An important feature of a world class organisation is the way the organisation has been able to develop and link its suppliers with its external processes. Supplier relationship management can be defined as the relationship that exists between the supplier and its buyer based on long term commitments and trust with the ultimate aim to maximize the potential value of the relationship. This will include the management of different forms of supply relationships such as partnership, joint venture and vertical integration. The critical importance of supplier relationship types to achieve supply chain competitiveness can be viewed under the following headings: The effective use of strategic partnership Typical traditional short term relationship is characterize by irregular or ‘one-off’ transactions that give rise to supply uncertainties, difficulties in choosing suppliers, and is price oriented making this type of relationship unreliable and unsupported. Organisations can move from this type of relationship towards a Continue reading
Supply Chain Management
What is a Lean Supply Chain?
A supply chain is a network of facilities, functions and activities that are involved in fulfilling customer demand. Supply chain is the network of organisations that are involved through the upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hand of the ultimate customer. The coordination within the entire chain is therefore very important. The supply chain covers activities on the business process, procurement, production, inventory carrying, storage, handling and distribution within an organisation. Supply Chain Management is therefore, the integration of key business processes across the supply chain for the purpose of adding value for customers and stakeholders. The size of the business determines the extent of Supply Chain Management it will get itself involved in. Companies invest heavily in Supply Chain Management to give their customers value for their money since supply chain management is Continue reading
How Logistics Productivity Improvement Affects the Economy as a Whole as well as the Position of Individual Consumer?
Generally logistics refers to the inbound and outbound flow and storage of goods , services, and information within and between organisations. The Council of Supply Chain Management Professionals (CSCMP), which is the pre-eminent professional organisation for academics and practitioners in the logistics field, formed in 1963, defined logistics management as ” that part of supply chain management that plans, implements and controls the efficient, effective forward and reverse flow and storage of goods ,services, and related information between the point of origin and the the point of consumption in order to meet customers requirements “. Logistics Productivity Improvement and the Economy Logistics has become an enormously important component of the gross domestic product (GDP) of industrialized nations and thus affects the rate of inflation, interest rates, productivity, energy costs and its availability and other aspects of the economy as well. Ever changing business environment due to globalization, lead time reductions, Continue reading
Collaborative Planning, Forecasting and Replenishment (CPFR)
Collaborative Planning, Forecasting and Replenishment (CPFR) is defined as a business practice that combines the brainpower of two or more trading partners in planning the ways to fulfill the customer demand. They also explained the relationship that CPFR links best practices of sales and marketing, such as category management, to the implementation of supply chain planning and completion process, to increase availability while reducing inventory, transportation and logistics costs. Basically CPFR is an approach that deals with the requirements for good demand management. The most involved industries with CPFR are consumer products and food and beverage. The main objective of Collaborative Planning, Forecasting and Replenishment (CPFR) is to “optimize” the supply chain process by: Improving accuracy of forecasting demand, Delivering the right product at the right time to the right location, Reducing inventory, Avoiding stock outs, and Improving customer service. But the most important fact on which the achievement of Continue reading
Case Study: Zara’s Supply Chain Success Story
Zara is a Spanish fashion clothing manufacturer and retailer, formed in the 1970’s It is known that only two weeks are required for Zara to complete the development and shipment of a new product to its stores, which outweighs the average of fashion industry of six months, thanks to the collaborative relationship with customers and suppliers. Zara mainly targets on young and urban female customers and acceptable prices are offered. There are always new products in Zara stores. Even though usually Zara stores are spacious but the stock is displayed in limited quantity. This kind of strategy gives customers a sense of originality and exclusivity. Most of the stores display clothes only when they have a full set of major sizes, so customers would not be upset to find out that the needed size is not available. As shoppers enter the stores, reaction between Zara and customers starts with creating Continue reading
Purchase-to-Pay Process (PTP)
Purchase-to-pay process consists of financial transactions with the suppliers in a supply chain. Purchase-to-pay process starts with the buyer making the requisition and ends with the payment to the supplier. The buyer makes a purchase requisition and it is passed on to the purchasing department for approval. After getting the approval of the purchasing manager, a purchase order is sent to the supplier. On receiving the purchase order the supplier dispatches the shipment along with the invoice. On receiving the goods, the firm checks the shipment and the invoice to confirm whether the shipment matches the purchase order and the product quality/quantity is as desired. Upon confirmation, the accounts department pays the supplier. Some of the measures to improve efficiency of purchasing transactions are discussed below. Focus on Reducing Processing Time and Costs There are various ways of reducing processing time and costs in order to expedite the purchasing process. Continue reading