Supply Chain Strategic Fit

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The supply chain management remains to be an integral component of any given organization. However, the effectiveness of any supply chain process is dependent on the measures which have been put in place. There is need to adopt strategies that are essential in the improvement of performance of the supply chain process. In the current discussion, two supply chain systems are explored. In particular, it includes the supply of fuel at a petrol station and custom-made sofas. The supply chain process for the two products are explained in detail. The findings depict the need to adopt and embrace key supply chain principles as a way of improving the process.

Keywords: supply chain, performance

Introduction

Supply chain management process deals with the planning, control and execution of the flow of products from the manufacturer through to the customer via distribution. In particular, it is based on streamlining of activities to ensure that the supply chain process is cost effective and reliable. Furthermore, it encompasses factors associated with the planning and execution of measures needed to optimize the flow of materials from one location to the next. Supply chain management is expansive, complex and relies on close coordination of different stakeholders (Wisner et al., 2014). In addition, there is need to ensure that there is proper alignment and communication between different parties for the attainment of better outcomes regarding the delivery of goods to the customers in a timely and efficient manner. In the current discussion, the focus is going to be on the end-to-end supply chain of fuel at the petrol station as compared to the purchase and eventual disposal of the custom-made sofa. The report will be on supply chain strategic fit that focuses on two industry sectors. Briefly, the report will entail a critical analysis of the relevant literature, analysis of the supply chain types provided and a conclusion and recommendation on how to improve the entire process.

Critical Analysis of the Relevant Literature

Supply chain concepts

Supply chain is characterized by a wide range of concepts. The first aspect regards the issue on logistics management. Mainly, it is involved with the goal of ensuring that the right product gets to the customer within the right time and in a right condition. Furthermore, it is associated with the overall issue of ensuring proper planning, implementation, control and effective flow of goods from one location to the next. In addition, the information which is associated with the entire process is critical since it determines how soon and in what condition the product gets to the customer. The next concept of supply chain regards the issue of value chain. The tool was developed as a factor of competitive analysis and strategy. In essence, it is concerned with the idea of inbound logistics, operations, marketing and sales, and the services which are provided to the customers (Fredendall and Hill, 2016). In addition, value chain acknowledges the fundamental role of support activities which are provided to the customers as a way of helping generate profits to the organization. Therefore, value chain continues to play a critical role in ensuring the realization of profits by enhancing the nature of services which are provided to the customers. Therefore, the overall objective of value chain is to ensure that the customers get the best services for the money they use in obtaining a particular product. Finally, the distribution channel is the last concept of supply chain. In particular, it supports the flow of goods from one location to the next that is the manufacturer to the final consumer (Hugos, 2018). The distribution channel is entirely based on the organization and the measures put in place to ensure that the goods get to the customers in a timely manner.

Principles and Models Associated with Supply Chain

The understanding of the principles of supply chain management is critical in determining how best to ensure the realization of better outcomes in the entire process. Anderson et al. (2007) explored the principles and identified them as critical in the supply chain process. The first principle regards the adaption of the supply chain to the specific customer needs. The ability to understand the specific customer needs is critical since it enables the organization to address them. Therefore, to achieve the concept, it is critical to segment the customers based on the sales volume or profitability. However, other ways through which segmentation can be done is through products, trade channel and industry. The next principle is based on the customization of the logistics network. The process of segmenting the customers establishes the need to do the same for the logistics process. However, that can present a significant challenge to the supply chain process. Consequently, it establishes the need to customize the logistics network as a way of ensuring that processes work in tandem to ensure products get to the customers in a timely and efficient manner (Mangan et al., 2016). The third principle is based on the alignment of demand planning across the supply chain system. In particular, there is need to ensure that information on demand is available for the trading partners. The information helps in determining the exact location where the supply of goods can be taken in relation to the prevailing demand (Brandenburg et al., 2014). The process will ensure effectiveness since products and services will be delivered to those who are in need of the same. The effect is the achievement of profits.

