Global Supply Chain Management
Assessment: – ?
Reg No: –
2.1 Supply chain decisions
2.2 Challenges in Supply Chain Performance
2.3 Competitive in the market
2.4 Strategies for supply chain
2.4.1 Forecasting Demand and Planning for Supply
2.4.2 Aligning Strategies with Needs
2.5 Warehouse Management Systems by web based system
2.6 E-Business (web based) and the Supply Chain
Distinctive Books is a bookstore in UK cities. They sell many types of books, what makes them distinctive in terms of other high street bookstores is their expertise in sourcing unusual and rare books from around the world for their customers. They offer customers an excellent, reliable and speedy service.
Their target is to expand their company to the world market. They don’t have any online customer services. They sell their books through their outlets and other distribution shops. They have to introduce web based business system to remain competitive. Their web system should support them in sourcing and selling books of all types, including business books as well as unusual and rare books. They therefore wish to examine the viability of developing a web presence to support the sourcing, marketing and selling of their books and services. They recognize that this must be considered in the context of their global supply chain, from sourcing supplies, managing stock through to marketing and selling their books and services. They think they can offer quality services to their customers.
So, this study is based on analyzing the issues of introducing web based system to the Distinctive Bookstore. It’s required to use the supply chain management to introduce analyze the company and opportunities to introduce the system. This study carries supply chain management and its important elements to support the study.
It’s necessary to analyze the current condition of the company and its elements. They are based on manual system now. They want to implement auto system which means we based system. It will help them to do various targets. The Company already knows that they have to introduce online system to its customers. So, this study based on helping the company to implement an online customer service system. For a supply chain, decisions are made across three levels or phases: Strategic phase, Tactical phase, and Operational phase. It’s very important to analyze the Challenges in Supply Chain Performance. There is brief explanation for the challenges.
Company’s main objective is remaining competitive in book store market. To remain competitive in the market, Distinctive Bookstore needs to plan and be prepared to cater to both factors. Business trade-offs, Organizational silos. Strategic planning is the way an enterprise seeks to answer three basic questions: Who are we?, Where do we want to be?, How are we going to get there?. Strategies are Forecasting Demand and Planning for Supply and Aligning Strategies with Needs. Warehouse Management Systems by web based system will automate the supply chain process is basic concept to improve the organizations overall efficiency.
E-Businesses have directly affected organizational operations by providing them the opportunity to respond faster to customer demands and deliver effective services. For a supply chain, web based system have the following benefits: Reduces the different costs of operation, allows for organizations to collaborate their processes, Managing supply chain risk, Provides improved marketing and customer service opportunities are the major objectives can achieve by supply chain management.
Distinctive Books is an independent chain of bookstores on the high street of a number of UK cities. . It is an independent chain of bookstores. They sell their book via their outlets in many cities in UK. They are the leading company in the bookstore market. But they still have problems in their supply system and management system. They don’t have web based system which means they sell books through their books stores. So, they use manual system and they don’t have any auto system. Therefore they decided to implement web based system to support them in sourcing and selling books of all types, including business books as well as unusual and rare.
They are the leading company in book marketing section. But they are trying to implement a viable web based business system to attract their customers. They have to develop a web presence to support them in sourcing and selling books of all types of books to remain competitive. Distinctive Bookstore currently has a manual systematic working style and company based manual system. So, it’s trying to make it’s mixed of manual with Information System. It knows that it can get whole market and it can survive in the book market. World is always progressing and there are new trends and new techniques emerge. So, all the manual systems should be upgraded.
Distinctive Bookstore is known that it can remain in the competitive market by upgrading its system with Information System. Other competitors may already have introduced Information System to their manual system. Therefore Distinctive Bookstore also wanted to introduce web based system in order to remain the market. It’s the major purpose for the web based system of Distinctive Book store.
