Cat One Principles of Supply Chain Management

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CAT ONE

Students name: OSMAN IBRAHIM BOCHA

Course Code: DSC 100

Course name: PRINCIPLES OF SUPPLY CHAIN MANAGEMENT

Date:20TH October 2022


CAT

Question one

Describe the key components that make up supply chain management

Planning

One of the most crucial phases is this one. The strategies must be completed and implemented

before the start of the full supply chain. It is crucial to assess the viability, costs, profit,

workforce, and demand for the good or service. It will be very impossible for the business to

reap effective and long-term benefits without a sound plan or strategy in place. Therefore, this

phase needs to receive ample time. One can only move forward if the plans are complete and all

advantages and disadvantages have been taken into account. Every business needs a strategy that

is based on a plan, blueprint, or road map.

information

A constant flow of information controls the world today. A company must keep up with all the

most recent information regarding the numerous facets of its production in order to be

successful. If the information is effectively and promptly communicated throughout the different

levels of the organization, it will be easier to understand the market patterns of supply and

demand for a specific product. In a knowledge-based economy, information is essential, and a

business's prospects may literally be doomed by ignorance of any business-related topic.

Source
In systems for supply chain management, suppliers are extremely important. A variety of raw

materials are used to manufacture the goods and services that are offered to consumers.

Therefore, it is essential to obtain adequate quality raw materials at reasonable prices. A supplier

that can't deliver on time and on budget will inevitably cause costs for the company and damage

its reputation.

A corporation must have high-quality resources in order to produce high-quality items and

uphold its market reputation. This calls for suppliers to play a significant part in the supply chain

management system.

Inventory

It is crucial to keep an inventory in order to have a highly successful supply chain management

system. An inventory is a ready list of the things, supplies, and other necessities needed to make

a good or provide a service. To distinguish between available stock and required stock, this list

must be updated frequently. The ability to produce and sell products is impossible without

effective inventory management, hence it is essential to the operation of supply chain

management. Currently, businesses are beginning to pay greater attention to this component due

to its influence on the supply chain.

Production

One of this system's most crucial components is production. Only when all the other supply

chain elements work together harmoniously is it feasible. It is crucial to have good planning, a

steady supply of commodities, and a well-maintained inventory before the production process
can begin. Testing, packaging, and last-minute preparations for distribution of the finished

product come after the creation of the goods.

Location

Any firm that wishes to thrive and survive must have a location that is profitable for it. Consider

the installation of a carbonated beverage factory in a region with limited water access. A basic

requirement of such a firm is water. The absence of water could hinder productivity and harm the

company's reputation. If a company is forced to share an already-rare raw material with the

neighborhood, it cannot exist. Therefore, a business' success depends on having a good location

that is well-connected and close to the source of key resources for production.

Transportation

Transport is essential for getting raw materials to the factory and getting the finished product to

customers. For the business process to continue running smoothly, timely product transportation

is essential at every level. Any company that pays attention to this element and looks after it well

will gain from the timely production and delivery of its items.A corporation must make every

effort to ensure secure and safe transportation. The transportation management system must

make sure there is no damage and little loss during transit, whether it is done internally or by a

third-party vendor. The two cornerstones of secure shipment are an efficient logistics system and

faultless invoicing.

Returned merchandise
A solid supply chain is made up of many different elements, including a facility for the return of

defective or malfunctioning goods and a highly responsive unit for resolving customer

complaints.

Nobody is perfect. Even machines can break down once every million times or more. A robust

business process should allow for the return of items in a variety of situations. Even the greatest

quality control procedures can occasionally fail for brief, unavoidable reasons. A company must,

immediately, recall the product(s) and offer an apology in the case of such errors, which are

invariably followed by customer complaints. This not only forges strong bonds with customers

but also sustains goodwill over time.

Discuss the prerequisites of supply chain management

Planning and Monitoring

Information like shipping date, time, ID, order number, freight information, and much more are

provided by SCM systems. Businesses can track KPIs and improve their strategic decisions by

analyzing these insights. With the use of a consolidated dashboard, you can monitor logistics,

production, and procurement from a single location and prepare for problems in advance.

Processing orders and maintaining inventories

One of the main SCM objectives is to rapidly and accurately complete an order from sale

through delivery. For the proper business, getting a head start with effective order processing

might mean everything. Order processing features simplify your order-related tasks, boosting the
proportion of flawless orders and raising customer satisfaction. Its main responsibilities include

order creation and delivery, including drop shipments and orders from numerous channels.

