Challenges faced by supply chain management Essay

With rapid and drastic alterations imposed by globalisation on the construction of labour intensive industries, like the furniture industry, greater figure of imports at lower monetary values force makers to see competitory borders and if required, to reconstitute their operations.

The primary intent of pull offing the Supply Chain of an organisation is to derive gross growing every bit good as cost decrease, at the same time. This entails that a balance between the ends of a possible customer-service degree and the ends of lower inventory-investment and low unit-cost is indispensable. Practically, these are tough trade-offs. Low stock list degrees and low unit costs are gettable for procedures peculiarly for functioning clients with stable and similar sorts of demands. Further, greater client service degrees normally demand both procedure and merchandise flexibleness. The deficiency of efficiencies lifting from nonuniform client demands and greater stock list for cut downing order lead-time can be remunerated by higher monetary values paid by clients ( Fleur van Veenstra 2009 ) ( European Union ) .

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

However, direction complications in supply ironss is non uncertainness based, non all uncertainness in Supply Chain Management ( SCM ) is random in nature. Since the debut of SCM in 1982, it has gained overpowering involvement both in the literature every bit good as at the industrial degree. This fact is backed by the grounds that there are so many legion aspects and the undertakings of accomplishing the purposes of SCM are so demanding that is can be said that SCM is more than merely on ongoing venture topographic point instead than a individual short-run undertaking. Furthermore, the widespread range of SCM imposes the trouble of finding an appropriate “ common ” definition and account of the term ( Seurring 2009 ) ( Beamon 2008 ) .

The chief purpose of the paper is to project the deductions of a displacement in order penetration/decoupling points/ alteration to agile supply concatenation for an organisation, theoretically. These findings are accurately applied to the furniture industry to better be able to compare SC of conventional retail merchants with new on-line furniture retail merchant, by utilizing the instance survey of the Gallic company “ ”

An brief debut to SCM is provided by reexamining the edifice blocks that incur some fresh characteristics for the disposed direction of the houses ; thereby playing a critical function in SCM.

What is Supply Chain Management?

Supply Chain Management is the undertaking affecting interfacing of organisational units with a supply concatenation and coordination of stuffs, informations every bit good as fiscal flows, to fulfill client demands with the cardinal aim of bettering fight of the supply concatenation as a whole ( Seurring 2009 ) . This definition can be best understood via the house of SCM as shown in the figure below:

The roof of the SCM house indicates the ultimate purpose of SCM, peculiarly bettering the overall fight of a supply concatenation. The roof is laid upon two pillars, viz. ‘integration of organisational units ‘ and “ flow coordination ” . Integration of concern unit involves happening those spouses who have the best tantrum to the current supply concatenation and the client needs which must be served. At the beginning, the supply scheme may consist of a individual house that takes the enterprise. A on the job supply concatenation is formed by following merely a little set of merchandises or services for the ultimate client ( European Union ) .

As a contrast to a practical company that is formed for carry throughing a individual client order, a supply concatenation partnership is generated in the medium-term, such as a life-time of a merchandise. And this allows bigger investings in close partnerships throughout the supply concatenation. Furthermore, a supply concatenation can be considered as a tight web of companies holding some common ends ( Yang & A ; Burns 2003 ) .

The chief challenge in commanding this web arises from the nature of possible relationships among SC spouses. Leadership is once more a important issue while sing the accurate working of a supply concatenation. A focal SC is equipped by a spouse who is nil but a natural leader, chiefly because of his outstanding cognition of merchandises and procedures or his fiscal strength. On the other manus, a polycentric web is one in which all spouses are viewed at an equal degree, such as in consumer goods fabrication, retailing, etc ( Mason-Jones & A ; Towill 1999 ) .

Building blocks that enable improved coordination of information, stuff and fiscal flows throughout the supply concatenation depict the 2nd pillar of SCM house.

Novel chances of information and communicating engineering nowadays allows for easier information exchange amongst spouses within seconds by utilizing the Internet and related web services. Therefore, gross revenues records, market anticipations, orders, and other messages can be handily exchanged over the SC immediately at low costs ( Naylor et al 1999 ) ( Beamon 2008 ) .

