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The supply chain of every organization has an impact on the overall success of the organization. The efficiency of the supply chain is dependent on the structure of the supply chain and the nature of the products that are involved. The technology adopted also has an impact on the overall optimization of the business organization’s revenue.
This report reviews the article Leagility: integrating … written in 1999 by Naylor, Naim and Berry. The article discusses the application of leanness and agility in the supply chain while making reference to the similarities and the differences. It also highlights the different types of structures of supply chain.
This paper will also use DHL Company as a case study on how the RFID technology can improve a company’s supply chain performance and mitigate the bull-whip effect. This will be based on the article by Attaran (2007) RFID: an enabler of supply chain operations.
DHL Company has adopted the RFID technology to provide information to its customers. This paper also discusses how the potential implementation of RFID technologies can complement other existing relevant technologies and concepts.
Critique of the article by Naylor
Naylor, Naim and Berry (1999, p 108) defines supply chain as the network that involves producing, supplying and distribution of the products to the consumers with a feedback of information. A successful supply chain is characterized by an excellent exchange of materials and revenue for the material.
They also define the term agility as the use of available information concerning the marketplace to maximize on profits while paying attention to market trends. They also describe the word lean as an expansion to the value stream to save on time, resources and a means to arrive at targets.
Understanding the attributes of the marketplace have an impact on the supply chain as pointed out by Naylor et al (1999, p. 109). The attributes may be seen in terms of equal importance, similar importance or different importance. Using the term lean and agile they describe the attributes.
The attribute of equal importance applies to both lean together with agile. They are relevant in the manufacturing of the products because they influence the decision made by the supply chain. They can be implemented to maximize on the revenue.
The coordination of the supply chain to availing the product to the consumer should be emphasized as revealed by Naylor et al (1999, p. 109). The consumers demand should be adopted through integrated efforts to realize the market demands. Integration encourages the members of a supply chain to share information and overcome barriers that may be a hindrance to distribution of material resources and enable making more revenue.
Waddington (2008, p. 18) emphasizes that adopting leanness and agility will enable the supply chain to perform the functions assigned efficiently and effectively. This is because both require the constant review of information about customer demand and the market. They allow for adoption of decisions made from the changing environment.
Again the terms lean together with agile are used by Naylor et al (1999, p. 110). Lean is applied in the procedure of manufacturing. In the procedures the producers ensures that they utilize the least requirements needed to get a product. They eliminate the procedures that hardly add value.
While doing so they ensure that the end product is not rejected by the consumer. The manufacturer may also apply the agile principle. The challenge is to be able to keep up with the changes in the market in terms of stock so that the customers acquire the product.
Some processes add no value and cannot be abandoned because they are necessary. The relatively accurate supply of products required may be arrived at using the available information making it possible to cut down on the unwanted, nonprofit making processes. The cost of the product is therefore trimmed down (Naylor et al 1999, p. 110).
Naylor et al (1999, p. 109) argues that the information about the consumer must be given attention. The consumer is at the end of the supply chain. Before determining the supply chain, the kind of market that the products end up must be considered. This implies that the supply chain may consider the demand before supplying the products to consumers.
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Waddington (2008, 18) indicates that the other factors other than the customer demand may also influence the supply chain. These include the availability of the raw materials and the beliefs of the customers. The information therefore assists in making the accurate product that the customer needs
The benefits of integration and coordination include among others reduction in waste. Resources and materials wasted as a result of consequences of oversupply are minimized. Consequently time is also saved and the overall performance becomes efficient. For this reason the supply chain for a particular market should be designed for the specific market.
Thus different supply chains may be adopted for different markets (Naylor et al 1999, p. 110). The companies that adopt the principle of lean and agile in its operations have the advantage of predicting the possible changes that may be inevitable in the market. Some of the changes are caused by technology which is costly and may require retraining manpower before implementing.
Companies with effective implementation of leanness and agility will have a smooth transaction in the application of new technology (Waddington 2008, p. 18). Naylor et al (1999, p. 111) notes that to be effective the supply chain would depend on the coordination and integration created to be able to make necessary changes in a short time. For instance, there can emerge a demand for a wide range of products.
