Supply Chain Management
Assignment 1B
There have been significant benefits gained in developing collaborative relationships with customers and suppliers based on focused collaboration over time, joint initiatives and information sharing. Manufacturers across the globe are under incredible pressure to increase profit margins whereas keeping overall sustainability. However, overhead costs that are associated with time and resources have made the companies not improve supplier-customer relationships. In this connection, these associations need to work together towards enhancing both developments. Therefore, Supplier Development, Customer Development and Customer/Supplier Development how do they make an important contribution to the success of manufacturing companies.
Supplier Development is the practice of working with an identified group of suppliers on a one-to-one basis to increase their performance for the advantage of the buying organization. Security concerns such as hacking pose a major issue due to the sharing of information between supplier and customer. Therefore, placing security checks such as Encryption reduce incidences of data loss and security breaches. It is in this regard, benefits to supplier development range from reducing sourcing time, increased customer need responsiveness and improved knowledge sharing. Manufacturing companies need to realize for them to be successful while reducing potential risks they need to put into place an effective supplier development program.
Customer development, on the other hand, is identified as a process of development framework where customers find, create and recommend the market of the business conception. We shall describe the customer development in a two-step stage. 1. Search stage, to seek the customer and the market for the products/services that are to be developed. Validation and great in-depth of the market are emphasized here. 2. Execution stage, initiation to the markets and finding of customers. With customer development products action plans are set by the understanding of the customer, market, and solving the problem.
Co-development is the harmonized development work in timing and ingredient of the various buyer-supplier organizational self-controls that extend the life-cycle of products. It primarily concerns with alignment. Internal uniformity amongst the customer’s and supplier’s developments is an important pre-requisite for important co-development improvement. These practices are an instrument integrated by companies to add a competitive lead and to reduce development budgets. Supplier’s objective is to commercialize the intended product, whereas the customer focuses on the phases that support goals improving efficiency in the co-development process.
However, evidence suggests that there is still manufacturing companies experience great difficulty in implementing relationships to meet the expectations. This has resulted in unrealistic anticipations while going into the relationships and unreasonable expectations that yields no plans. Therefore, implementing methodologies such as Partnership Model and The Collaboration Framework that has been implemented in many companies has seen these relationships work. This is enhanced through continued meetings to evaluate progress made in the relationships.
As a result, manufacturing companies to thrive and be successful, they need to implement Supplier, Customer and co-development. In integrating supplier development, provides the companies with a competitive edge in leveraging their technology and cost reductions, whereas successful companies will get the right customers and solutions through customer development. Lastly, Co-development enables parties to acquire external information involvements, combine resources and improve new product designs for overall success.
In Your Company (or Industry)
Supplier Development, Customer Development and Customer/Supplier Co-Development of Samsung Company
Driven by the philosophy of fairness, openness and win-win cooperation, Samsung is an example of a company that has a successful supply chain system. The company has over 2500 suppliers across the world. All the suppliers of the company are committed to complying with Samsung Supplier Code of Conduct and operate within the set relevant regulation and international standards. Samsung assists their supplying companies to manage supply chain risks with the aim of ensuring there is sustainability in the movement of goods from the assembling area to the market. Smartphones are not the only revenue stream of Samsung, but it is the main product that the firm product and supply in the market.
Supplier development is one of the critical areas that most firms are to establishing in the market. For that one decade, Samsung has become one of the design powerhouses in the world, producing unique and quality products in the world. Starting 20 years ago, South Korea’s Samsung Electronics has established strong brands in the market. However, the success in the global market is based on the supplier development that Samsung has established between the supplier of raw materials and those who deliver these products in the market. Samsung is not finished with its supplier development, and this is supported by the investment in research and development that the company has established in the world to facilitate the movement of goods and services across the globe.