Storage Management

Physical warehouse operations benefit from a higher level of precise control provided by a

warehouse management system (WMS). Users may more effectively control what happens inside

the warehouse thanks to SCM features. All the factors that go into making a warehouse function

on a daily basis, such as workers, supplies, floor space, and operating procedures, are dealt with

by these systems.

Transportation Administration

Tools for managing transportation control the systems that manage shipments of materials. This

is frequently a combination of tools for managing the over-the-road fleet and monitoring for

other forms of shipping, such rail, air, or marine freight. You can identify problems early on

when you can monitor shipments, providing you the greatest time to correct the situation.

Management of sourcing and supplies

The issue of analyzing your supply chain activities is approached from somewhat different

aspects by sourcing procurement and supplier management solutions. Many of these tools take

into account factors like expenses, contract management, supplier quality, and others. They

oversee the sourcing and acquisition of supplies and raw materials and evaluate the technical

facets of the interactions between businesses and their vendors.


Key tracking procedures for supplies and materials must be established, which requires sourcing

and supply technologies. Additionally, they automate a large portion of relationship

management, improving productivity and lowering confusion and mistakes.

The key objective is to create superior net value for stakeholders. Using Porters’ value

chain model, describe the primary activities of value creation

According to Porter, competitive advantages come from the processes a company has, such as

marketing. The five key (primary) activities that generate higher profits include inbound

logistics, operations, outbound logistics, marketing and sales, and services.

Inbound Logistics

The receiving, storing, and inventory management of a company's raw materials are all included

in inbound logistics. This includes all interactions with suppliers as well. Inbound logistics, for

an e-commerce business, can involve receiving and storing goods from a manufacturer that it

intends to sell.

Operations

Operations Procedures that turn raw materials into a finished good or service are included in

operations. All inputs must be modified in order for them to be suitable for output. In the e-

commerce example mentioned above, this would entail branding the goods, adding labels, or

bundling numerous products together.


Outbound Logistics

Outbound logistics refers to all procedures used to deliver a finished good to a customer. This

includes delivery of the product but also includes storage and distribution systems and can be

external or internal. For the e-commerce company above, this includes storing products for

shipping and the actual shipping of said products.

Marketing and Sales

Marketing and Sales Strategies to enhance visibility and target appropriate customers—such as

advertising, promotion, and pricing—are included in marketing and sales. Basically, these is all

activities that help convince a consumer to purchase a company’s product or service. Continuing

with the above example, an e-commerce company may run ads on Instagram or build an email

list for email marketing.

Services

This covers customer service, maintenance, repair, refunds, and exchanges, as well as other

consumer experience-improving initiatives. This can involve warranty coverage, repairs, or

replacements for an online retailer.

Explain the phases of supply chain decision making

The three primary decision phases of supply chain management are:

Supply chain design (Strategy)

Supply chain management decision (Planning)


Operational level (Operation)

Supply Chain Strategy: Management makes the majority of the choices at this time. The choice

to be made considers factors including long-term forecasting and the cost of items, which might

be quite expensive if something goes wrong. It's essential to do some market research at this

time.

These decisions are made in light of the present and upcoming market circumstances.They make

up the organizational structure of the supply chain. After the layout is finished, the roles and

duties of each are distributed. All strategic decisions are made by top management or higher

authorities. There are several factors to take into account while manufacturing a product,

including the location of the plant (which should make it simple for transporters to load the

product and deliver it to the desired place), the location of the warehouse, and many more.

Demand and supply should be taken into account while developing the supply chain. To

understand client expectations, a market analysis should be done. The general public's awareness

of the situation, the competition, and the strategies they use to satisfy customer expectations are

the second component to be considered. As we all know, different markets have distinct demands

and should be treated accordingly.

This stage includes everything, including predicting market demand, choosing the market that

will receive the finished items, and choosing the location of the facility. The goal of all

employees or participants in the firm should be to make the process as flexible as possible. A

supply chain design phase is considered successful if it contributes to successful short-term

planning.
Operations in the Supply Chain: In the third and final decision phase, a number of functional

decisions must be made in a matter of minutes, hours, or days. This decision-making process

aims to make things clearer and perform better. From taking the customer's purchase through

delivering the product to the customer, everything falls under this phase.

