The supply of an organization depends on the facilities for economical yet efficient production and distribution. The organization can keep production and distribution costs minimal by carefully selecting the raw materials and the suppliers. Managing the supplier offers velocity, flexibility and, quality at the lowest costs possible.
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The main reason of working around reasonable costs is to ensure satisfaction of the customer at all times, especially during the market fluctuations. The main aim of a supply chain is to offer innovative dimensions of remaining competitive in the market by introduction and delivery of dynamic and technologically high quality inventories into the market at sustainable costs and high swiftness.
Management of cost also enables the organizations to build a vision or goal by recognizing the performance break and thus narrowing the gap through utilization of available resources. Successful supply chain means that the consumer is not kept waiting after ordering and this is achievable via proper balancing of resources to meet the demands (Wang et al, 64).
According to Wisner (478), the current economical crisis means that these are un-standardized times, which require critical but quick decisions regarding trade especially on money matters. Today there is need for careful management considering that technology is taking over transactions by storm and there is need to convert the physical elements of transactions to virtual ones to enhance trade at the lowest feasible costs.
The costs need management because currently there is urgent need for firms to invest in hi-tech information and goods transfer due to low investments rates and poor international transactions. Economic crisis means low investment rates thus the need to invest the available resources smartly.
Globalization of the supply chains is becoming crucial because of the reduction on the procurement costs as well as decreases on the risks of international transactions such as purchasing behaviours. The technological impact is forcing businesses to consider outsourcing or venturing into countries that are more productive.
For instance, India was a rare consideration to venture into some years back but today their advancement in technological matters makes most transactions easier, faster and cheaper over some of the U.S. and other western countries. Today globalization enables supply-chain firms to bid for the cheaper but best quality options through comparison.
Competition requires better establishment, new ventures and proper marketing strategies thus the quests for globalization. Globalization means change for growth and that is the aspiration for every firm (Ayers and Odegaard, 88). Lastly some of the market niche are only attainable globally for instance the vehicle manufacturing industries that require global supplies.
Some of the repercussions for this trend involve higher overall costs in comparison to the traditional style of regional or remote supply chains. According to Coyle (7), the exchange rates, tariffs, and space are some of the extra costs incurred during the international transactions.
The time factor due to regional differences may affects the transactions beside the climatic conditions. A lot of complexity is usually involved when there are many global suppliers, thus the needs to consider the number to involve. The lowest prices in the global markets may mean more costs if a firm lacks to consider other related factors such as time, quality and quantity.
In relation to Lambert (91), companies use various methods for demand forecasting of supply chains, such as graphical, historical or statistical. Graphically there are many difficulties involved in modelling outputs, especially when the chains are many but on the other hand, it offers clear picture of the reality and chances for expansion through better analysis of hindrances and catalysts.
The daily demand shifts call for complex representations. However, it is possible to model systematic and similar graphs even when they call for demanding efforts. The statistical forecasting are more accurate because of defined data types compared to historical, which mainly entail predictions based on past performances.
Majority of the methods nevertheless utilizes supply situations that are a rough estimate as opposed to the current states of affairs, thus lack of exact prediction. Forecasting enables firms to learn the procedures of controlling some of the consumer’s systematic shifts such as weekly changes.
The shifts are rather much more complicated when the company fails to carry out the observations. Forecasting enables the management to find the information regarding insufficient supplies, which would otherwise be hard to note thus better trading and accurate timely supplies.
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Close coordination means that the chains are working as a unit, to alloy uniformity especially over performance and dynamism. The managers are able to avoid heterogeneity within the firm by synchronizing activities. The current technological change calls for intelligent systems and personnel who are able to handle the operations, research and system’s theories.
In a strategy to minimize costs, they harmonize state times, sequences to avoid waiting costs, and retain customers through timely deliveries, especially for the global markets. Coordinated activities enhance the firm’s ability to deliver solutions of the complex problems through integration of various aspects from different chain stores. According to Kurtz et al (405), globalization makes the supply chains more complex and, limited but better and more profit oriented.
Modulating components enables the manager to design subsystems as modules, which assist in meeting a wide range of business requirements. The production, manufacturing and procurement of components are highly reduced, thus saving resources in material status for future requirements.
The joint planning, process integration and coordination reduces the performance cost and offers chances for business expansion to other market niche. There is increase on returns on investments such as assets, improved customer services due to specialization and, reduction on the time required for delivery.
Ayers, James B. & Odegaard, Mary Ann. “Retail supply chain management: Series on resource management.” CRC Press, 2007
Coyle, John J., Langley, C. John & Bardi, Edward J. “Supply chain management: a logistics perspective.” Cengage Learning publishers. 2009
Kurtz, David L. MacKenzie, H. F. & Snow, Kim. “Contemporary Marketing.” Cengage Learning publishers. 2009
Lambert, Douglas M. “Supply chain management: processes, partnerships, performance” Supply Chain Management Inst. 2008
Wang, William Y. C, Heng, Michael, S. H. & Chau, Patrick Y. K. “Supply chain management: issues in the new era of collaboration and competition.” Idea Group Inc (IGI) publishers. 2007
Wisner, Joel D., Tan, Keah-Choon., & Leong, Keong. G. “Principles of Supply Chain Management.” Cengage Learning publishers. 2008