, 1999). According to Blanchard (2010) the main objective of supply chain management is to reduce inventory since the products will be availed whenever they are needed.

Defense industry is a significant player in the arms market; it is a major employer and the sole player in maintaining national security and order (Gates, 2004). The industry is involved in construction of nuclear-powered aircrafts, nuclear propulsion technology, manufacture of missiles, battleships heavy combatants, artillery and space technology.

Defense Industry is also involved in the manufacture of a variety of products like Automotives and other weapons designed and developed to meet the modern combat needs. The Russia’s defense industry for instance has underwater cruisers armed with ballistic missiles together with nuclear powered combatant.

This is the industry that is responsible for the well-being of the soldiers needed to deter war and provide security to all the citizens. They include the Army, Air Force and the Navy all organized in divisions and ranks with a distinct chain of command.

Supply chain management supervises and coordinates supplies, information and financial resources as they move from the supplier to the target consumer. The flow of supplies in defense industry includes delivery of food, clothing and equipment. Information flow here includes making orders and updating delivery status while financial flow entails terms of payment, credit and ownership agreements. There is need therefore for the defense project management teams to ensure there is a working supply chain management structure that will allow for flexibility, rapid response to changes in demand and is market sensitive.

DEFENSE INDUSTRY CHARACTERISTICS

Rapid Emergency Response

According to Gates (2004), Military supply is always geared towards readiness for war. There is need for emergency preparation at all times. Military management must therefore take into account the possibility of war at any given time hence put in place enough recourse set for the time of war.

Unstable Demand

Defense supply chain is unstable especially in cases of conflict, the supplies are unpredictable. It is characterized by rapid change in demand, dynamic needs in unspecified period, changing supply quantities and the need for variety of products.

Defense industry is faced with uncertainty; there is uncertainty on what the soldiers will demand, when they will demand and where they will be demanded. This makes it hard to determine what to source from the suppliers, the amount of items to be sources and even the delivery points.

Defense inventory has a large number and very different items grouped in classes. These classes of military supplies include food and clothing, classified maps, petroleum and lubricants, barrier material, ammunition, medical supplies, vehicles and armored automobiles among other specialized military equipment. These are a big number of classes of supplies. The classes of supplies have different supply chain management strategies ranging from packaging, transport and time of delivery.

The need for supply for spare parts for the repair and maintenance of large, classified and complex military machines is also a big challenge.

Advancing Technologies

New and advanced technologies that arise as we move towards the digital world calls for unique supply and repair of technological gadgets. The increase access to the internet with dynamic search engines coupled with global competition, supply customers are now unique with much power than ever before. The customers are now keen on quality, delivery speed and vast knowledge of a variety of products as well as their prices (Hines, 2004). This report will clearly provide a solution to this challenge through agile supply chain.

Transportation Challenges

Transportation is a big challenge because unlike other supply chain structures where supplies are shipped to specific destinations, military soldiers are greatly mobile and need supplies as they move, this is a dynamic demand that is challenging to meet. There are cases of overstocking due to stocking of unnecessary surplus hoping to ensure inventory availability this hamper mobility.

There is need for many divisions that distribute supplies; the same applies to control centers.

Safety and Security Related Materials

According to (Hartley, 2006), nations are now facing security challenges characterized by international terrorism, weapons of mass destruction, regional and ethnic conflicts. These calls for effective security policy that will ensure steady supply chain that will maintain sustainable national security. Due to security reasons, defense industry has strict supplier selection criteria, tough policies, scheduled deliveries and rapid performance.

Defense supplies are also handled as per the category and priority of supplies. Priority must be assigned at every stop point. According to Coyle et al (2009) ABC Analysis technique can be adopted in order to categorize inventory in order of importance. Priority in defense industry is based on the urgency of need of a given supply. Supplies needed at times of war especially basic items like food and clothing must be delivered timely.

Constrained Military Budgets

Where the supply volume is increased and time of delivery reduced, the cost of such a tender will be high, hence supplementary budget need to be put in place to cub such eventualities.

Similarly, there is need for extra warehousing, inventories, transportation and suppliers. This will give adequate buffer that will enable the supply chain manage demand and supply variations as well as maintain uninterrupted service delivery. All this come with additional cost.

AGILE SUPPLY CHAIN APPROACH

According to Christopher and Towill (2001), agility refers to the achievement of rapid response to a constantly changing market demands. It refers to the ability to effectively react and adapt to the dynamic changes in the demand and supply chain. The constant changing demand involves supply volume, time of delivery, variety and speed of delivery.

Supply Chain Management 2

Agile Supply Chain

This flexibility is good in industries that encounter rapid change in demand and supply in order to minimize service interruption hence achieving the overall organizational objectives. The quick response to expected changes enables an organization maximize the service levels and fulfillment of demand and delivery of personalized products.

This report has comprehensively highlight the key issues that defense project management team requires to make strategic decision on the best supply chain management strategy. It is through agility that the defense industry will attain a responsive supply chain. Agility has been evaluated and provided as the best strategy that can be adopted by defense industry supply chain management project for efficiency and effectiveness in service delivery.

Agile supply chain has postponement as a key characteristic where products are kept in semi-finished form until the customer demands and requirements are identified. This principle allows for rapid response to specific customer demand. This is achieved by providing tailored customer needs and maintenance of buffer capacity.

Flexibility is also one of the main characteristics of agility; it is the component that allows for quick response to rapid changing market requirements such as product volume and variety. This is achieved by product substitution or promotion.