The changes will have effect from the production to the presentation of the end product to the consumer. Agility lays emphasis on the service that lead to differentiation. Therefore, the supply chain must have the flexibility to advocate for changes. Agility in production may be overwhelmed by the instability in demand that may be caused by the market.
Although the instability is unpleasant, Naylor et al (1999, p. 111) indicate that the supply chain can be managed to maximize on the revenue by using the available opportunities. Information from the market must be constantly consulted since the demand may be varying from time to time.
Naylor et al (1999, p. 112) also note that lean manufacturing differ with agility. Leanness relies on the information obtained to plan assuming the market is stable. If the production of a product is implemented using the lean manufacturing principle, it is likely that some stocks will remain unsold. This is due to the fact that the demand of the market will have shifted.
Different techniques can be applied in the adoption of lean manufacturing as well as agile manufacturing. Depending on the nature of market and the nature of demand adjustments that involve integrating the relevant in the implementation of lean and agile to get maximum benefit. The process will however require constant review of information and the supply chain (Waddington 2008, p. 19).
The structure of a supply chain is dependent on the market. There are various structures of supply chain that can be adopted. The first is “buy- to- order” (Naylor et al 1999, p. 113). This is best suited for highly variable products. The consumers can be assured of a variety of products that emanate from different raw materials. The supply chain can manipulate the availability of the product by holding back a particular line of product to create a shortage.
This can be beneficial because the production is minimal and the losses that may be realized if a product fails to sell are minimal. This is because there is over supply. This structure may have limited advantage of changing products due to changes in the market. The second structure is “make- to- order” as indicated by Naylor et al (1999, p. 113).
The same raw material is used to make a product. Therefore it is possible to adopt to change in the market in different geographical areas. This structure makes it possible to produce according to the demands of consumers with little time wasted in the production. In this structure the challenge is to meet the demand of diverse products and the consumption rates of the product.
The absence of the raw material may paralyze the supply chain. The third structure is “assemble to order” chain in accordance with Naylor et al (1999, p. 113). Customization of products is rescheduled to a later date. This allows for adjustments in later stage. The chain is important in maintaining a supply. This structure is also suitable in supplying different geographical areas.
The product is usually standard to meet the demand of the market. Another structure is the electronic chain of supply. It is very effective and efficient in a chain that characterized by complexity. The supply chain may involve a wide range of products to multiple locations and have diverse members (Naylor et al 1999, p. 116). Undertakings that may not be of value to the supply chain should be eliminated.
Naylor et al (1999, p. 110) indicates that a lot of time and resources as well as other resources may be wasted in the supply chain despite them not adding value. For this reason they suggest that time compression be adopted in the manufacturing stage. Thus time can be saved in the manufacturing and time can be saved when the information on the market is acquired.
The Radio Frequency Identification (RFID) is a technology that has been used in the supply chain to identify products as pointed out by Attaran (2007, p. 249). The product is given an identification tag that is used to count, to identify the price and can be kept by the consumer for use when they want to claim a warrant service. In line with DHL-usa.com (2011) the DHL Company uses RFID technology in their business.
In their parcel delivery, they attach a tracking device on the parcel or shipment. The customer is given a number that they can use to track the progress of the parcel over the internet. This has encouraged customers to use the services offered by the DHL Company.
According to Attaran (2007, p. 249) using the technology will enable the supply chain to save on time. The tags can be used to count the items when they are in packet. Therefore, the manual labor, time and cost that would have been incurred are drastically reduced.
It also improve inventory visibility and management that benefits all the players in the supply chain network like retailers, distributers, suppliers and others. This benefits could be as depicted in the table below
Potential RFID benefits from a supply chain entity perspective (adapted from e-force presentation: “RFID Solution Lifecycle Management”, https://e-force.com/)
Also, RFID avails numerous amount of information about the product. It is possible to share a lot of information about the product with the customer. The information can be used to make decisions on the best product that a particular customer requires (Attaran 2007, p. 251). This is similar to what happens in the DHL Company.
