Supply Chain Management, Essay Example

Supply chain management has a great impact on all areas of business. It affects customer satisfaction in a way that people get products in time. It also has an impact on cost savings projects and overall productivity. Indeed, a company is not able to produce an income or profits until the product or service is delivered and paid by the customer.

Supply chain management has one single goal: to manage the chain of supply through the system matching it with the demand of the market. This often involves advanced communication among different suppliers and departments, prediction or reporting of production, delivery. The end result should be to deliver the right product at the right time at the lowest possible cost for the customer’s highest level of satisfaction.

While production management and process improvement methods covered previously within the course are useful, if the product does not arrive at its final destination: in the hands of the end-user, the company fails to meet the market demand.

The main challenges calling for effective supply chain management are: global competition, outsourcing of processes and manufacturing, e-commerce operations, shorter life cycles of products, greater complexity of supply chains and environmental concerns worldwide. Further, cost-advantage development needs to be considered through comparing the cost of inventory with the final price paid by customers. The main costs to be monitored are capital costs, storage costs and risk costs related to holding inventory.

The main difficulty the designers of supply chain management face is the “bullwhip effect”. The fluctuation of production within the supply chain, delivery, lead times and market demand are not level, and the more complicated the chain is the harder it is to manage this phenomenon. A close monitoring of capacity utilization, speed of the product going through the supply chain and the variation of demand throughout time is an effective way of overcoming the bullwhip effect.

Supplier analysis and management is another method to ensure that products are delivered in time and the quantities match market demand. As Apple’s example shows, tracking parts and requesting detailed reports, predictions from suppliers is an effective preventive measure used to eliminate faults within the supply chain. Auditing suppliers while maintaining effective communication and relationships is also essential.