Supply Chain 1

Running Head: SUPPLY CHAIN

Manufacturing and Marketing of a Supply Chain

[Name of the Writer]

[Name of the Institution]

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Manufacturing and Marketing of a Supply Chain

Introduction

The plan is to manufacture and market a line of power hand tools, including electric

drills, saws, and sanders. A supply chain has to be established for which a business report

prepared that address the challenges of ensuring all business units (Choi, 2006).

Supply chain refers to the production and distribution process involved in the raw

material suppliers, manufacturers, distributors, retailers and ultimately consumers and other

members with the upstream and downstream members of the connection (linkage) composition

of the network structure. Examples of competitive priorities are low cost, quality, on time

delivery (Choi, 2006).

Supply Chain Management

A moderately novel management procedure that had great momentum in the past decade

and generates significant cost reductions by allowing companies greater higher profits and

competitiveness. In the new millennium, competition occurs between supply chains rather than

between individual companies. The management of the supply chain revolves around the

efficient integration of retailers, distributors, manufacturers, and suppliers in this way is achieved

substantially reduce costs and at the same time improve customer service levels (Chopra, 2004).

Vertical Integration

For the supply chain of the power tools and drills, a vertical integrated strategy will be

used. The extent at which an organization posses its buyers and suppliers is called as the Vertical

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Integration. The vertical scale of an organization is a significant corporate strategy’s

consideration (Chopra, 2004). When deciding to vertically integrate, the two of the concerns

which ought to be considered are control and cost. The second issue is the impact of asset

control, which can impact barriers to entry and which can assure cooperation of key value-

adding players. In comparison to the horizontal integration, the vertical integration is more

effective as in horizontal integration a company has to pay too much up-front and realize too

little on back end. In horizontal integration, it is hard to merge resources, capabilities & cultures

of different firms (even within same industry).

Metrics for Measuring Performance

There are many metrics which can be utilized for measuring the supply chain. All of

these metrics helps in providing an overview of the performance of the supply chain, not just in

the conditions of cost and spend but in terms of the information of the supplier as well as aspects

of the operation (Dooley, 2001). The Key common supply chain metrics used in this supply

chain business will be:

Cost

The cost will be in terms of the cost of purchase, transportation and travel cost, cost of

the delivery of the storied items as well as the administrating supplies and revenue costs. Costs

should be a common metric because the cost is imperative to the efficacy of the supply chain.

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Forecast Accuracy

The forecast of the item’s need which are to be supplied will tell about the efficiency of

the supply chain. The more customers’ demand of the product the better is the quality.

Quality/Defects

Deliveries are an important part of the supply chain. The quality needs to be of good

standards and the defects should be at a minimum. A standard measure is PPM or Defects in

Parts per Million.

Stock outs

Stock outs are pricey as they are the reason for the delays in the supply chain and have an

effect on its overall performance to the consumer. The stock out quantity will have a significant

effect in terms of transportation, costs concerns etc, which is why it is a vital metric to evaluate

the performance of the supply chain.

Productivity

Measuring the output of the supply chain in relation to the staff will be a vital pointer

which will help in evaluating the performance. This might be in turns of products manufactured

or even purchase order raised. Productivity indicators can be crucial to understand the

effectiveness of the supply chain and help in understanding how to improve further.

Process Risks

Following risks can be encountered in the integrated supply chain

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Delivery Process

The customers may not be able to come to the supply chain to get their orders and if they

have large orders it will be difficult for the customers to handle their orders. The company needs

to hire or buy large shipping trucks to facilitate the customers.

Creating Brand Image

As this is a new company, it will be a little difficult to carter the customers as they may

already have selected stores in which they buy their tools from. There is a strong need to attract

the customers so that a brand image is created and the company gains customers.

Control Risks

Following are some of the effective management methods which will be applied on the

integrated supply chain.

Delivery Process

Those companies, which followed the customer-oriented approach, had started this trend

of giving value other than the product itself. Home delivery of these services represents a great

value for our customers modern (Simon, 2005). Specially designed delivery system of goods

online stores and other organizations can deliver the goods at very reasonable customer value,

and cooperation on an ongoing basis (Simon, 2005).

