Supply Chain Management

Topics: Supply chain management, Inventory, Supply chain Pages: 8 (2407 words) Published: April 29, 2013
Supply chain management, which involves inventory management, cost reduction, transportation, configure the distribution network, strategies development for product distribution, aims to improve the efficient and effective in the production activities. With better improvement in managing the current resources to operate profitability, and to minimize the inventory costs and reach the demands from market. Through the upstream and downstream linkages, different products and service which helps in forming products and services to fulfill the requirement of ultimate customers. To manage the network of supply chains, a systematic tool is required to measure and manage the transactions between partners. Accordingly, key performance indicator (KPI) was developed, is a number or value that can be used for comparison an internal targets or external targets as an indicators for evaluate the performance. Moreover, collected value or number should be calculated for the process or activities improvement.

2Literature review

2.1 Diagnostic Method
It is important that companies develop a supply chain management strategy that is consistent with their overall business strategy. A key tool to achieving this is to develop a supply chain "diagnostic method" that can be used to improve operations and reduce inventories (see Kilty, 2000). The first consideration here is for the company to examine and understand their supply and demand planning. This is the key to optimizing resources as well as the timing of activities associated with procuring raw materials and producing and distributing products. The next step is to begin the process of transitioning from a functional organization to a process organization. And finally, as companies reorganize to be process driven, then the performance measures for the various functional departments should be changed to support the overall supply chain management goals. Some examples of the measurements would include perfect order fulfillment, customer satisfaction, product quality, total supply chain cost, inventory days supply, and cash-to-cash cycle time.

2.2 On-Time-in-full delivery to customers (OTIEc)
The purpose of this KPI is to measure the delivery of the product on time and in full with no defects in the product, packaging, transport arrangement supporting documentation. It will measure the abiliy to adhere to the first agreed demand date for each order, and whether there were any problems with the materials shipped. Supporting such a measure needs a rigorous recording system either by the plant itself, or by the distribution company if this aspect is out-sourced. The goal in this KPI will be to achieve a value > 99%


Integrated supply chain require that each segment of the supply chain i.e., procurement, production and distribution as shown in Figure 3 be functionally integrated for optimum result. Today's technology is the key that allows the supply chain to become integrated and therefore reduces the inventory requirement. Some examples are the electronic transmission of advance ship notices (ASN) to advise customers of the contents of a shipment and its expected delivery date. The transmission of purchase orders via electronic data interchange (EDI) can provide more timely and accurate data to suppliers, allowing for more efficient information in management and production planning (Kilty, 2000). Also, freight tracking systems now are being used in the management of the movement of goods, which provides flexibility that can be used to react to rapidly changing internal and external needs such as changes in production schedule or changes in customer product delivery requirements.

2.3 Key performance indicators in collaborative supply chain Collaboration is defined as a way by which all companies in a supply chain are actively working together towards common objectives,...
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