Think about a customer who requests a product that your business manufactures. Receiving

orders and transferring them to the manufacturing and inventory divisions are initially the

responsibility of the marketing department. In response to the client's request, the manufacturing

division sends the required item to the warehouse via the appropriate medium, where it is

distributed to the customer within a suitable time frame.

Highlight the key performance metrics in supply chain management

Cycle Time from Cash to Cash

Beginning with the time you pay for merchandise and ending with the time you receive money

for the sale of that inventory, the cash to cash cycle time shows the typical amount of time

needed to transform resources into cash flows. Three widely used financial metrics—days of

inventory (DOI), days of payables (DOP), and days sales outstanding—are used to measure it

(DSO). To calculate the cash to cash cycle time, first add DOI and DOP, then subtract DSO.

Perfect Order Rate

This measure is pretty straightforward to comprehend, but it might be a little challenging to

monitor consistently because it takes into account a few factors linked to handling and delivering

orders to your clients. In a nutshell, the perfect order rate is the proportion of orders that are
delivered in whole, on schedule, without a hitch, and with correct and thorough documentation.

Because it directly affects customer happiness, many firms view this as the most crucial supply

chain key performance indicator (KPI).

Rate of Fill

The fill rate is a crucial indicator that has an impact on consumer satisfaction. The proportion of

orders that are successfully fulfilled with the first shipment is shown here. In other words, it

represents the proportion of orders that don't need a second, third, fourth, and so on shipment.

Cycle Time for Customer Orders

The term "customer order cycle time" describes the typical interval (measured in days) between

the day a client places an order and the actual delivery date. It may be a sign of a problem with

payables, receivables, or inventory management if the cash to cash cycle is growing while the

time it takes to complete a customer order is either reducing or remaining constant.

Inventory Movement

Inventory days of supply and inventory turnover are closely related insofar as they both ask

whether a company is keeping more inventory on hand than is necessary. Start with the cost of

goods sold for a specific time period to calculate this KPI (e.g. for a month, quarter, or year.)

Next, multiply by your average inventory level at that time (which can be calculated by adding

your beginning inventory to your ending inventory and dividing the result by two.) In this

situation, a high value typically denotes excellent and efficient inventory management.

Returned for what?


Customer returns, let's face it, wreak havoc on your supply chain procedures. They typically

result in a bad client experience and cost your business important time and money. Simply

expressed, "reasons for return" refers to a measure that details the circumstances under which

customers return products. Simply categorize customer returns into common categories, such as

"defective item," "damaged product," "product no longer needed," and so on, to keep track of the

reasons for returns.

Punctual delivery

Rapid delivery times are more crucial than ever in today's fast-paced environment where nearly

every organization is battling to satisfy client demand amid supply-chain unpredictability. The

ability to deliver goods quickly is becoming an increasingly essential consideration in both

consumer and commercial purchase decisions. The customer will go elsewhere if you are unable

to meet their wants at the time they arise.

In most cases, on-time delivery is calculated as a proportion of orders that arrive on time or

ahead of schedule. The advantage of this is that it is rather straightforward; either you delivered

the order on time or you did not.

On-time delivery

With one minor exception, this measure is extremely similar to the on-time delivery metric. The

percentage of orders that were dispatched on time is what the term "on-time shipment" refers to.

Why the distinction? Because there may be a problem with logistics and transportation if there is

a difference between on-time deliveries and on-time shipments. For businesses that operate in a
small area of the world, this might not matter very much. But logistics and transportation are

more crucial than ever in a world economy that is becoming more and more globalized.

Costs of the Supply Chain as a Percentage of Sales

The cost of maintaining your supply chain might increase due to a variety of circumstances. For

instance, it's not unusual for manufacturers to speed up the delivery of incoming raw materials so

they can fulfill a customer order on schedule. Generally speaking, things cost more when you

need them quickly. Suppliers will be able to demand greater costs for those inbound goods if

they are aware that you have a tight deadline. Even if prices stay the same, shipping items to you

more quickly frequently comes at an additional expense. Some of those expenses will be

included in your cost of goods sold, but others will just be listed as an expense.