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Creating Brand Image

The main purpose of will be to assemble customer demand for assured delivery of high

quality and low cost with minimum lead-time. In order to accomplish this objective, the

company needs to have better presence and command into the whole supply chain process of the

strategy of their own as well as those of their suppliers and customers. The individual customers

are more likely to select the company that is providing services at the least cost.

Environmental Risks

As this is a supply chain which will manufacture its own tools and deliver them, there

will be certain environmental risks due to the manufacturing process.

Increase in Waste in the Environment

When the company is manufacturing tools it will release toxic materials in the

environment which can be very harmful. The company should make sure that the manufacturing

process is done in an industrial area so that the residential areas do not get affected. The

company should also use environmental friendly materials so preserve the environment.

Organizational Structure

Following departments are needed to run the company,

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Management Department

The management department is an important department which will manage the other

departments. They will look out for any problems or issues which arise during the process. They

will ensure that the productivity of the company is continuous.

HR Department

The Human Resource department is the most important department of any company. This

department ensures that proper and qualified people are recruited in the company. They evaluate

each candidate according to the job description and recruit those who are best suited for the job

and the company.

Finance Department

The finance department is also necessary for the company as they take care of all the

finances of the company. They make sure that the company’s financial situation remains intact.

Manufacturing Department

The manufacturing department manufactures the goods of the company. This department

will have sub divisions within for different kinds of tools. Each tool will be manufactured under

a different division.

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Delivery Department

This department will make all the deliveries of the goods to their designation. They will

ensure that the delivery is on time and all the quantity is what the customer asked for and that the

delivery is done to the right place.

Quality Assurance Department

This department will ensure that all the goods of the company are of high quality. Each

part used in the tools is bought from a reliable company to ensure the quality of the overall

product.

Maintenance Department

This department will look after all the maintenance of the company. They will do all the

repairs and preservation whenever needed. They will also take care of the goods which needs

repairing.

Organizational Components

The following are the organizational components for the supply chain business which

will benefit the company (Tan, 1999).

Plan

This is the strategic segment of supply chain management. Strategies and business plans

are made in order to carry out the remaining stages efficiently. Strategies are devised by the

supply chain managers of the company devising best policies and strategies for the business.

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Source

The next component is the selection of suppliers who will supply the services and goods,

required to produce a good or service (Tan, 1999). Build up a set of delivery, payment and

pricing procedures with suppliers and generate metrics for checking and improving the terms and

relations with the suppliers. Further, one needs to design procedures for managing the inventory

of goods and services he receives from suppliers, including receiving shipments, their

verification, transference to the manufacturing facilities and approving payments of the

suppliers.

Make

This is the manufacturing step. One needs to plan the activities that are essential for

manufacturing, testing, packaging and preparation for delivery. It is the most metric-intensive

segment of the supply chain, that measures quality levels, production output and worker

productivity.

Deliver

This part will include the coordination of the receipts of orders from customers,

development of a network of storehouses, picking up of carriers to take goods to customers and

setting up of an invoicing system to receive payments.

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Return

Client/customer would return the good or product back to the company if it fails to meet

effective quality control criteria (Van, 1999). The origination gets in touch with the customer to

record and keeps a track of his/her complaints so that the company's SCM and Complaint center

department together deals with the issue and get it sorted out as quickly as possible.

Mass Customization

Mass customization is a new paradigm that encompasses the technologies and systems

needed to deliver products that meet individual customers’ needs with near mass production

efficiency.  In order to accomplish this, the company must adopt a flexible, demand-oriented

strategy to provide a range of custom options. Efficiency is a key strategy as mass customization

is as much a business practice as it is a technology practice. Implementing mass customization

demands new processes and services—new capabilities that are not in place in most

organizations. To succeed, the company must design products that create enough customer value

to justify any additional customization expenses.

