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Supply Chain Management

Summary: This is a 4 page paper in Supply Chain Management. The paper is in APA format and has 1 source. The paper is a reflective summary posting of the postings of CheeWai and Santosh.

Supply Chain Management

Key Learning Points of CheeWai:

In his posting “ERP and Supply Chain Information Systems Design” CheeWai has explained which task is difficult, whether changing a business process of an organization or the entire culture of the organization? Moreover he argues whether the high price of ERP is could be justified after achieving after achieving total integration of organization processes through implementation.

CheeWai argues that ERP system is the information backbone of an organization and reaches into all areas of business processes and value chain. Most ERP would include modules like manufacturing, supply chain management, financials, projects, human resources, customer relationship management, and data warehousing etc. Now by keeping in mind all the nature regarding the nature of ERP systems, it would be easy for the organizations to assess whether they need to change certain business processes or they already are compatible with it.

While Analyzing which task is difficult, we have noticed that changing the culture is only one factor in successful implementation. CheeWai finally concludes that

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each task has its own difficulties, therefore should be examined separately.

Speaking about the justification of high price tag of ERP sysems, CheeWai argues that upon weighting the advantages and disadvantages of an ERP system the organization should consider ERP investment as a long-term one. They must also balance their financial status, which corresponds to the price tag. The company should look at least 5 years beyond for the return on investment.

In his posting “Enterprise Execution Systems” CheeWai explains how the creation of an ERP enables an organization to provide better customer service? And how is a distribution portal different from a procurement portal?  According to CheeWai enterprise system helps integrate internal and external data. In this way it integrates CRM, SCM, resource planning and product management. It also helps to create a customer-focus and addresses the 4 dimensions of customer service i.e. time, dependability, communication and convenience.

Speaking about the difference between distribution portal and procurement portal CheeWai argued that the portal, which is involved in selling products and services between a supplier and multiple customers, is a distribution portal for e.g. Amazon, Ikea and Cold Storage etc. On the other hand a procurement portal is a single login platform where transactions can be made between B2B and B2C purchase. Moreover it provides a complete overview of on going contracts and guarantees the price for each product.

In his posting “Supply Chain Coordination Problems” CheeWai explains the meaning of Bullwhip effect. According to CheeWai Bullwhip effect is the result of variation in demand from the end-user, which results in the increasing variation in the upper end of the supply chain, and the effects are worst at the most distant member of the supply chain from the end-user. Therefore where the supply chain is longer the effect will be worse than where the supply chain is shorter. CheeWai gave the example of HP Printers, which as compared to Dell is longer, thus more vulnerable to bullwhip effect.

In his posting “Building Supply Chain Relationships” CheeWai has explained the question why it is beneficial to encourage trust in supply chain relationships? According to CheeWai trustworthiness results in lower transaction costs, creates common objectives and shared goals, helps develop effective collaboration and planning, reduces competition mentality and minimizes duplication efforts in the workflow of both parties. Speaking about the possibility of maintaining both contractual and trust-based relationship CheeWai argued that initially the relationship will be contractual and over the time the trust-based relationship will develop.

Key Learning Points of Santhosh:

In his posting “ERP and Supply Chain Information Systems Design” Santhosh has explained that ERP software models and automates many basic processes of the company. The main goal is to integrate information across the organization and eliminate complex and expensive links. According to Santhosh changing a business process in not as difficult as changing an organizational culture, specially incase of mergers and acquisitions. Moreover successful ERP implementation will justify its high price tags because it will result in increase in volume of business, reduce the direct and indirect overheads and consequently increase the overall profit of the company.

In his posting “Enterprise Execution Systems” Santhosh has explained how could the creation of enterprise system enable an organization to provide better customer services? According to Santhosh many enhanced versions of ERP include modules like CRM and SRM. These solutions result in better customer service because of improved business processes, management and inventory control etc. speaking about the difference between procurement portal and distribution portal Santhosh says that a procurement portal enables an organization to present its buying department to potential new suppliers and existing suppliers. The potential suppliers can be added into ASL. On the other hand a distribution portal is used to make a product or service available to an end-user or a business user. It manages channels, channel motivation, promotion, pricing and marketing etc.

In his posting “Supply Chain Coordination Problems” Santhosh has explained what is bullwhip effect. According to Santhosh the bullwhip effect distorts the information of demand within a supply chain. The result is a loss of supply chain coordination. The adverse effects include the reduction of the profitability of the supply chain, loss of relationship between different stages of the supply chain, increase in replenish lead time, increase in inventory cost, increase in transportation, shipment and clearing cost etc. According to Santhosh Apple’s launch of Iphone exemplifies bullwhip effect.

Speaking about the consequences of poor coordination Santhosh argued that poor or lack of coordination reduces responsiveness, hence increases the operation cost. The consequences of poor coordination include increase in replenish lead-time, increase in inventory cost, increase in transportation, shipment and clearing cost etc.

In his posting “Building Supply Chain Relationships” Santhosh discusses why trust is beneficial to encourage trust in supply chain? Santhosh argues that trust based relationships create inter-dependability and confidence in joint decisions. Moreover it increases supply chain productivity and operation efficiency and finally helps to build strategic partnership. According to Santhosh it is possible to maintain both contractual and trust-based relationship by assessing the value chain, identifying the operational roles and decision rights, creating good contracts and designing effective conflict resolution procedures.

My Key Contributions:

Though changing a business process is also a difficult job, but changing an organization’s culture is a more profound and radical task, thus is more difficult. The primary obstacles include resistance from the employees and administration, especially those who feel threatened with the on going change and feel that their control and authority will be lost.

Enterprise Execution Systems help the organization not only to integrate the knowledge and information throughout the organization. This integration of data across the enterprise helps in streamlining the information regarding the customer. In this way the entire information regarding the customer is streamlined and is available through a single company personnel only by a single click of mouse. Speaking about the difference between the distribution portal and procurement portal, the first is build with keeping the buyers in mind, while the latter is build in order to coordinate the suppliers.

Bullwhip effect is the result of lack of communication and coordination between different members of the supply chain. The Hindustan Oil Company of India is a daily life example of bullwhip effect, where inaccurate forecast, lost sales opportunities as a result of mal-distribution, non-availability of stock all had severe effects on the growth of the company. All these issues lead to very high sales fluctuations, which resulted in the bullwhip effect for the company.

Trust based relationships are always beneficial for the entire supply chain as compared to traditional transactional-based relationships. The main reason behind it is that when both members of the supply chain trust each other they will act for the overall profit of the supply chain and will be cooperative than being competitive, which on the other hand may be harmful and costly for the supply chain.

Though practically, any new business relationship is based on contracts initially the mutual trust develops over the time and it results in trust-based relationships. Therefore one can conclude that both relationships coexist between two parties though it starts with contractual based relationships and ends into a trust-based one.

The first two postings of CheeWai were really insightful to me while the last posting of Santhosh also was helpful.

Read also: Apple Value Chain


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