Bookstore Company has to introduce a web presence to sourcing, marketing and supplying books to their customers. It’s not very easy to do such improvement in a company. Anything can’t change immediately. Any system cannot introduce as they think. So, it’s complex and if anyone try to do such work, it will give negative result. It’s usual and everyone knows it. So, there are so many ways to introduce and new system or any changes. Before going to do anything in big organization, it requires to some kind of analyze. Then they can use any theory to match their work. In this case, Distinctive Bookstore has to introduce web based system to remain competitive. So, it has to follow some ways. Their target related to supply of the company and customers. So, here supply chain management is the suitable theory which can use to introduce we based system. So, Distinctive Bookstore Company also knows that there is potential to improve the supply chain of their business. They are also aware that without a full understanding of the opportunities and risks they could implement inappropriate solutions.
It’s required to use the supply chain management to introduce the web based system. When they try to implement the system, it’s too difficult to it themselves. So, I have been asked to do that system. My have been employed by the Distinctive Book Company to investigate the issues of sourcing and selling their books on the web as well as through their existing bookstores. They know that there is potential to improve the supply chain of their business. My role is to investigate the issues of introducing a web presence to sourcing, marketing and supplying books to their customers. In doing so I should ensure that I consider the strategic, tactical and operational issues of improving their global supply chain. In addressing this problem I should consider global supply chain strategies that would help the business to:
* improve efficiency;
* maintain or improve quality of service;
* manage supply chain risk;
* address supply chain issues that would arise from sourcing products through to sale and
* distribution of products to their customers (procurement, inventory management, warehousing
* management, strategic partnerships,
2.1. Supply chain decisions
According to requirements of Distinctive Bookstore, I have used supply chain management theory and its elements to find out the above issues as follow. A supply chain is linked set of resources and processes that begins with sourcing of raw material and extends through the delivery of end items to the final customer1. Supply chain decisions are very important in the supply chain management process. The smoothness in movement of products across the supply chain is an important factor that determines the success of the system. Organizations make strategic decisions for their supply chain to ensure that the demand generated by the customers is balanced with the supply of products and services and both operate in sync.
For a supply chain, decisions are made across three levels or phases:
> Strategic phase
> Tactical phase
> Operational phase
Strategic decisions are critical to the sustenance of a supply chain since they determine the long-term goals that are to be achieved by the organization. However, tactical decisions determine how the processes should flow in a supply chain, while operational decisions deal with how the efficiency of day-today transaction can be enhanced. All these three major levels will determine the both failure and success of the system.
2.2. Challenges in Supply Chain Performance
It’s not easy to apply supply chain management theory to case. It has lot of challenges and problems. Challenges are very important. We should hand this challenges properly and try to overcome from them. Otherwise our process will give the negative result and we will have to encounter a lot of problems. In our case, to maximize profitability from its supply chain, a Distinctive Bookstore Company must foresee the obstacles that may occur along the way. Despite the complex level of tactical detail that company follow, the supply chain faces challenges, which need to be periodically monitored and managed. Companies design strategies to manage these challenging situations and devise plans to mitigate them.
2.3. Competitive in the market
To remain competitive in the market, Distinctive Bookstore needs to plan and be prepared to cater to both factors.
* Business trade-offs
In businesses, trade-off situations arise when targets or goals that seem equally important cannot be achieved fully, at the same time. In such a situation, companies prioritize one product or service as more important and necessary than others. As a result, they place more weight on this product or service and may support it with a part of profits allocated for the other products or services. Ultimately, the company seeks to capitalize on the high priority product or service more than the others2.
In our case where Distinctive can reduce the price of any time of book which has lower demand by 10% because the demand for the book type was less than that of the other books. In this situation, Distinctive made a cost or price trade-off in order to reap the benefits of better sales and presence in the market.
Tradeoffs help business organizations stay in competition. Combining the right benefits and costs helps companies in devising alternative solutions for improving their business and increasing profitability.
