The companies Warburton’s Family bakers and Kellogg’s Cornflake Company catered perishable products or products which can rot or spoil on a matter of time. In line with this, their customer wanted to have good tasting and fresh products. The success of both companies were truly outstanding. The risk of enganging with this industry is on how the company will be able to provide its customers the freshness, goodness, taste, and the overall satisfaction of them.
In chapter 2 page 38 of our handout, supply chain strategy defined as “Supply chain strategy determines the nature of procurement of raw materials, transportation of raw materials, transportation of materials to and from the company, manufacture of the product or operation to provide the service, and distribution of the product to the customer, along with any follow-up service and a specification of whether these processes will be performed in-house or outsourced.” Managing the whole supply chain-from primary, secondary, up to tertiary sector- was complex and needed constant monitoring to achieve efficiency and effectiveness until the products or services reached its final consumer. The two business entities that was introduced to us were working well in maintaining there position as two of the bests companies in the world.
Both companies were producing perishable goods, so having high-level of inventory was a big no-no! Kellog’s was focusing mainly on its expertise, which is manufacturing and was practicing the JIT tools and techniques to provide inventory needed at the moment. Fully occupied warehouses was not also good for the industry like this.The company was practicing the most efficient way of transporting its final products to the retailers to avoid muda -lean production.
The strategy of eliminating erros in the process in the process involves indentifying errors that are commonly made in the process and eliminating them. The best way to improve the design of a process is through an active program for experimentation. The companies should’ve also ensure that the processes involving repetitive tasks were being done in the most efficient way and productive manner.
There was a close connection between the design and management of supply chain flows and the success of a supply chain.The strategy of a company was the root cause of gaining competitive edge of a business entity against its competitor. The two business entities should not maintain there process but rather continullay improve their supply chain management, they should set omproved goals like 10 times improvement with the process and as the years passed by their standards should increase respectively to continually and improve and help them become motivated.
PROS AND CONS OF INVENTORY
A lot of arguments are expressed that the supply chain can still work even without inventory. Inventory is the quantity of goods, intermediate goods, or raw materials on hand of the company or simply the stock. Is inventory evil or is it a necessity?
Inventory is taking the evil because it ties up working capital. Another problem of inventory is its presence or absence; it could be too much or none. Inventory obsolescence is another frightening matter for the companies in having inventory probably because of too much inventory on hand or the items are no longer wanted by the customers. If a company has inventory consequently there is warehouses of goods storage which is costly to have because of its maintenance and the space for storage, which the money spent on this can be use in elsewhere. The company does not want to “tie up” money in unused inventory that often depreciates while sitting on the shelves.
On the other hand, inventory is helpful when the prices of the goods are expected to increase in time then a high level of stocks can also eliminate the risk of fall of supply in the future; hoarding. Keeping inventory is helpful to ensure total customer satisfaction. There are companies that take an inventory of their supplies regularly to prevent shortage of their in demand items. And some take an inventory to make sure that the quantity of items ordered aligns the actual number of items in the inventory.
Making sure you can successfully accept orders, process these orders and then ship them and reach the hands of the customers can be a complex process. Inventory must be managed correctly. Companies need to have the necessary parts in inventory to meet customer demands at a moment’s notice. Companies must have a practical, efficient method for managing inventory in order to stay in business and satisfy their customers.
The problem can be solved in three letters; JIT. JIT: “You have it when you need it. You don’t have it when you don’t need it.” It is about understanding of what is needed to produce goods and schedule them for delivery to customers, efficient monitoring of the usage of materials in production and decreasing the inventory in the firm because of the Philosophy of “Inventory is a waste”. By reducing work-in-process inventory and carrying cost, the income of the company may increase in time. Kanban also will help in scheduling for the company to know when to produce, what to produce, and how much to produce.
We cannot really determine the exact demand for raw materials, products, and intermediary goods needed by the company’s customer even if we apply forecasting because any time of the day and any where something may happen like fortuitous event.
The importance of supply chain strategies is its competitiveness. The competition today is provoked by the technological advancement, globalization, economic stability, availability of information, and the dynamic needs of the customers. A company acquires competitive advantage by strategically performing the vital activities in a lower cost or way better than its competitors. The lack of strategic fit may lead to the failure of the company.
The flow of the supply chain is one way to achieve competitive advantage. The domino effect of mismanagement in the supply chain is apparent in the example: A textile manufacturer receives a shipment of poor quality fiber; it is dependent on its supplier for timely shipments, the poor quality results to shipment delay to one of its customers so the manufacturer forced to close because the raw material –fiber- is not available. In effect to that, the retailers will receive the products delay and consequently the end-user is unable to look for the desired brand and the customer decides to buy the product of the competitor.
In examining the effectiveness of any strategy is the dependence of the outcome on the manner in which the strategy has been implemented. No matter how brilliant or well aligned a strategy may be, it will still be unlikely to lead to a successful outcome if it has been poorly implemented.
Managing the links or connections in the supply chain is where the integration of the supply chain begins. There is no right supply chain strategy independent of competitive strategy. The very first step to strategic fit is to understand customers by mapping their demand on the implied uncertainty spectrum. The company should have the actual resources and capabilities to execute and support the strategy. The supply chain responsiveness is needed to respond to the dynamic demand of the customers. The consistency of the supply chain blends well with target customer’s needs.
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