The tracker attached to the shipment or parcel gives information on the location and details about the status. Moreover the information is usually in real time, giving it an advantage. More over a lot of details are also offered. The customer can track their shipment or parcel using the receipt number of their pay bill, they can also use the tracking number, and they can use the place of shipment or the destination of the shipment to track.
Consequently there is no need to go through the customer service to obtain the whereabouts of the shipment (DHL-usa.com2011). The RFID technology causes the executive management in the supply chain to increase their involvement. For this reason they can be able to get first hand information within a short span of time. Consequently, they can make informed decisions that are applicable.
The performance becomes more efficient with the top management getting involved more often (Attaran 2007, p. 251). Excellent technology providers are likely to initiate partnership when the RFID technology is adopted. In the long run, the services will become consistent and therefore reliable. Customers as a result may want to get such products that have a warrant attached a RFID tag.
The use of RFID technology unlike the use of a bar code and a scanner is easier to use. Moreover, the risk of damages and loss of the bar code is eliminated. Consequently, the labor that may be involved in scanning the entire total number of products is abandoned. This is because RFID technology reduces the time spend on counting by identifying and doing the sum of the number of products their prices and obtains more information about the products.
Attaran (2007, p. 251) mentions that the integration of RFID technology in the existing information technology structure leads to improved performance. The process of uploading data in the information technology system is integrated with that of the information technology making the process mush simpler. The obtained information can be manipulated so as to be able to track down the supply chain processes.
When the supply chain is efficient customers are likely to buy the products that are constantly available in market. The DHL Company in providing their tracking services integrates with other applications to make the services available. The tracking is available online through their website. It is also available in the mobile phones application.
They offer assistance to the customers by offering HTML codes to make the access possible. This encourages more customers to use the services and enable them sustain customers demands (DHL-usa.com 2011). Besides making the process of uploading information into the system easy and fast, the RFID technology integrates data received into the organizational data bank.
The data bank can be used to make predictions on the trends of the supply chain and be used to make future plans. The RFID technology improves the supply chain by making it possible to plan for the future. In keeping with Attaran (2007, p. 252) the data received from the RFID technology may reveal undesirable elements of the supply chain. They may reveal which products have reduced consumption and information that would lead to quick modification in the supply chain.
The RFID technology influences the structure of supply chain that is most efficient for a particular market. The RFID technology can allow sharing of information. The technology stores a lot of information that is associated with each stage in the supply chain. The information enables the planers to detect any abnormalities in the supply chain. This is because the information aids in the coordination within the organization in every stage of the supply chain.
The DHL Company has expanded in their business. Customers prefer using the shipment because of the contact they keep with the progress of their shipment or parcels. The customers get frequent notifications about the progress even up to eighteen times. The company makes it possible to get a lot of information for the lowest rates.
The details about the total number of shipment are easily obtained. In cases of emergency, it is possible to respond quickly because the trackers provide details in real time. Besides making it possible to track the shipment or parcel, DHL Company offers security to the information that is obtained through the tracking system.
The company allows the customers the permission to get information. They offer consent to customers only so that they have access to the tracking information. They give a code to the clients (DHL-usa.com 2011).
Potential implementation of RFID technologies
The RFID technology and the internet have partnered as revealed in the DHL-usa.com (2011, p. 1). The RFID technology tracks the customer’s parcels and shipments and can be revealed in the internet. In their website the DHL Company has a slot where the customer can type the secret code they are given by the company to get information on their parcel or shipment.
The information is sent to the website and the customer’s needs for information are met. RFID technology can be used to complement existing technology and concepts. RFID technology provides huge amounts of data that are challenging to manage after a period of time. The existing information technology system integrates with the Enterprise Resource Planning software has been used to make the data manageable.
The software aids in making the data useful by proving a means to analyze the data (Attaran 2007, p. 254). Incorporating the management of the supply chain with the RFID technology is relevant. Attaran (2007, p. 254) mentions that this is because the existing management cannot be faced off. Indeed the RFID technology requires support because it has its own shortcomings that cannot allow complete replacement.