The next principle is the differentiation of products closer to the customers. Product differentiation is a critical component in supply chain management. In particular, there is need to ensure that the customers are able to get the products and services which are specific to their individual needs and services. Mainly, in a possible situation, the focus should be on assessing the exact requirements of the customers and coming up with measures of guaranteeing delivery based on the product differentiation (Martínez-Jurado and Moyano-Fuentes, 2014). The fifth principle is based on the need to ensure that there is strategic outsourcing. In particular, there is need to ensure that the process of supply chain is done in a discrete manner as a way of maintaining the strategic advantage. More so, in a business environment where there is competition, the focus should be on maintenance of all attributes that are central toward the achievement of quality outcomes. The development of information technology structures is equally an essential principle that can support multi-level decision making. In particular, the adoption and implementation of the enterprise resource planning is a vital component which will guarantee the achievement of better results. The IT systems are critical in enhancing the entire process of supply chain, therefore, it should be part of the whole process (Kamalahmadi and Parast, 2016). The ability to incorporate IT is critical since it helps in the identification of the deficiencies which can assist in knowing the kind of technology that can be used to improve the process of supply chain. Finally, there is the principle of adoption of both service and financial metrics. The approach is essential because it helps in assessing the specific customer profitability and the steps that can be taken to achieve the identified goals and objectives.

The management of supply chain is critical because of the role it has in enhancing the whole business performance. The supply chain model is oriented toward efficiency. The first model is based on the “efficient” supply chain model. The model is suited for firms which are operating in a rather competitive market that has several products and customers who are ready to appreciate the value for any proposition which is provided. In the current model, the management should focus on the maximization of the end-to-end efficiency while including the high rates of utilization of the supply chain. The next model is based on “fast” supply chain (Monczka et l., 2015). The system works best for companies that are engaged in the manufacture and supply of trendy products that have a shorter lifecycle. In such a case, the primary interest is how fast the manufacturer is well suited to keep up with the trends in the fashion industry (Christopher, 2016). Therefore, the management needs to ensure that they put measures in place that are critical toward the attainment of quality outcomes by being able to replenish the supply when the demand is high. The next model for the supply chain is based on the “agile” concept. The model best suits organizations which engage in the manufacture of products that are under unique specifications from the customers (Monczka et al., 2015). In addition, the model works best for industries where there is unpredictability with regard to the concept of demand.

Analytical Examination of the Supply Chain with Organizations and Measure Performance Improvement

In the current discussion, an analysis is given on the end-to-end supply chain that is involved when a customer purchases a litre of fuel at the petrol station as compared to buying and eventually disposing a custom-made sofa.

Overview of Supply Chain in Purchase of Fuel at the Petrol Station

The supply chain process involved in the purchase of fuel at the petrol station is dynamic. The first aspect is based on the raw materials which are supplied to the manufacturer. Mainly, it includes the crude oil from drillers to the refining companies. The process can be done in various ways including transportation through underground pipes or shipping. The next phase is based on the manufacture and production of refined oil that can exist in different forms. The manufacturing companies engage in a range of activities that are based on making the final product that can be used by the consumers. The crude oil, which is the raw material is converted into the finished products that can be utilized by the consumer. Finally, the different retailing companies ensure that the fuel is transported to various petrol stations where the customers can have access to the same. In this case, the distribution focuses on ensuring that the product can reach the customers through the use of an organized system of distributors and retailers (Anderson et al., 2007). The customers are then able to purchase the fuel at will. In a typical scenario, the process is as illustrated in the figure below;

The methods used are aimed at ensuring that the customers have access to the fuel at a time when they are in need of the same without experiencing any form of challenges.

Supply chain process involved in purchase and eventual disposal of a custom-made sofa

The supply chain process involved entails a customer walking into a furniture shop and making the purchase of a sofa. The supply chain starts when the customer identifies the need to have a new sofa for the house. The next step of the chain is the specific furniture shop where the consumer visits. The shop has stocked different forms of sofa utilizing the inventory that has been supplied from the finished goods warehouse which is managed by different individuals. The vendor is equally stocked by a manufacturer of quality sofas. The manufacturing plant obtains the raw materials from different suppliers. In this case, it mainly includes timber that serves as raw materials for the manufacture of the sofa. Following the purchase, the customer has the option of disposing the sofa by going back to the same retailer or seeking another alternative where they can get a deal for the second-hand goods.

Comparing and Contrast of the two supply chains

The two supply chains are varied because of the nature of the process that is involved. For example, in the purchase of fuel, there are multiple stakeholders and the process is rigorous, requiring a strict and efficient supply chain system. In addition, there are multiple distributors as compared to when purchasing a sofa from the retailer. The process involved in the purchase of fuel is intensive and requires that proper logistics and reliable supply chain management systems put in place to ensure the customer gets the products at the right time (Shi et al., 2013). In addition, it is not possible for the customer to sell back fuel after purchasing the same, as compared to when dealing with the custom-made sofa.

