Unit 26-L.O.3 Evaluate The Interrelationships Between The Supply Chain And Other Areas Of An Organization

Course: Pearson BTEC Levels 4 and 5 Higher Nationals in Business

Evaluating the interrelationships between the supply chain and other areas of an organization is important for various reasons.

First, shareholders require better financial analysis based upon a lot more than just inaccurate numbers – they want to see why the company’s performance has changed over time, what opportunities there might be for increased shareholder value, and decreased risks.

Second, it should be a focus because a well-developed strategy focused on supply chain management can provide them with the resources needed to grow a business without the need to incur debt or sell their assets.

Thirdly, they always have to remember that while we can start with demand forecasting today and make plans for tomorrow’s market adaptation based on trends in commodity prices, enterprise resource planning systems (ERP), and the development of new technologies, they need to have the flexibility to recognize market opportunities that the business might not be able to anticipate.

Supply chain integration:

A holistic and integrated approach to a supply chain and supply chain management

A holistic and integrated approach to supply chain management (SCM) is a strategy for managing the complexities of a global, interactive supply chain.

Integrating several components into one aggregate “whole” is what characterizes a holistic approach to SCM. A robust SCM process will integrate customer service, planning, material sourcing, and logistics according to mutually agreed upon priorities.

Ideally, this integration will happen on an enterprise-wide scale at all points in time. Each of these processes contributes information back and forth between themselves in real-time to maximize value creation. The single most important trait that distinguishes SCM from other approaches is its stakeholder orientation.

Relationship between the supply chain and other business functions.

The supply chain is the “behind-the-scenes” function of business that facilitates the creation, production, distribution, and sale of goods to ensure profitability.

It’s considered by many top analysts in business strategy as being among the critical areas of focus for businesses competing in global markets.

As a complex network of activities involving sourcing raw materials and parts, manufacturing or producing those inputs into finished goods, then transporting them – often from overseas – to customers via storage and sales points around the world; it touches nearly every aspect of a company’s success.

Factors influencing decisions to integrate a supply chain include its size, structure, geographic location(s), target market, and competitor profile.

There are many factors that can make a supply chain more or less appealing as an investment.

Factors including the size of a business, its structure, location, target market, and competitor profile all play into what makes a company look like it would be at an advantage for the organization.

For instance, companies with already-existing partnerships in place typically have lower costs due to these pre-established connections with suppliers and help reduce development time.

Products that are heavily processed or require complex processes to produce meanwhile may not benefit from having the direct producer handle their production needs themselves– larger businesses may provide better returns on investments because they have available resources and infrastructure needed to directly operate those facilities without relying on external partners. Large operations also offer pros such as being able to provide better customer service and a more efficient supply chain.

Customizing logistics networks to meet service requirements.

The team can work with you to design a custom logistics network that would meet your current and future service requirements. We’ll cover the following factors:

1) Geographical coverage- Where do you want distribution points at? How far out from warehouses were branches located? What cities will be serviced by what warehouse?

2) Warehousing and transportation capacity- How many goods need to be stored in inventory, how much physical space are we talking about? What are the truckload capacities of all suppliers when traveling back and forth between branches? Will it fit on one truck or two trucks or more than two trucks loading into a trailer that needs special HAZMAT handling facilities onsite at the branch?

3) Inventory management capabilities- How much management is needed to oversee the warehouse operation, from track and trace to inventory control?

4) Relationship with suppliers- Do you or do you not work with an extended network of suppliers that require last-mile delivery services to your brick and mortar locations by your own fleet of trucks or by air freight?

Customer demand planning and the product life-cycle.

Customer demand planning is a part of supply chain management in which information about customer buying habits and expected needs are gathered in order to plan the supply of products.

The product life cycle is also known as “consumer trend analysis”. It can be separated into four categories (introduction, growth, maturity, and decline) that represent the stages of fashion trends. With this information, it can be determined how many units must be produced to meet current demand.

Supply chain management:

A holistic approach to managing and optimizing the effectiveness of a supply chain

A holistic approach to managing and optimizing the effectiveness of a supply chain entails making appropriate tactical adjustments, such as changes in inventory carrying costs, altering ordering parameters, or changing the product mix to suit customer demand.

It also includes using advanced planning approaches that consider all components of the supply chain suite including material availability, manufacturing capacity, transportation infrastructure, and variability in production volumes. This allows one to forecast with greater accuracy and effect the necessary actions needed at critical moments of disruption across every link from extraction through sales.

The main responsibility is to make sure that there is a continuous flow of goods throughout each strategic stage with limited levels of redundancy for those stages exhibiting stability such at raw material extraction point as well as sourcing stages where products are being sold without an actual physical stock.

The main goal is to optimize the distribution and production process through multiple points of entry in order to ensure a resilient and cost-effective supply chain.

The use of the SCOR model to address, improve and communicate SCM

There are five major purposes of the SCOR model. These purposes include defining, describing, arranging, analyzing, and communicating the supply chain in order to identify improvement areas.

The first purpose is the definition or narrowing of a supply chain process relating to what needs to be analyzed and improved. This might involve combining processes because an issue is found in one area but this same issue can be solved by improving another area that is currently not being utilized.

For instance, if both purchasing agents need items before evaluating their inventory for new orders when they have reached a point with their current stock that every aspect of what has already been processed through all stages would prompt improvements elsewhere and then reduce delay even further just by implementing them more efficiently would entail combining these functions into a single department that would evaluate the situation and present a solution to management.

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