Customer experience remains the differentiator between Samsung and other brands in the global market. This is the message that Samsung East Africa COO, recently stated while projecting their supply in the market. In order to build customer development in the market, Samsung produces unique products different from what other competitors offer in the market. Creativity and innovation play a critical role in helping the company to produce products that meet customers’ demands. At Samsung, the firm has built a strong customer but still is committed to increasing its customer base in the global market. In order to build a strong. Samsung has many customers across the world and the only way to match customers’ demands with the products that the firm produce is a good network that Samsung has created in the global market. The branding strategy of Samsung originates from the firm’s universal program that is supposed to make Samsung the leading supplier of electronics in the whole world.
Before developing any product, Samsung would always conduct extensive market research and understand customer demands because, without customers, it becomes hard to produce and ship manufactured products to the market. Customer involvement in the design of the products is achieved through innovation and creativity. As technology and the mobile world changes, Samsung is also changing its attitude towards customer experience. As the technology and mobile changes, Michael Lawder one of the employees at Samsung recently indicated that the firm has moved from break, fix model where they expected customers only to visit their brand to fix their broken devices or problems and go on with their lives to building a lasting and meaningful relationship with both customers and suppliers.
Samsung is a leader and at a valued speed, scale and reliability because whenever a change takes place in the market, it responded by producing a product that meets customers demand. The engineers working for Samsung built products that not only meet specification and also customer requirements.
Management of customer and supplier co-development means involving customers in the development of new products and services and coordinating other processes. In business to business markets like the one Samsung uses, customer co-development enable the firm to be innovative. The conceptualizes management that the firm uses is divided into three major dimensions that include relational co-development process, co-development challenges and paradox that the firm faces and finally customer involvement processes. In all the development processes that include product design, customers are always involved. In all processes, the company encourages its customers to participate in these processes as one way of creating a good working relationship with the clients and help Samsung’s performance. Samsung has been voted among the top 100 brands in the world due to its marketing strategy and ability to create brand awareness in the market through sponsorship across the world. Samsung is currently considered a design powerhouse due to the ability of the firm to set the pace in the market in both production and distribution of unique products in the market. Samsung is one of the firms in the firm that is growing at a faster pace by constantly innovating and creating a good brand image in the market.
At Samsung, the company is dependent on supplier and customer development because the organization recognizes the role that each play in the supply and distribution of its products in the global market. Apart from the suppliers that ship the products to the market, the firm has also established a good working relationship with those who supply raw materials to be used in the manufacturing process. In order to respond to customers’ demands, Samsung is committed to producing modern products like solar-powered laptops, solar-powered internet schools, solar-powered clinics and other products that are likely to have a positive impact on their lives of consumers. Samsung, throughout the ages, has been successful in building a brand image in the market based on product attributes, the benefits they wish to give their customers and brand personality.
Some of the approaches that Samsung has used to deliver its products in the market include a partnership with other organizations to assist in the delivery of products in the market. However, the company has four major strategies to various market across the world. The four strategies include market penetration, market development, product development and innovation. These four strategies are meant to explore and penetrate the new markets where competition is not as high as other regions. For instance, most of Samsung’s supplies are concentrated in Africa and Asia, where Apple is not the dominant product as it is in the US market.
Samsung Company takes certain measures for supplier development, customer development and supplier/customer co-development, which help in the achievement of the company’s objectives. The company ensures that it integrates communication, collaboration as well as top management and long term commitment with its suppliers. Research indicates that Samsung takes the measure of utilizing structured and unrestricted models used in supplier performance evaluation. The company ensures that it focuses on quality, delivery and cost, which are essential in supplier performances evaluation measures. Further, the company ensures that it gets a supplier development strategy which ensures that the Samsung company gives value-added services to the potential manufacturing customers.
For customer development, Samsung Company uses different measures to ensure they are effective. Customer development is measured frequently through acquisitions, activation as well as retention and the revenue, which helps the company in determining if their customer development is active. Further, Samsung Company has taken the measure of having a clear association between customer and supplier development in its supply chain management. Suppliers help the company in reaching the customers conveniently; hence a good supplier wins the trust of clients on the product. Having an effective supplier development is key for the company since they play a crucial role in product lifestyle ranging from sourcing of raw materials to reaching the consumers.
