How can improve efficiency and reduce cost in the process of Supply Chain Management?

 

Effective supply chain management has become a key function to improve organizational performance and a valuable way of securing competitive advantage. The thickening business competition since the Nineties has forced firms to boost potency in several aspects of their business. On the other hand, the increasing uncertainty requires them to spend more resources to anticipate demand and supply, as well as internal uncertainties for better sustainability of their supply chain. Interestingly, such associated increasing uncertainty isn't alone induced by the external business environments, however conjointly because of increasing completeness of the provision chain structure and ranging mechanism initiated by the provision chains in their business

 

Every organization manages its supply chain effectively and efficiently with concern to achieve benefits such as saving time and money. Technologies have the biggest changes in information and communication using an open platform. So that companies no longer need to buy properties trial legacy systems but may use standard platforms of technology to build system integration that meets standard requirements to exchange information. However, Developments have allowed firms to integrate a system that can be applied to manage the whole organization's processes and to link with their supplier and customers. This integration enables error-free data transmission opportunities, waste avoidance, cost efficiencies and opportunities for value enhancement, and value-adding activities for the customers. 

 

Risk is an important factor in the supply chain process and it contains operations, structuring, integration with partners, implementation of corporate strategies, and having good inventory in stock, because moving production at a low cost is very important for the organization. Companies need to improve the services that they provide to customers at a competitive cost by creating a good supply chain.

 

Furthermore, some implications for supply chain executives, so adoptable downstream operations to ensure the product and services must achieve exceptional upstream efficiencies and reduce cost. In addition, the company also needs to create efficient, responsive and a good balance top to bottom priorities. 

 

The Supply chain process is the moving of products from one place to another. Risk is unavoidable that may affect as rising rate, infrastructure, and new security costs interims of money and time. The managing supply chain risk needs to focus on demand risk and supply risk because those affect particular on time and cost. Risk management strategies are mostly found in organizations where business involves high risk, and the company doesn’t have enough resources to react efficiently on time. Risk management is the uncertain conditions checking and addressing uncertain events present at various levels of the organization. The risks are an indication of possible failure in the organization's present, past, and future and may affect organizational culture and structure.

 

Global economic decline has placed a compelling premium on such considerations as cost control and tighter credit, speed to market, and increased supply with efficiency. Just in time supply chain management has certainly a step in the right direction but left much to be desired in real-world environments where things often go wrong.

 

Logistics 

 

Organizations can reduce and improve efficiency through the change in existing logistics and distribution systems. Companies have to link the logistics field that including warehousing and transport. Logistics is the part of a supply chain that plans implements, and controls, the effective flow of related information to fulfil the customer’s demand. Companies try to reduce the supply chain risk, while adding value for their customers, with the result of becoming more efficient.

  

Logistics are essential operational activities performed by the organization delivering customer services. As Logistics system stores raw material, work in process, and finished goods at and between points of origin and point of consumption.   

 

A Supply network reduces customer costs and brings greater efficiency to the supply chain and a good supply chain risk management program not only reduces financial impact but also it allows the company to gain market share. For example, Cisco does a better job of managing supply chain risk, that’s the way they are the worldwide leader in networking solutions. Cisco’s vision is to deliver the most resilient supply chain in their industry; their strategy is to deliver best-in-class by incorporating with designing of products and supply chain.

 

Technology

 

Recently, customer behaviors have changed as they need the quick response of order processes. Therefore, it is necessary to develop a system that is responsive and fast. Quick response is the development of information technology; EDI Electronic data interchange bar-coding, use of electronic point of sale system, and laser scanning. Such technological change could be a massive advantage to be gained by all parties in the supply chain if the concept of quick response was adopted by any organization throughout the chain.    

 

Technological innovation, inventory cost control, electronic data interchange systems, and reducing transportation time are important in supply chain management. The manufacturer supports the supply chain of the brand and efficiency in innovative products. Hereby, the innovation helps to achieve the global supply chain management operation. Hence, an organization must inspire work in multinational business activities. As technology in supply chains expanded, taking orders over the internet or an automated phone system has the potential to streamline and lower transaction costs for the company by selling goods and services. Simultaneously, it makes the purchase experience more pleasant, informative, and efficient for the customers.

 

Electronic commerce (e-commerce) refers to conducting business transactions over an electronic network that includes the internet. Where business in relation with product or services buying and selling, trading and exchange information. Currently, the adoption of e-commerce is seemingly unavoidable. Many companies struggle to boost their business globally and adopt the best approach for establishing and doing business. This is not a simple prescription for establishing business over the internet because it requires the best approaches to doing business. On the other hand, Electronic data interchange technology provides organizations to establish e-commerce capabilities and avoid delays and errors generally related to buying.

 

Technology can be used within the organization to establish organizational culture and structure where employees coordinate and share information to improve process efficiency. Most companies are taking advantage to establish information systems through EDI technology that enables the organization to maximize benefits, improve operational efficiencies and reduce costs. The organization can get benefits such as improving customer service, timely delivery, business integration, increased production, and labor efficiency, reduced processing errors, transaction cost, and holding inventories. But companies cannot ignore problems such as data theft, machine malfunctions, and security threats. 

 

In areas as important as enterprise risk management, it is critical for people carrying out risk mitigation activities to be recommended by an automated ERM system that has complete confidence in those recommendations. However, the new technology in the commercial marketplace may solve the risk management "reasoning" problem effectively.

 

Just in time

 

Just-in-time is a management philosophy and not a technique. It originally referred to the production of goods to meet customer demand as arose, just in time is an approach that links the supplies with distribution channels and helps to develop a valued network with customers. It also reduces the waste of effort and saves money. Just in time build around an idea of minimizing the amount of inventory in the value chain. 

 

Just in time is an approach that counts to the requirement of the supply chain. Moreover, it is in small shipments to be made more frequently and to meet the précis requirements of the customers. JIT also ensures that all the elements of the supply chain synchronize and there must be early identification of shipment, and most importantly it requires the highest level of planning. It is a disciplined approach to planning and scheduling. Along with close communication required between the supply chain partners.

 

Just in time is a small lot size of products and the inventory reduction substantially lowers the risk for the purchaser. There can be no build-up of defective products or expired products. Hence, smoothing the inventory flows avoids any unnecessary push-ups or uncertain effects on the system. Even, the Supplier also gets benefits such as plants not being stressed by producing large quantities. So it allows the highest level of planning, machine and working areas keep clean, and maintenance and tidying areas can take place in a planned working environment. 

 

In conclusion, supply chain management has greater advantages to improve efficiency and reduced cost, just focus on three supply tools such as logistics, technology, and just in time.