Additionally, procedure orientation non merely focuses on flinging the barriers between concern operations for speed uping the executing of procedures and matching undertakings, but besides between houses. Here, apart from incremental betterments, organisations can derive competitory benefits every bit good. However, one can associate bing activities more expeditiously along with a redesign of such procedures, by flinging unwanted or duplicate activities.

The following edifice block, progress planning has been developed to make full the spread made by the transactional endeavor resource planning systems which is non included in the country of planning. APS is based on the principles of hierarchal planning and extensively uses solution strategies of mathematical scheduling and meta-heuristics ( Seurring 2009 ) .

Put merely, Supply Chain Management is non a fresh direction paradigm. It is instead an exact word picture of how organisational units can be linked to best function client demands and to heighten the fight of the overall supply concatenation. In this effort, SCM has derived attacks and cognition from several subjects like computing machine scientific discipline, selling, operations and logistics research, and many more ( Fleur van Veenstra 2009 ) .

The ever-changing and ever-evolving context of SCM brings away the grade of competition ; the organisation success does non merely rely on the direction of nucleus activities but besides on supply dealingss and supply direction. Hence, upwards and downwards the supply concatenation, an organisation needs to pull off relationships with clients and providers. Obviously, the developing outsourcing tendency gives rise to this necessity ( Beamon 2008 ) .

Therefore, the SCM doctrine necessitates the undermentioned points:

Treating the whole supply concatenation as a individual, incorporate entity

The cost, quality and bringing requirements of the fabrication client are primary aims common to every house in the concatenation

Inventory is said to be the last resort in managing supply-requirement instabilities among the grades

Therefore, every provider in the supply concatenation must thoroughly survey and understand its clients. This understanding encompasses factors more than merely cognition of quality, bringing, measure, and cost necessities. It besides includes the cognition of the concluding client ‘s procedures, markets, organisational civilizations, together with their hurdlings, restrictions, and demands. Experts advocate client service to be the result of the Supply Chain. Every activity in the SC must be good balanced, for supplying a greater grade of client service without enforcing an inordinate load of cost ( Yang & A ; Burns 2003 ) ( Mason-Jones & A ; Towill 1999 ) .

Working with provider ‘s resources means jointly work outing organisational jobs, exerting quality-at-the-source, and substituting information. Furthermore, quality-at-the-source starts with quality-at-the-supplier. That is, if providers insure a 100 % quality, the consumer can fling the procedure of review of inward supplies. Corporations and their providers exchange information among themselves in respects to long-range programs, production dockets, design alterations, and limitations/ restraints.

A company provides its providers with progress presentment about alterations to the state of affairs sing merchandise mix and merchandise demands, so as to enable them to set. Suppliers besides give progress notices about bringing or quality jobs so that the concluding clients can help them in finding solutions and making eventualities ( Naylor et al 1999 ) . A partnership kind of relationship is necessary instead than the traditional relationship. And this transparence in information at different degrees, throughout the supply concatenation, decreases the hazards and uncertainnesss ensuing in waiting times, excess stock list and excess production.

The decoupling point is a standard term used for specifying the place in the material grapevine wherein the merchandise flow alterations from “ push ” to “ draw ” . The decoupling point is officially defined as:

The point within the merchandise axis at which the client ‘s order will perforate. It is that point where order driven and anticipation driven activities coincide. As a regulation, the uncoupling point meets an of import stock point or a chief stock point, from where the client is supplied with. Briefly, the uncoupling point maps similar to a buffer between upstream and downstream entities in the supply concatenation. This protects upstream participants from non-uniform consumer purchasing behavior, thereby bring forthing smoother upstream kineticss, while downstream consumer demands are met from a merchandise pull from the buffer stock ( Yang & A ; Burns 2003 ) ( Seurring 2009 ) .