Question Two

Discuss the drivers and inhibitors of supply chain management

Production

Make sure your facilities have surplus capacity and employ flexible production methods to

generate a variety of products in order to develop a responsive supply chain. Production can

quickly adapt to changes in consumer demand thanks to its flexibility. Furthermore, having

numerous smaller manufacturing sites adjacent to hubs for customers and distribution centers

improves consumer demand responsiveness by cutting down on delivery times.

Inventory
Optimizing responsiveness sometimes necessitates stocking more products and at more

warehouse sites when inventory is the driving factor. Effective inventory management enables

fast response to unanticipated demand swings. The cost of storing is higher with this strategy,

thus it must be considered against the advantage of widespread accessibility.

Location

Making convenience a top priority for the site driver frequently entails opening numerous

locations close to consumer bases. Fast-food businesses, for instance, open a lot of locations in

high-volume markets to be particularly responsive to their customers. They can respond swiftly

to customer demand by having several locations, but doing so raises operational costs.

Operating from a small number of locations and centralizing operations improve efficiency. An

illustration of location efficiency would be how e-commerce firms serve international markets

from only a few core sites while carrying out a variety of tasks. This makes each location more

productive, but it also leaves them open to disruptions, as was the case with the coronavirus

outbreak.

Transportation

Even though they are frequently more expensive, faster modes of transportation like air freight

enable quicker deliveries and higher responsiveness. FedEx and UPS are two businesses that

offer excellent last-mile responsiveness by leveraging transportation to deliver goods frequently

within 48 hours.

Transporting goods in larger batches less frequently using bulk carriers like ships or railroads

emphasizes efficiency. This method of transportation is more effective when the products come

from a single distribution hub rather than several different sites.


Information

As technology for gathering and distributing information becomes more accessible, user-

friendly, and affordable, its power as a driver is increasing. Analytics-based software employs

both internal and external data to help supply chain drivers perform better. For maximum

efficacy, your supply chain should gather and distribute precise and timely data produced by the

previous four operational drivers.

Market-leading supply chain solutions allow businesses to maximize the use of information to

boost internal responsiveness and efficiency through collaboration and end-to-end visibility,

even as the cost of the first four supply chain drivers keeps going up. Supply chain managers are

better equipped to respond swiftly and decide strategically and wisely based on key supply chain

factors thanks to scenarios.

Explain the applications of e-commerce in businesses

E-commerce is the practice of doing business activities such as information sharing, relationship

management, and transactional activities utilizing computers linked to a communications

network-commerce is the practice of businesses and customers purchasing and selling goods and

services over an electronic network without the use of paper paperwork.

E-commerce has several uses in both retail and wholesale. E-commerce, often known as online

retailing, is the sale of products directly from a business to a customer using online stores built

on the electronic catalog and shopping cart concept. Cybermall is a single Website that provides
various goods and services in one place on the Internet. Through a Web browser, it draws the

buyer and seller into a single virtual location.

A lot of financial companies are using e-commerce. Through online banking or E-banking,

customers can check the balances of their loan and savings accounts, transfer money to another

account, and pay their bills. Online stock trading is another use of e-commerce. There are

numerous websites that offer access to news, charts, company profiles, and analyst ratings on the

stocks.

A company's supply chain operations also leverage e-commerce. Some businesses create an

electronic exchange by working together to buy and sell products, exchange market data, and

manage back office data like inventory control. The flow of raw materials and completed items

among the business community's members is accelerated as a result. The application of business

models is constrained by a number of strategic and competitive challenges. Companies might be

wary of their rivals and worry that divulging trade secrets in large-scale electronic exchanges

will result in their loss.

Customer-to-Customer E-commerce is the practice of selling products and services to clients

directly. Electronic auctions with bids are also included. A unique kind of auction called bidding

enables potential purchasers to place a bid on an item. For instance, airline firms provide

customers the chance to estimate the cost of a seat on a certain route at the chosen time and day.

Customers of financial institutions can make financial transactions on a website run by the

institution using online banking, often known as E-banking. Other names for online banking

include internet banking, e-banking, virtual banking, and others.


electronic publishing

E-books, periodicals, and the creation of digital libraries and catalogs are all examples of

electronic publishing, often known as e-publishing or digital publishing.

An application called an Internet booking engine (IBE) assists the travel and tourist sector in

supporting online reservations. It makes it easier for customers to reserve hotels, flights, vacation

packages, insurance, and other services online. Given that the aviation sector has one of the

fastest growing sales channels, this is a much-needed application.

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