* Organizational silos
An organization consists of several divisions or silos. The smooth functioning of the supply chain depends on the smooth interaction of these silos. In certain situations, these divisions may work in a disjointed manner with a lack of proper coordination and communication. In addition, the two silos may have divergent goals and competing agendas, which render them incapable of capitalizing on their opportunities. As a result, the stability of the supply chain processes is jeopardized and the flow of resources across the processes is distorted. In addition, in case of misinterpreted communication between the silos, conflicts can occur. Therefore, organizations generally devise common conventions to maintain consistency in operations, tactics, and strategies across their silos or divisions3.
In our case Distinctive Bookstore may have some separate teams for the retail sales and the corporate sales. Both teams operate as separate silos and coordinate with each other to discuss the respective sales status on a quarterly basis. This helps them avoid the conflicts that may arise out of their varied sales strategies and ensures that both teams are working towards a common organizational goal. If they introduce web based retails system that must corporate with other systems. Otherwise there will be conflict between these sales systems.
Besides these internal challenges, organizations also encounter certain external challenges. Some of the common organizational obstacles are:
¦ Increasing product variety: To fulfill the increased and varied customer demands, customization of products has increased the variety of products available but leads to increase in the complexity of supply chain management.
¦ Increasing customer demand: Demands for improvements in delivery lead- times, cost, and product performance have brought in the need for organizations to revise their supply chain policies at a regular basis.
¦ Globalization demands: Globalization or expansion of the business domains has led to an increase in competition and customer expectations, which is a challenge to deal with.
Therefore, for a business organization to be a success, it is necessary to make strategic plans to meet both external and internal challenges and maintain an effective supply chain framework. One of the key considerations is the use of Information System in Supply Chain Management.
2.4. Strategies for supply chain
Strategic planning is the way an enterprise seeks to answer three basic questions
Who are we?
Where do we want to be?
How are we going to get there?
All enterprises should make strategic planning a basic part of their work. While many fall short in this regard, high performing organizations frequently credit their success to a good plan. A CLM study found that three-fourths of the companies they surveyed reported doing strategic planning and two-thirds had formal written plans. Strategic planning may be defined as. “The process of identifying the long-term goals of the entity (where we want to be) and the broad steps necessary to achieve these goals over a long-term horizon (how to get there), incorporating the concerns and future expectations of the major stakeholders”4.
Organizations competing for the global market frequently re-engineer their supply chain practices in order to align them with changing customer demands. In addition, they combine critical supply chain capabilities with core business competencies to create customer value and enhance profit.
Consider in our case, wherein, as a strategic component to their expansion plans, the management at Distinctive Bookstore contacted Information System Solutions, Information System Services Company to streamline and automate the company’s existing processes. New web based system will contribute to the business of the Distinctive Bookstore. This we based system will links to all client systems in worldwide. On these client systems, the daily operations including sourcing, marketing and sales updated and sent to the server where the information will be verified and utilized for devising future strategies for the company.
Integrating the supply chain activities with IS has proved beneficial to business organizations by enhancing both business-to-business, and business-to-customer operations. While E-commerce has enhanced the strategies for marketing products and services at a global level, Warehouse Management Systems (WMS) have contributed significantly in improving the efficiency of the in-house supply chain activities for business organizations.
2.4.1. Forecasting Demand and Planning for Supply
Demand forecasts form the basis for all strategic, tactical, and operational decisions in a supply chain. Devising accurate demand forecasts plays a significant role in balancing the supply and demand for business organizations.
All the stages in a supply chain contribute towards making an accurate forecast, and the process of demand forecasting influences all decisions in the production, marketing, finance, and personnel processes. Using sales history or other time-series data as a base, enables efficient development of a statistically based forecast to predict and plan future demand.
In our case, Distinctive Bookstore starts a web based system, first the market demands are assessed, risk in the system will be evaluated, challenges will be evaluated, and finally, the process of the web based system will be planned. Failing to consider any one of these factors might result in wrong planning of demand and results in inefficiencies for the whole system.
Forecasts could range from long-term forecasts made for several years together to short-term forecasts made for a certain period such as six months to one year. Depending on the situational obstacles and pressures for an organization, the forecasts are formulated.
