The supply chain for DIMCO products is quite long. It entails the involvement of the manufacturer, an agent based in the United States, local distributors (wholesalers), retailers in different countries and finally, the consumers. That is the up-stream part of the supply chain. Although it is crucial as it adds onto the value of the product, the chain sometimes can involve too much handling, which may damage the quality of goods.
This is putting into consideration the goods that the company manufactures. However, it seems convenient for the company as the products do not necessarily require short chains. The down-stream supply chain is quite convenient for the company. The company, however, employs the services of too many suppliers who are widely spread all over the world. This may hurt the logistics involved and can be quite costly for the company.
Advantages of Supply Chain Management
Supply chain management is the process that manages both downstream and upstream relationships of the supply chain with the aim of delivering customer value at the most optimal cost. DIMCO’s operations must implement a proper supply chain considering the number of parties it is dealing with both from the downstream and upstream arena. The following advantages will be realized if proper supply chain management is implemented.
The company will meet the specific requirements of the customer. This will boost its ranking and good will and more people will associate with its product. Proper management of the supply chain may have much capital requirements in the beginning, but in the long run it saves the company costs and increases profits.
It also helps the company to monitor the operations of both the upstream and downstream players in the supply chain. DIMCO may have diverse and totally different business strategies at different levels of the product before reaching the consumer. Proper supply chain management acts as a link in business strategies and plays a major role in the decision making of the company in different frontiers (Kouvelis et al. 2006).
Recommendation for External Suppliers
DIMCO employs the services of many suppliers from almost every part of the world. This is quite tricky and unpredictable and it may hurt the continued operations of the company in the long run. The company should indentify its major needs in terms of raw materials and come up with a strategy that will merge its resource acquisition.
Its requirement of 1350 components of raw materials can be centralized so as to have a focal point of operations. The 375 external supply rings ought to be trimmed to a manageable level. Fro example, the company may employ the services of only 10 major suppliers and do way with the rest of the suppliers.
The above recommendations will be quite helpful to the strategy formulation and implementation in the company. It will also come in handy to offload the logistics department of uncertainty. The short down-stream chain will be easier to handle and will auger well with the companies continued operations (Kouvelis et al. 2006).
Recommendation for External Distributors
The company’s distribution of finished products is quite sophisticated. It manufactures its products and then supplies them to both local and international regional distribution centers. These in turn supply to localized distributors who in turn sell to retailers and finally the product reaches the consumer. For the type of product that the company is dealing in, it is not economical to have such a chain.
It would be more logical to do away with the localized distribution and to have footage in all the countries where its products are used. The company should conduct a feasibility study of its market with the aim of consumer targeting. With the study results in mind it should indentify and have footage in the most significant markets and have the current status maintained in the other markets. Once a market is indentified as an emerging one, the recommended criteria will be implemented.
The reason for this is because the company will maintain touch with its customers and this will enable to handle their problems from the grassroots level. This is not the case in the current organization of the supply chain. Most importantly it will greatly reduce handling of the products and hence maintain quality. Overall, it will reduce costs associated with the chain (Kouvelis et al. 2006).
Consequences
In the above recommended changes in the whole supply chain, most of the downstream and upstream players in the supply chain will be affected. Distributors and agents who are in major markets for the company will be scraped and replaced with new company presence in those countries.
Some suppliers who are only capable of supplying small quantities of raw materials to the company will have to get scraped as the company moves to merge its operations from that frontier. The company’s management will be affected as it has to rethink its strategies and conduct feasibility studies concerning the new move. The research department will be the most affected as it seeks to give credible information concerning the new strategies. The consumers of the company’s products may get ripples from the transition also.
Reference
Kouvelis, P. et al. (2006). Supply Chain Management Research and Production and Operations Management: Review, Trends, and Opportunities. Production and Operations Management, 15(3), 449–469.