Arguments to Support the notion that an organization can craft its supply chain to achieve a fit with competitive strategy

Organizations have the fundamental duty of ensuring that they streamline their supply chain process for the attainment of quality outcomes. The adoption of appropriate supply chain strategy is critical in ensuring that customers have access to goods within the right time and in the right condition. The ability to enact such measures is essential and endows any given organization with a competitive advantage. For example, in the case of the custom-made sofas, the manufacturer can ensure that they optimize the product design, management for supply and innovation. The manufacturer needs to understand that there could be multiple suppliers of the sofas. Therefore, the decision to purchase a particular sofa solely lies with the customer. An efficient supply chain means that the customer is able to get the product in a timely manner and in the best condition (Boonjing et al., 2015). Consequently, the organization entrusted with the mandate of ensuring the supply of sofa needs to have a mechanism where its systems are effective. The use of innovative approaches can help in ensuring that customers are attracted toward making the purchase. The organization can craft a supply chain that depicts desire to satisfy the customers. For example, through the adoption of product innovation and competitive advantage, the organization can select the most efficient suppliers dealing with attractive commodities. The organization needs to be able to manage information, customers, the process and decisions regarding the nature and quality of the custom-made sofas. Thus, the streamlining of the process is critical for the organization as it would endow a competitive advantage to them.

Secondly, there is the aspect of the distribution system that is used by the given organization. For example, in the case of supply of fuel at the petrol station, there is need for the organization to ensure that it puts all the necessary measures to ensure that the product gets to the customer in a timely manner. The distribution strategy utilized by the organization should be efficient to the extent that it does not result in any loss of time in delivery. For example, fuel is an essential commodity. Therefore, the consumers expect that in the course of the distribution, the organization puts in place all the necessary measures which will be critical in assuring its timely delivery at the petrol station. The ability to craft an elaborate supply chain strategy will endow the organization with a competitive advantage since it will be possible to gain the confidence of the customers (Stevens and Johnson, 2016). In addition, there is the aspect of cost reduction, especially in the supply of fuel at the petrol station. For example, the transport of petroleum products may be expensive to any given organization. Therefore, it is critical that appropriate measures are put in place that are essential in ensuring an effective distribution system that is cheap but efficient. For example, there is the use of pipeline to ensure commodities get to the petrol stations in a timely manner, without any interference from environmental factors. The approach is essential since it will ensure that at any given time, the customer is able to get the product. The outcome is an improved customer service that works to the advantage of the organization by endowing them with a competitive advantage.

Critical Analysis of Cross-functional drivers to optimize performance and achieve positive outcomes bottom-line

The determination of drivers aimed at enhancing performance leading to positive outcomes is critical in the bottom-line. The first driving factor regards the aspect of inventory management. The supply chain process needs to have an appropriate system of inventory management as a way of ensuring the attainment of quality outcomes. Ideally, products such as fuel are critical and continually needed. Therefore, there is need to ensure that appropriate measures are put in place to have an inventory system that can lead to the achievement of quality outcomes. In addition, in the case of the customized sofas, there is need to ensure that there is enough in the store whenever they are needed for different customers. The second driving factor is the distribution network. Consideration should be made to the fact that the systems used for distribution are essential and form the basis of the supply chain. Therefore, it is critical to ensure that relevant measures are put in place to ensure that there is effective tracking and delivery of items as required by the customers. Furthermore, the development of an elaborate distribution strategy is a critical driving factor that can lead toward the attainment of improved performance while achieving positive outcomes bottom-line (Ross, 2015). The approach is essential because it will lead to the attainment of profitable growth in the organization as issues such as cost, revenue and utilization of the assets are addressed. Therefore, in dealing with the issue of distribution strategy, there is need to factor in factors such as the production facilities, warehouses and how the customers are able to get the products when they are in need of the same.

Synthesis of a range of advanced and specialized concepts, principles and models and their application to the operational and strategic improvement

The supply chain concepts, principles and models are fundamental with regard to the overall process of enhancing operational and strategic improvement. The concept of logistics management is key in ensuring that there is a smooth execution of the supply chain process to ensure that the customers are able to get the products in a timely manner. For example, in relating to the aspect of customized sofas, there is need to ensure that the customers are able to get the commodity in a right time and the best condition. The existence of an efficient logistics management system can guarantee customers access to the product whenever it is needed. Consequently, there would be an improvement in the operational and strategic improvement. The concept of value chain is equally critical and can be applied to help in enhancing the operations and strategic improvement in the supply chain management (Stevens and Johnson, 2016). For example, customers who purchase fuel at the petrol station need to have a guarantee that they are getting the best quality product. In a similar manner, those who are purchasing custom-made sofas with plans of disposing again need to have access to value chain services. The strategy positively influences operational and strategic position of the supply chain process by guaranteeing the customers availability of the products when they are needed. For example, in the sale of fuel, the petrol station can opt to add car washing as a value addition service. The outcome would be a guarantee of the entire process of operations while improving the strategic standing of the supply chain process.