Market Sensitive is another characteristic ofagility; it allows for the supply chain to have the capacity to respond to various market demands. It is achieved by effective planning, effective demand forecasts, risk identification and mitigation. All these are driven by actual customer requirements.

Agility has the virtual characteristic; this is where various groups are linked together in a virtual network in order to communicate online. The virtual characteristic of agility is where various groups are linked together in a virtual network in order to communicate online.

RECOMMENDATION

Agile supply chain management approach will provide for fast responseto changing demands coupled with dynamic logistic operations is only possible through implementation of flexible supply chain management strategies. Agile operations will provide excellent delivery of service to the target customers. Agile allows for organization to effectively respond to unpredicted delivery delays, changes in demand trends and highly mobile customers.

Implementation of agile supply chain approach will ensure thesupply chain will be able to maintain sufficient inventory in order to fulfill the high targets of changing demands and varied time of delivery. It will have in place a secondary supplier identified in advance where sudden increase in demand is realized and the primary supplier cannot cope. This will ensure there is uninterrupted supply during such an eventuality.

Adoption of agile supply chain will also ensure the suppliers in the defense industry are flexible enough hence allowing the supply chain to easily change quantities of order, time of delivery, destinations or even cancel the order all together when need arises.

Given that the defense industry has an element of risk assessment in the supply chain. When the military supplies have challenges or production problems, whereby expected products fail to be delivered due to poor logistics or errors in different production systems, agile will provide a solution.

Proper logistics are needed to move inventory from one point to the other. Logistics bridge physical and time gaps in supply chain by ensuring the inventory reaches the consumer at the right time and in the right place. With agility, there is efficient supply chain that will enable the defense industry to maintain a strong fighting power with very mobile and motivated soldiers.

Since defense contractors are faced by many uncertainties ranging from changing delivery requirements, technological advancements and competition from market rivals; agile supply chain approach will facilitate for quick to changing demand to avoid service interruption. This is because agile is characterized by market success factors like flexibility, quality, speed of delivery and availability.

Given the lager structure of the defense industry, there are bound to be inefficiencies and problems within the supply chain management. There are cases of delays in delivery, overstocking, hampered mobility and even demoralized soldiers. Implementation of agile supply chain approach with proper logistics, every soldier will be receiving the right amount of supplies they need in the best condition, in the right place and at the right time.

Agility has the virtual characteristic; it will therefore adopt the use of the internet and information communication technology to facilitate real-time data sharing between suppliers, planners, manufacturers, customers and even distributors through a virtual network. This therefore ensures that global customer’s needs are responded to instantly without any delay.

CONCLUSION

Defense industry is a high volatile market characterized by slow moving logistics, rapid changing technologies, unpredictable change in demands and highly mobile soldiers. Its supply chain management faces great challenges caused by rapid change in customer requirements, global sourcing, technological advancement and volatile market. This needs an appropriate response strategy that will enable the industry management team to effectively manage supply chains as well as maintains the best service delivery. Agile supply chain is one of the most flexible and market sensitive strategy which can be effectively adopted in order to achieve the supply chain management objectives. Through agile management defense industry will be able to carry out its activities however much they are diversified, and effectively deliver supplies that its consumers cannot find it elsewhere. With the implementation of agile supply chain management approach, the defense management team will be able to achieve their core objectives through responsive supply chain. They will therefore have much time to effectively concentrate on their core industry operations and responsibilities.

REFERENCES

Christopher, M and Towill, D (2001) ‘An integrated model for the design of agile supply chains’, International Journal of Physical Distribution & Logistics Management, Vol.31, No.4.

Cooper, M.C., Lambert, D.M., & Pagh, J. (1997) Supply Chain Management: More Than a New Name for Logistics. The International Journal of Logistics Management Vol 8, Iss 1, pp 1–14

Coyle, JJ, Langley, CJ (Jnr), Gibson, BJ, Novack, RA, Bardi, EJ (2009), Supply Chain Management: a logistics perspective, 8th edition, South Western CENGAGE Learning, Mason, OH, USA.

David Blanchard (2007), Supply Chain Management Best Practices, John Wiley & Sons.

David Blanchard (2010), Supply Chain Management Best Practices, 2nd. Edition, John Wiley & Sons.

Fawcett, SE, Ellram, LM, Ogden, JA (2007), Supply Chain Management: From Vision to Implementation, Pearson Education, Upper Saddle River, NJ, USA.

Gates, E. (2004) ‘The defence firm of the future’, Defence and Peace Economics, vol. 15, no. 6, pp. 509-517.

Handfield, R., and Nichols, E., (1999), Introduction to Supply Chain Management. Prentice Hall, Upper Saddle River, NJ.

Hines, T. (2004) Supply chain strategies: Customer driven and customer focused. Oxford: Elsevier.

Ketchen Jr., G., & Hult, T.M. (2006). Bridging organization theory and supply chain management: The case of best value supply chains. Journal of Operations Management, 25(2) 573-580.

Larson, P.D. and Halldorsson, A. (2004). Logistics versus supply chain management: an international survey. International Journal of Logistics: Research & Application, Vol. 7, Issue 1, 17-31.

Melissa Conley-Tyler (2005) A fundamental choice: internal or external evaluation?, Evaluation Journal of Australasia, Vol. 4 (new series), Nos. 1 & 2, pp. 3–11.

Mentzer, J.T. et al. (2001): Defining Supply Chain Management, in: Journal of Business Logistics, Vol. 22, No. 2, 2001, pp. 1–25

Zsidisin G.A., Ritchie B.( 2008), Supply Chain Risk. A Handbook of Assessment, Management and Performance, Springer, New York.