The strategic arrangement of stuff decoupling point is based on the merchandise type, concluding client demands and the supply concatenation attack employed. Choice of uncoupling points is a strategic determination which decides client lead times every bit good as stock list investing. Therefore an organisation may hold many DPs and even a individual merchandise may hold DP more than one, since it can function multiple product-market dealingss. The general dogma for the arrangement of the decoupling point is to switch the supply concatenation upstream, i.e. the planning and execution of activities of industrial makers and cardinal manufacturers are most frequently dependent on client demand information.

On the other manus, the order incursion point is one in the fabrication value concatenation for a merchandise in which the merchandise is associated to a specific client order. Assorted fabricating events like make-to-stock, assemble-to-order, engineer-to-order, and make-to-order, , are linked to different places of the order incursion point ( OPP ) . Different fabrication places are linked to the ability of the fabrication operations in order to suit customizing or a wide merchandise scope ( Lee 2002 ) ( Beamon 2008 ) .

About a decennary and a half earlier, the computing machine industry was associated with bringing lead times up to multiple hebdomads, peculiarly due to the drawn-out production lead clip. Since so, client demands have altered significantly, taking to a petition for short bringing lead times and a bigger merchandise portfolio. Further, manufacturers have responded to this by switching the DP or OPP upstream in the supply concatenation ( Mason-Jones & A ; Towill 1999 ) . Second, in order to keep the concern at a profitable degree, they focused on

Internet engineering to bring forth high-velocity information/ informations transportation and exchange and utilize a direct nexus to obtain client order information, therefore taking the trader web

Product standardisation, by utilizing modular or generic stock list which is a concluding committedness to a peculiar client order delay.

Tight partnerships with providers who deliver the demanded faculties at the requested topographic point and clip

Greater production/ assembly flexibleness

Fast transit constructions ( Naylor et al 1999 ) ( Beamon 2008 )

However, today, computing machines are assembled in order and the constellation asked for can be delivered with a span of few yearss.

In order for being client driven every bit good as clip pull offing the complexness of the overall merchandise design procedure, companies and concern should develop schemes that allow for greater degrees of reactivity throughout the merchandise life rhythm. The rule of delay recommends the delaying of induction of activities until existent demand can be determined, so as to guarantee that some parts of the fabrication and logistics procedures are postponed before the clip concluding client necessities are known, thereby cut downing the hazard and uncertainness ( Mentzer et al 2001 ) .

The chosen delay scheme helps in finding the place of the uncoupling point or the order incursion point in the supply concatenation. In kernel, for an nimble supply concatenation, strategic stock list in sustained in a generic signifier as much upstream as possible at the point where information about existent concluding demand penetrates and finally reduces the deformation in demand. In kernel, the challenge is to seek for methods, by which merchandise development clip can be reduced, feedback from market topographic point made comparatively speedy and replenishing times constricted ( Yang & A ; Burns 2003 ) ( Beamon 2008 ) .

Ironically, over the old ages with supply ironss going planetary in the Hunt for lower costs, lead times have significantly lengthened. Besides, as more and more merchandises are being manufactured far from the concluding client, the opportunities of failed merchandises within the market topographic point are high, ensuing into addition in the entire costs and non cut downing them ( Fleur van Veenstra 2009 ) .

Advantages of SCM:

The profitableness of the supply ironss can be improved drastically by improved bringing public presentation and greater information handiness at the operational degree every bit good as lessening in time-to-market at the strategic and tactical degree.

Furthermore, the potency for promotion while using SCM-theories is based on the lessening in inventory-carrying every bit good as transit costs, lessening in direct and indirect labor costs and the addition in gross revenues and gross revenues borders. Several corporations are re-engineering and simplifying their supply concatenation web for deriving these advantages ( Lee 2002 ) ( Seurring 2009 ) .

SC schemes:

The supply concatenation can be dealt with otherwise, depending on the different key public presentations addressed by companies for constructing their competitory advantage every bit good as and on the features of the market sector. Recent old ages have witnessed new supply concatenation schemes seeking to heighten the cost-service tradeoff, working both on efficiency and velocity. Furthermore, the emerging schemes are based on two dimensions, viz. merchandise and merchandise typology/ categorization, taking to different supply concatenation schemes ( Mentzer et al 2001 ) .

