Subject: Supply Chain Design
Today, there is stiff competition in the global market and the competition is getting more and more intense. This competition has been driven by factors such as technological change, globalization, knowledgeable and demanding customers. This leads to competition among companies with their whole supply chain, unlike initially where competition was only based on product design. With a well-designed supply chain a company can have a competitive advantage. It enables continuity of a product flow and hence a countering the varied demands from the real customers. It includes transformation of raw materials to finished goods. The concept encompasses planning, implementing as well as controlling manufacturing and delivery of the finished item.
An organization can adopt one of the following four types of supply chain design depending on its specializations.
Build to stock is used to stocks products that have low involvement. This product does not offer a way of customization or configuration. The customer has no choice other than to buy what is supplied to the market through the retailers. Products in this category are ones that are consumed daily such as detergents, soaps, toothpastes among others. Consumers need a quick delivery of daily-consumed products rather than for them to place an order for the products with specified features. Hence, build to stock is the best design for consumable products because the prices are also cheap. The stakeholders value is maximized, as the sale is high.
Configure to order, this is a bit complex and therefore a bit difficult to implement in real life. This design offers the customer a chance to give their specifications of the product they want manufactured. This model is not applicable to most products, but is seen in products that are required for different purposes such as cars computers and laptops. There is a margin for customers choice and the customization of the item. The product is assembled using the available materials but if needed some may be added. In this model the consumer has to wait for some time before the product is made available for use. In such a case the supply chain manager must do their best to reduce the lead-time because a customer is satisfied when he/she gets the order on time.
Build to order, different customers have different tastes. This model is used to cater for such differences. Some customers want a product with their specifications, some go to an extent of choosing the materials to be used. There is a slight difference between configure to order and build to order because for build to order even the materials are chosen by the customer. Once an order is received, they order the specific material from the suppliers. Therefore a good relationship and communication should exist between the producer and the supplier.
Engineer to order, this happens to be the most complex and expensive design. The design of the product starts after the customer has placed an order. In this model not only materials are chosen by the customer but even the model idea. The consumer comes up with a design of the product he/she wants to cater for the specific needs. Such products are rear and are transported as a single product ones completed.
As discussed earlier supply chain enables movement of a product from supplier to the customer. Supply chain allows a better distribution of resources and assets of an organization. There are five ways this is achieved:
i. Cost reduction, this is achieved through better management of inventory. It allows for asset maximum utilization, efficient distribution, short cycle times as well as raw material procurement.
ii. Improved customer satisfaction, the on time delivery ensures fully customer satisfaction, supply allows delivery of a product to the right customer at the right time. This gives a manufacturer economy of scale that translates to customers loyalty.
iii. Better operational efficiency, this help the organization to reduce cost through elimination of most if not all the non-value adding activities.
iv. Better organizational flexibility, this enables the organization to cope with the competitive market through catering to the demands of the customers.
v. It enables development of good relationships with the rest of the organizations in the chain. This reduces unhealthy completion among the organizations.
In conclusion, supply chain design has benefits to almost all parties involved. Its general objectives include reducing cost by better utilization of available space as well as reducing wastage. It is also aimed at ensuring continuous supply of products as demand can be forecasted. It is aimed at promoting innovation that leads to technological production of goods. Chain design is also aimed at adapting to changes in the market. In terms of production the warehouse will be able to manage inventory by minimizing inventory, ensuring stocks availability for the unpredictable market. It also minimizes functional components. In terms of lead-time, it shortens the lead needed for production. Therefore supply chain design will have a positive impact to the organization at large.
A warehouse supply chain design visual representation.