Human resources are needed to perform other task. Besides the management of supply chain the management of customers is also significant in the incorporation. Their input remains significant as they are keen to observe and get feedback from the customers face to face.
HTML application and RFID technology have partnered to make it possible for customers to track as provided by the DHL Company. The clients can install a direct link to the DHL company website on the tracking page in their applications. The clients have access to the page without any hindrances. The availability of information on- line makes it possible for the customers to get access to the information irrespective of their location.
The company receives fewer calls from customers. Consequently, the company as a result has a low number of customer services. Internet and RFID technology reinforce each other. Customers can use the number provided by the DHL Company to get information via email. More over clients can reply to the company for any queries by sending and receiving emails (DHL-usa.com 2011).
The RFID technology complements the barcode system. The bar code system is still relevant in the market because it stores a substantial amount of data that is useful. On the other hand the RFID technology requires large data storage to store cumulative information generated from tracking. Because of the nature of the large amounts the barcode is still, being used.
This is because the company will incur large amounts of cost purchasing storage for the cumulative data that is generated. The businesses adopt the barcode for individual products while the entire packet of good is given the RFID technology tag (Attaran 2007, p. 250). RFID technology has also complemented the Collaborative Planning Forecasting and Replenishment (CPFR) in terms of planning.
The Decision Makers (2011, p. 1) argues that from the massive amount of data obtained CPRF which is largely involved in planning of business supply chain is significantly impacted by the RFID technology. The information retrieved from the RFID technology gives details on the demand from the customers, the environment of the market and can help in the prediction of future business.
What is more, it is possible to detect any change in the market. Accordingly, the information obtained influences decision making in the supply chain. Among the decision made communication is important and this information can be availed and distributed within a few seconds to the manufacturers, distributors, retailers and customers.
RFID technology has the potential of complementing e– commerce. With the ability to obtain the massive data through tracking the information can be obtained to inform decisions made in the e-commerce. Products that are being manufactured can be made such that they meet the needs of the customers and inform the distributers to be able to optimize on the goals of business organizations.
The significance of collaborating the other technologies and concepts is to be able to share and utilize the available information to maximize on the profits. Collaboration allows the RFID technology to be able to overcome the demerits that are associated with the massive amounts of data that accumulate from the tracking.
Furthermore the integration allows quick response to emerging problems that are evident in the market. The operation within the supply chain benefits from the coordination and becomes more efficient and effective. Customer satisfaction increases with the efficiency and more sales are realized.
The use of agile and lean principles can be applied in a company to maximize on the benefits. Therefore information and the understanding of the market are important and are heavily relied on. The two principles are affected by the instability in the market due to changes in demand and unpredictable market environment. For this reason the supply chain must be quick to adapt to changes in the market (Naylor et al 1999, p 108).
There are also different structures of supply chain that include “buy- to- order,” “make- to- order,” “assemble to order” and the electronic chain of supply. The electronic chain of supply is very effective and superior to the others because it can handle complex and massive information.
The DHL Company in its supply chain has adopted the use of RFID and has realized increased sales. This is due to the fact that the customers have access to the shipments or parcels they send. The number of clients using the technology has increased because of the availability of tracking services. The RFID technology collect a lot of information, is efficient and provides real time tracking.
RFID technology has the potential of complementing other technologies and concepts to become effective. The internet and the use of HTML are examples of collaborations. The supply chain customer management and the supply management have also collaborated.
E-commerce, CPFR and the barcode system have also potential of integrating with the RFID technology for realization of goals. The major benefits of collaboration are the sharing of the information and the ability to manage challenges that arise in the course of business.
Attaran, M., 2007. RFID: an enabler of supply chain operations Supply chain Management. An international Journal, 12, (4), pp. 249-257.
DHL-usa.com., 2011. Tracking solutions. Web.
Naylor, J. B., Naim, M., and Berry, D., 1999. Leagility: integrating the Lean and agile manufacturing paradigms in the total supply chain. International journal of production economics, 62, pp. 107-118.
The Decision Makers., 2011. Collaborative Planning, Forecasting and Replenishment. Web.
Waddington, T., 2008. Lean agile and Agile Supply Chain Design. Web.