From the evaluation of the module on customer development, supplier development for Samsung Company, I have learnt that they play a significant role in the company’s achievement of set goals. I have learnt that the supplier development of a company is critical in determining customer development. Hence, there should be a linear association between supplier development and customer development. On the other hand, there are trends in supplier development where Samsung is now using different convenient suppliers for every stage of the product life-cycle. There is also the globalization aspect where suppliers can reach mass customers across the world.
Assignment 2
PART A
Axioms of Supply Chain Optimization Considering the push, pull and push-pull applications in the organizations
The pull and push policies identify different logics that underpin the relationship that exists between the supply and demand of the products of a firm. Push policy refers to the development of various processes that emanate from the company and are directed to the market, while the pull policies refer to processes that start from the market and go towards the company. Therefore, pull and push policies to refer to activities that rotate around the production and distribution of resources and communication flows of the firm.
Pull Supply Chain explains the process of manufacturing and supplying factors that facilitate the actual customer demand for products in the market. Based on this type of supply chain logistics, inventories are acquired on a need basis, but it is also important to keep the minimum reorder levels to ensure there is a breakdown in the supply. Keeping the minimum reorder level assists the firms to meet the increasing demands and reduce the unnecessary costs that the firm would incur if the consumers lose out in the supply. The push supply chain is defined as the logistics driven by long-term projections based on customer demand.
The Pull Based Supply Chain Strategy
In supply chain management, inventory managers are required to developed an effective inventory control system meant to manage the demand of customers. The demand for products in the market controls inventory costs, carrying costs, ordering costs, and storage costs. Generally, the inventory control systems can be categorized into both push and pull models and play a critical role in bridging the gap between the demand and supply of products in the market. In this strategy, customers order pull materials into the supply chain. The main idea behind the concept is the willingness of the customers to wait for the products to be delivered to the market. However, if the wait time is stretched too long, this strategy may fail. Under the push supply chain, the logistics are driven by long-term projections of customer demand.
Some of the known examples of pull/push strategy in real life include Hopp and Spearman that state that most common systems can either be classified into the pull-push. MRP is considered a push system because it releases master productions that are scheduled without regard to the system status. No, a priori WIP limit is considered to that cause. Classic Kanban is another pull system that a firm may use to manage its inventories. Classic Base Stock System is another surprising push system that a firm may develop to manage its inventories. It has no limit on the amount of work in the process that an organization should make, but a lot of emphases is placed on the base-stock level. Installation stock (Q,r) is another system that falls within the pull system, but neither of this system neither imposes a limit on the number of orders to be placed on the system.
CONWIP is another a pull system adopted in different organizations across the world. CONWIP also limit WIP, although through cards that are similar to kanban. However, the important difference between kanban from CONWIP is the implementation processes as cards are placed in a specific pattern rather than the number. POLKA systems is also another push system that a firm may use. It was put forward Suri, and like kanban, CONWIP is also limited by cards.
In modern society, where there is stiff competition, firms are expected to respond to any kind of chain that may take place in the market. It is not business as usual when there is a change in the factors of production in the market. There are many factors that may influence the supply and demand of products in the market. Whenever there is a change in the supply, firms are expected to respond to the changes by streamlining their production and increasing their production. Due to the changes that are shaping the world, mass production is soon losing their value, and most manufacturing firms are adopting mass customization that involves crafting products based on customer productions. Most customers are no longer interested in products that are affordable but are more interested in products that meet their specifications.