Strategic Operations Management

Typically, the supply chain business will focus on three to five forces which will help in

spanning the life cycle of a supply chain strategy, from go-to-market model, to process

effectiveness, to complexity management, to nonstop improvements and manufacturing

superiority (Van, 1999).

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Effective Complexity Management

The designing procedure may take longer than that of competitors as extra time will be

spent to make certain that the new products conform to existing modern process and, therefore,

can be accessible at comparatively lower prices.

Low-Cost Manufacturing Foot Print and an Efficient Distribution Network

Factories will gradually be placed in different developing nations, and comparatively

economical logistics approach, like container shipping and railroads, will be adopted.

Mature Strategic Sourcing Approach

Relationship with suppliers will be refined so that they last for a longer period which will

be valuable in volume and cost for both partners, and will be supportive so that process for all

phases of the supply chain can be continuously evaluated for improvement areas.

Manufacturing Excellence

A definite importance will be placed on executing lean manufacturing methods in all

services.

Manufacturing Facility

Following are some of the ways in which cost-effectiveness of the manufacturing facility

can be improved.

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Know Your Cost

A proper budget must be designed monthly or quarterly, the aim of the company should

be not to go over that recommended budget cost. All the materials and delivery process should

be done keeping the budget target in mind.

Monitor Productivity

The productivity of the entire workforce should be monitored; if someone is not

performing well they should be trained and coached, so that they can properly perform their

tasks.

Creating Teams or Groups

By creating different teams and groups to work on selected project, the company will

ensure more productivity. The work will be more managed and organized.

Training

Proper training must be given to the employees so that they perform their job more

effectively and efficiently.

Improvement in Cost Effectiveness in Supply Chain

The following improvement in the cost effectiveness will surely benefit the supply chain

business and will help in improving the quality and standards of the chain as well as customer

satisfaction (Choi, 2006).

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Best Values

It is one of the vital elements in proper decision making connected to purchasing. The

company should consider every option available. The supply chain will offer best values to

customers as well as the best quality products which will improve customer satisfaction and

hence, will improve the sales of the supply chain (Choi, 2006).

Control and Management of Contracts

The company ought to adequately manage the contracts. The administration will also

firmly direct all the ventures to guarantee proper completion of the purchases of each venture

inside the allotted finances and with the observance of regulation and rules.

Minimizing and Assessing Risk

The risks associated with all the purchasing will be taken into deliberation and contradict

methods will be exercised to reduce the involved risks in the projects.

Experienced and Qualified Staff

All the staff members hired will be have the required qualification and will have

experience in the supply chain field so that they can handle the financial, legal as well as other

issues in a better way.

Conclusion

Supply Chain Management is not just the completion of the order but includes all the

operations and processes that start from generating the products through the ending of life

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disposal and recycling. Therefore, proper strategies and planning is needed to overcome this

competition. The quality and cost assurance is needed to attain the loyalty and satisfaction of the

consumer. This will ensure that this supply chain will gain profits and will achieve operational

excellence. It will ensure the economic growth and will also ensure the competitive advantage to

this supply chain over other (Chopra, 2004).

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References

Choi, T.Y. and Krause, D.R. (2006), “The supply base and its complexity: Implications for

transaction costs, risks, responsiveness, and innovation,” Journal of Operations

Management.

Chopra, S. and Sodhi, M.S. (2004), “Managing risk to avoid supply chain breakdown,” Sloan

Management Review

Dooley, K. (2001), “Organizational complexity, “International encyclopedia of business and

management. London: Thompson Learning

Greaver, Maurice F. (2008), “Strategic Outsourcing: A Structured Approach to Outsourcing

Decisions and Initiatives,” New York: Oxford University Press.

Simon, J.T. (2005), “Competitive Purchasing Policies under Price Volatility,” Advances in

Competitiveness Research.

Tan, A. (1999), "The use of information technology to enhance supply chain management,"

Production and Inventory Management Journal, Vol. 40 No.3

Van Hoek, R.I. (1999), "From reverse logistics to green supply chains," Supply Chain

Management, Vol. 4 No.3