Thin: This scheme can be applied when demand anticipation truth and production process stableness are at its extremum. In such instances, on may prosecute logistic cost minimisation, that is, a complete efficiency scheme. Particularly, houses eliminate or outsource all non value-adding activities seeking economic systems of graduated table for production. This typically involves the centralisation of merchandise planning every bit good as stock direction for the full supply concatenation. It besides involves the application of optimisation strategies for decrease of operational costs. Coordination of a complicated system and lessening lead times needs mechanization of the information exchange with providers ( Mentzer et al 2001 ) .

Responsive: In instances where market demands fluctuate and merchandises scopes are high, operational procedures need to be settled. Consequently, it is comparatively hard to be after necessities for maintaining stocks low. Besides, stable engineerings enable a reactive and flexible SCM. Fundamental to run intoing client demands is the procurance, production every bit good as distribution lead-time tax write-off ( Naylor et al 1999 ) .

Hazard Hedge: For instances where market demand is forecasted procedures of procurance, production and distribution are frequently submitted to changeless alterations. Companies frequently direct their attending to invalidate hazards that may be structural or anomalous. Further, they require backup stocks for such events. Else, a house may utilize back up providers when 1 may non be able to run into client demands. Similar to other schemes, information systems aid in coordination of different histrions and let for seasonably and precise information on stocks together with demand across the supply concatenation ( European Union ) .

Agile: Experiences reveal that the toughest supply ironss to manage are the 1s in which demand in continually changing and procedures are unstable. Such instances need the combination of antiphonal and risk hedge schemes. Such houses embrace assorted signifiers of supply concatenation schemes with regard to different merchandises from different parts of the supply concatenation ( Lee 2002 ) .

Supply concatenation of is the really first cyberspace platform for selling premium design merchandises straight out of the mill at the client ‘s doorsill. The sale does non affect any mediators. aims at presenting top quality design at monetary values with price reductions of 30 to 80 % comparative to traditional retail monetary value ( 2010 ) . delivers premium merchandises at mill monetary values. The designs are undertaken as demanded by the immediate client ; it produces merely what is ordered. All myfab merchandises exactly comply with the US ordinances for quality criterions. Myfab shipes the merchandises direct from the mill gate to the client ‘s front door within a span of 8 to 12 hebdomads, without any extra conveyance ; it rewards forbearance of clients with incredibly low monetary values. A client is enabled to follow the advancement of their point ‘s production every bit good as bringing online ( 2010 ) .

The Supply Chain of Myfab is depicted in the diagram below:

The greatest plus of Myfab is that it reverses the conventional value and distribution that leads to surprisingly low monetary values. To assist in finding demand and prevent merchandising unpopular merchandises, Myfab offers a pick to clients in merchandise choice via the ‘VOTE ‘ functionality. Factories produce merchandises “ on demand ” and the merely the exact measure is sold for avoiding stock list and repositing costs. Contracted interior decorator are hired to make furniture designs ; the production procedure takes topographic point in-house ( 2010 ) ( Thomasville 2004 ) .

The diagram illustrates the complete procedure of furniture production of Myfab, from natural stuffs to the concluding selling and distribution to clients. The largest sector of the furniture industry value concatenation may be the family furniture fabrication ; nevertheless, as a consequence of increasing planetary competition, Myfab has witnessed a drastic rise in the sweeping, retailing and design parts of the value concatenation for keeping its fight ( Fleur van Veenstra 2009 ) ( European Union ) .


The seminar paper successfully outlines the construct Supply Chain Management and the schemes involved in it. The paper besides demonstrates the importance of SCM for an organisation and how its theories help in achieving the organisational ends.

The research paper efficaciously gives an overview of the function of the concluding client in the direction of a company ‘s supply concatenation. With the aid of a instance survey of, which is a premium cyberspace platform aimed at selling design furniture, the paper takes a expression at the furniture industry and the globalisation it has attained by efficaciously bettering the supply concatenation by following newer schemes as per the client demands.

The paper negotiations about the supply concatenation of Myfab and how it has emerged as a globalized platform for the sale of interior decorator furniture.