The components that affect forecasting include:
¦ Past demand of the product
¦ Lead time of the product
¦ Plans for marketing and promotional activities
¦ Economic situation
Considering these, the final forecasts are made.
For demand forecasting, the important methods include:
¦ Projective forecasting: where historical information is used as a reference to predict future demands.
In our case, Distinctive Bookstore is going build web based system, so they have show their details of all books in that website index page. But it’s too difficult to display all type of books in a single page. In this situation, historical information has helped Distinctive Bookstore to identify that popular books type would sell more than the other books. So, they can find out the most popular book type and they can visible it on index page.
2.4.2. Aligning Strategies with Needs
Uncertainties in demands cause distortions in the supply chain flow. These uncertainties are an unavoidable part of the supply chain and need to be managed efficiently to maintain the supply chain flow and consistency. Organizations plan their processes and activities carefully in order to avoid the consequences of an unstable supply chain5.
In our case Distinctive Bookstore, the performance of all the showrooms should be monitored and assessed every quarter. The aim is to check if the supply of products is coordinated with the demands received. Therefore, once the performance is rated, they can manage it thorough web based system.
* Designing alternative distribution networks
Organizations choose the mode of distribution depending on the relationship that they share with their customers.
The performance of a distribution network is measured by:
¦ Response time taken to fulfill customer demands
¦ Product availability upon receiving a customer order
¦ Product variety offered to customers
¦ Experience and ease of return of the product offered to customers
2.5. Warehouse Management Systems by web based system
Automating the supply chain process is basic concept to improve the organizations overall efficiency. Some factors contributing to the complexity of automation include:
¦ Using the warehouses of different outsourced companies for storage purposes
¦ Purchasing raw materials from multiple suppliers through web based system
¦ Managing several outlets manned by different franchisee organizations.
Thus, integrating all these systems and devising a single IS for managing all these divisions in a single business organization is a big challenge. However, WMS provide options to achieve this integration. They have brought stability to organizational operations by serving as central data stores for the organizational activities. By controlling the movement and storage of materials in an inventory warehouse and the associated transactions, WMS have directed all the supply chain processes towards achieving a common goal, focused on the organizational well being6.
In general, WMS enhance the functioning of a supply chain in areas, such as inventory control, shipping, facility location management, quality control, order selection, and report generation.
In each of these areas, WMS perform the following tasks with web based system:
* Inventory control
* Tracks the details regarding receiving, stocking, placing, delivery, and finally the movement of the books in and out of the warehouse
* Calculates the lead-time, average consumption, and stock order purchased using programmed accounting methods,
* Automatically creates Move Inventory reports once the orders are received
* Automated Inventory Replenishment
* Alerts the receiving supervisor about the incoming shipments
* Alerts about stock discrepancies by issuing warning notifications
* Alerts about order backlogs and generates alternative routing notifications for order fulfillments
* Creates shipping documents and notifications
* Notifies about the handling requirements for shippers
* Displays the necessary and alternative routing instructions
* Facility location management
* Displays the location details by size, weight, and status of the inventory stock stored
* Displays storage details by the type of materials, and all details regarding the sales and supplies made from the warehouse
* Quality control
* Checks the quality levels of the materials by referring to the organization- specific directives stored in its memory
* Tracks problem situations and prevents products from being released
* Tracks material information by the orders fulfilled for various customers
* Order selection
* Permits access to the materials status
* Prepares plans for the materials about to be stocked out
* Allocates the accurate quantity for products to be supplied and those to be stored in the warehouse
* Report generation
* Generates reports about the warehouse management personnel regarding:
* Performance and productivity contributed
* Statistical information obtained from supervisions
* Updates the information regarding:
* The increase and decrease in inventory levels
* Locations available to receive orders
* The staff involved in the processes
* Forecasting for the shortages and alternate methods for prevention
* Inventory carrying costs, which are a financial measure that calculates the costs that are associated with storage of goods, generally expressed as a percentage of the inventory value.
