Supply Chain Management Inventory Cost

Question: Discuss about the Supply Chain Management for Inventory Cost. Answer: Supply chain management is considered as an integrative approach for managing the distribution networks as well as supply of the organization. It has been observed that the major purpose of the supply chain management has been reducing the operational cost of supply chain. The major costs, which are emphasized upon by the supply chain management, are carrying cost, managing cost as well as inventory cost. The supply chain activities also immensely put priority to the quality as well as supplier performance (Fawcett et al. 2014). The supply chain management include several major areas, which can be improved for enhancing the performance of suppliers. These areas customer satisfaction, cycle times, reducing supply chain steps, packaging cost, transportation service, order delivery and order fulfilment. It has been noticed quite commonly that the supply chains tend to develop competitive advantage around their core competencies. The core competencies are referred to the best activities, which are conducted by any given organization in a cost effective fashion. Moreover, these activities are considered as the pillar for the given organization to achieve the desired success. It has been observed through extensive study that majority of the companies has made multiple of business approaches or parts as their core competence (Pashaei and Olhager 2015). However, very limited numbers of organizations have been able to make the supply design as their core competence. In the current context, the current paper identifies and contrasts the benefits and challenges for investigating the effectiveness of making the supply design as their core competence. The article posted on SCDigest effectively disclosed that very small number of organizations has applied the supply design, albeit in a limited manner. They have initiated quite small teams for optimizing tools as well as designing network. However, these initiations are negligible as far as multitudes of organizations in the market are concerned. The percentage of these companies is limited compared to the huge market throughout the world. The major practices that have been noticed in the market are using network design tools at the time of managing large acquisition and optimizing combined network once or twice in five years interval (Yue and You 2014). In addition to that, they are often noticed to use traditional spreadsheet tools for managing other one-time trigger issues. The supply chain design is mostly constructed with the aim of acquiring effective competitive edge over the rival companies. In the contemporary market, the reduced cost of distribution, packaging, inventory management, optimal service as well as enhanced trade off management plays a significant part in provision of immense competitive advantage to the organization (Christopher 2016). There are multiple of heightened advantages, which can be gained through supply chain design if it is made core competence of the organizations. These organizations are discussed below: Higher Efficiency Rate: The supply chain design can be most effective for increasing the efficiency rate of the organization. Being a core competency the supply chain would be able to maintain inventory management, distribution, product findings as well as delivery in an effective manner (Melnyk et al. 2014). It will eventually enhance the organizational performance and reduce the operational time in an effective manner. Reduced Cost Effects: The supply chain design would be also effective for reducing the cost effects with the organization. For instance, the improved inventory management would be able to store the maximum number of products. They can identify the products with relatively convenient fashion. Moreover, the economic storage space allocation also inhibits the chances of damage (Schuster et al. 2017). The continuous updating of the product number and location helps to response robustly to the vendors and distributors. Raised Output: Supply chain management is a highly effective model for enhancing the coordination, collaboration as well as communication within the shipping companies, transportation as well as vendors. The bidirectional information flow is another major advantage of supply chain design (Waller and Fawcett 2013). The centralized as well as streamline distribution system will be able to ensure end-users to provide most accurate output results. Elevated Cooperation: The supply chain design is highly effective for tracking the activities conducted related to the supply and distribution of the organization. The increased information sharing provides a greater platform to the organization to maintain communication with every stakeholder (Flint et al. 2016). It essentially helps to boost the coordination among the stakeholders, as they will be aware of the organizational developments all the time. Reducing Process Delay: Effective supply chain design is highly effective for reducing the delay in the organizational process. The reduced process delay immensely helps the organization to enhance the relationship between the stakeholders (Fawcett et al. 2014). The effective supply chain design is also crucial for reducing the logistical errors in an effective fashion. From the extensive study of supply chain management, it has been also noticed that supply chain management can create major issues for the organizations. The major issues of the supply chain management are discussed below: Expensive System Installation: An effective supply chain design needs adoption of various modern technology, which can be proven as most expensive investment (Pashaei and Olhager 2015). The large amount of initiation cost has created a very considerable barrier in making the supply chain design as core competence. Replication of Supply Chain System: The rival companies can easily replicate the strategies initiated in the supply chain management, which thereby eliminates the competitive advantage (Yue and You 2014). The ease of replication by competitors has proven to be most critical issue for supply chain management initiation. Complex Management Process: The supply chain management is itself a very complex process and therefore need to be maintained by large numbers of experienced staffs. It poses a greater problem as large numbers of companies may not have the human resource to launch the supply chain management efficiently (Christopher 2016). Despite of the above-discussed issues supply chain management provides greater advantages as identified in the above discussion. Although the supply chain management requires great amount of initiation fund and greater number of experienced staffs, the cost effectiveness, organizational efficiency as well as elevated business profit helps the organization to achieve greater success in this competitive market. In addition to that, the enhanced collaboration, cooperation and coordination helps the organization to response to the dynamic market factors which greater proficiency. Reference List: Christopher, M., 2016.Logistics supply chain management. Pearson UK. Fawcett, S.E., Ellram, L.M. and Ogden, J.A., 2014.Supply chain management: from vision to implementation. London: Pearson. Flint, D.J., Signori, P. and Golicic, S.L., 2016. 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