The principles of supply chain management can equally be instrumental in enhancing the overall process downstream. For example, there is the principle of ensuring that the supply chain is customized to the needs of customers. In dealing with fuel and custom-made sofas, it is critical to understand that different customers have varied preferences. Therefore, there is need to ensure that appropriate measures have been put in place that would be instrumental in guaranteeing the attainment of quality outcomes. The operations and strategic improvement is likely to be achieved because of the ability to customize the nature of service provided to the customers (Boonjing et al., 2015). In addition, there is the aspect of customizing the process to meet the individual customer needs. Therefore, the process can result in the achievement of better outcomes and an enhanced operational performance. In addition, there is the principle of differentiation of products closer to the customer. In particular, there is need to ensure that the customers are able to have access to the products whenever they are needed. For example, fuel is an essential commodity that must be available at the petrol stations at any given time. Therefore, the supply chain management process needs to be accurate to ensure that customers have access to the commodity at any given time. Finally, the model of the supply chain adopted needs to be efficient with the ability to guarantee customers access to products when in need of the same. An efficient model of the supply chain should be able to guarantee customers the best service (Shi et al., 2013). In addition, there is the aspect of the organization attaining profits because of the efficient models that have been put in place to ensure the attainment of better outcomes. The organization needs to embrace a supply chain that adheres to the most advanced approaches for their benefit in terms of profitability and that of the customer. Furthermore, there is the model of “fast” which is based on efforts to enable the organization provide products to the customers in time. The effect is an enhanced operations and improvement in the strategies which are embraced.

Conclusion

The supply chain management process continues to play a critical role in shaping the outcomes of any given organization. In particular, there is the aspect of adopting strategies in the supply chain process that would yield quality outcomes to the customers. The organization needs to put in place measures that would be critical leading to the achievement of better performance in the entire process. The adoption of key strategies is critical in improving the process and resulting in better outcomes.

Recommendation

The organization can develop an elaborate an elaborate supply chain management process to guarantee timely delivery of products to customers. The supply of fuel at the petroleum station should embrace the latest strategies in supply chain for adoption of better outcomes for customers. The organization can realize success through adoption of the established principles of supply chain. Furthermore, there is need to ensure that the organization is well suited to manufacture when demand exists and reduce on the same when there is a decline from customers.

References

Anderson, D.L., Britt, F.F. and Favre, D.J., 2007. The 7 principles of supply chain management. Supply Chain Management Review, 11(3), pp.41-46.

Boonjing, V., Chanvarasuth, P. and Lertwongsatien, C., 2015. An Impact of Supply Chain Management Components on Firm Performance. In Proceedings of the 6th International Conference on Engineering, Project and Production Management (pp. 555-565).

Brandenburg, M., Govindan, K., Sarkis, J. and Seuring, S., 2014. Quantitative models for sustainable supply chain management: Developments and directions. European journal of operational research, 233(2), pp.299-312.

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Fredendall, L.D. and Hill, E., 2016. Basics of supply chain management. CRC Press.

Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.

Kamalahmadi, M. and Parast, M.M., 2016. A review of the literature on the principles of enterprise and supply chain resilience: Major findings and directions for future research. International Journal of Production Economics, 171, pp.116-133.

Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain management. John Wiley & Sons.

Martínez-Jurado, P.J. and Moyano-Fuentes, J., 2014. Lean management, supply chain management and sustainability: a literature review. Journal of Cleaner Production, 85, pp.134-150.

Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and supply chain management. Cengage Learning.

Ross, D.F., 2015. Distribution Planning and control: managing in the era of supply chain management. Springer.

Shi, H.B., Zou, W.N. and Das, S., 2013. Factors for Improving the Supply Chain Management Performance: A Survey of Chinese Toy Makers. In Proceedings of 2012 3rd International Asia Conference on Industrial Engineering and Management Innovation (IEMI2012) (pp. 301-312). Springer, Berlin, Heidelberg.

Stevens, G.C. and Johnson, M., 2016. Integrating the supply chain… 25 years on. International Journal of Physical Distribution & Logistics Management, 46(1), pp.19-42.

Wisner, J.D., Tan, K.C. and Leong, G.K., 2014. Principles of supply chain management: A balanced approach. Cengage Learning.

January 19, 2024
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