* Non-moving Inventory
* Turn-around time or Inventory Turns, which are measured as total throughput, which is divided by the average level of inventory for a given period.
Besides providing these tangible benefits to organizations, WMS with web based system enhance the level of coordination in the operations. Moreover, organizations adopting e-Business methodologies for transactions view WMS as a requirement instead of an additional facility.
2.6. E-Business (web based) and the Supply Chain
E-Businesses have directly affected organizational operations by providing them the opportunity to respond faster to customer demands and deliver effective services. In our case Distinctive Bookstore is going to more benefits by e-Business. Providing online services to customers will not just increase their domain of service but will also make them popular across several countries.
For a supply chain, web based system have the following benefits:
* Reduces the different costs of operation
* Allows for organizations to collaborate their processes
* Managing supply chain risk
* Provides improved marketing and customer service opportunities each of these is explained in detail
* Reduce costs
Web based system will lower the costs in supply chain processes by reducing:
> Inventory costs by:
* Integrating the supply and demand processes through online order fulfillments
* Fulfilling the online orders after determining the genuineness of the order placed by the customer
* Regulating the inventory storage levels according to the orders received
> Facility costs by:
* Centralizing operations, thereby making optimal use of the available facilities
* Lowering the resource storage levels because orders are fulfilled only after confirmations
> Transport costs by:
* Selection of appropriate and cost effective transport modes by initiating or processing a timely order fulfillment
* Combining Inventories according to the online orders placed and only then transporting It to the desired location
* Calculation of the goods to be transported by weight and volume and thereby estimating the right transport size and number of trips ensuring timely deliveries
> Information costs by:
* Integrating the information by adopting common software and installing centralized databases
> General transaction costs by:
* Automating the processes where the consumer is allowed to place the order, perform credit checks, and confirm the orders for delivery
* Eliminating repetitive errors, and improving responsiveness in order fulfillments
* Integrated organizational efforts
Web based system has benefited business organizations by allowing them to collaborate their supply chains. This reduces the costs incurred due to issues, such as the bullwhip effect and discord in organizational silos.
* Improved marketing and customer services
Web based system will contribute in the marketing processes by allowing for:
* Adaptable product prices and efficient transfer of funds between the buyer and the seller
* Healthy competition in product sales amongst the sellers, thereby allowing to improve service strategies
* A wider portfolio of the products for the buyers to choose from I Direct sales where the product can be ordered at any time
* Product customization according to customer needs
* Customer convenience through on-time home deliveries
Thus, we based system will play a significant role in the success of business organizations.
Distinctive Bookstore has to implement the web based system of business. They can implement it by analyzing the current business condition and system, what they have to done, what the challenges in the supply chain management, what are the risks in the supply chain management and then implement a problem strategy to the web based business system. They can do it by mitigating the risk through risk management and they should try to face challenges which may occur during the implementation of new system.
They should be ready to face challenges before going to implement the system. Then only they will be able to manage. Many problems may emerge during the implementation and after the implementation process. So, Distinctive Bookstore Company should be ready to solve all those problems.
Supply chain management theory can be applied to this case. Company can implement web based business system to remain competitive by increasing its efficiency, quality and manage risk.
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Routledge publication, pp 2-29
Remko van Hoek (2010) ‘Building the supply chain to enable business
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1 Douglas C. Long, (2003) ‘International logistics: global supply chain Management’,p43
2 Eero Eloranta, Jari Collin, Jan Holmström (2009) ‘How to design the right supply chains for your Customers’ (pp. 411 – 417)
3 NIIT, ‘Understanding Businesses Process and SDLC’, Students Guide, p 3B.11
4 Douglas C. Long, (2003) ‘International logistics: global supply chain Management’,p61
5 Andy Birtwistle, Janet Godsell, Remko van Hoek (2010) ‘Building the supply chain to enable business Alignment’ lessons from British American Tobacco (BAT) (pp12)
6 NIIT, ‘Understanding Businesses Process and SDLC’, Students Guide, NIIT Publication, pp.3B.20