There are several factors that influence the demand and supply in the market. Some of the factors include failure to treat customers as the most important resources of the firm. Whenever there are changes in the market, firms that have slow reactions are more likely to suffer a lot of loses more than firms that regularly study the market and respond to the changes within the recommended time. A high customer complaint rate and poor delivery can also influence supply chain performance, especially if a firm becomes more product-oriented more than customers. Due to increase competition and firms produce products that are almost similar, customers can easily shift their allegiance to a firm that is ready to listen to them and give them services that enhances their performances. If such a case happens in the firm, the firms are advised to move from push to pull environment. It is the pull factors involve analysis of the firm demands and give the customers the products that they need the most and serve as value to them.
Samsung Case Study
Although there are many challenges that most companies are likely to face in African markets, Samsung is one of the company’s that has successfully penetrated the African market to provide its customers with new accessories. Samsung’s global presence in Africa surpasses its competitors due to the ability of the firm to produce and supply the products in the market and without any delays. A study of the company’s presence in major African countries illustrated how Samsung had established itself as the brand ambassador of most consumers in Africa based on the production and distribution of television and mobile phones.
PART B (25 Marks)
In today’s global economy, organizations need to adjust to the ever-changing customer needs to ensure that the organization are productive and competitive in the global stage. Lean tools are critical in businesses by facilitating the removal of waste and non-value activities in the organization. Equally, the use of lean tools in a business is a strategy that aids an organization in improving its service delivery, customer retention, and reduced operational costs. Small and medium-sized enterprises (SMEs) have not been left behind in the adoption of lean tools to improve their profits and position itself in the global market. However, different industries have adopted the use of lean tools to suit their tailored organizational needs, which varies from different types of organizations.
Organizations in the service industry’s primary goal are efficient service delivery to its customers. The success and profitability of such an organization solely revolve around the ability to deliver quality service, conforming to the customer needs, and at the stipulated time. However, such an organization is bound to experience demand overflow, delayed service delivery as a result of the orders, and poor product quality as a result of inadequate supply chain implementation strategies. Lean tools implementation in the service industry help in determining what the customer’s value and cut out-wastes in the internal processes. Additionally, lean tools ensure efficient service flow as well as aid in maximum utilization of resources to meet the desired customer needs.
As a result of globalization, customers prefer tailored services resulting in the service organization’s being in constant pressure of delivering exemplary services to its customers. Therefore, lean tools in the service industry aid in addressing the issues of large inventory with numerous queues of orders awaiting improved office layout that will ensure that there is less movement of the employees within the organization. Equally, the use of lean tools not only aids in waste elimination optimized organizational services but as well as facilitating the development of company culture that will ensure customer retention. Lean tools benefit the service industry by providing that customer orders are processed quickly, service delivery is maximum, and most importantly, customer satisfaction and feedback are strictly adhered to.
Manufacturing industries utilize lean tools for optimized manufacturing to always streamline the supply chain within the organization (Krishnan, 2013). Today’s global market requires organizations to have proper measures in place to deal with the ever-changing shared market problems. Lean principles and lean tools facilitate the elimination of wastes by streamlining the in-house processes to ensure maximum utilization of the available resources for optimized goods production. Equally, the use of lean tools provided the methods that did not add value to the customers and did not directly affect the decision of customers were eliminated from the system.
According to Shah and Ward, lean production encompasses the key factors that ensure service or product is of quality and is delivered to the intended customer at the stipulated time. Additionally, the implementation of lean tools guarantee’s organizations a competitive advantage as well as reduced operational costs. The various tools used in lean production include total quality management, overall productive management, and Just in Time. However, not all these tools might be suitable for various available industries. Equally, the key objectives of lean tools in production are to reduce costs by streamlining processes such as inventory control, transportation, processing, and, most importantly, delivery. Additionally, the manufacturing industry utilizes quite a several lean tools compared to the service industry; this is because lean manufacturing encompasses the optimization of the supply chain as well.
Organizations tend to implement more than one lean tool to get rid of unwanted waste. Lean production has proved to be effective in the manufacturing organization resulting in increased profits and reduced manufacturing costs. However, the success of lean implementation in both the manufacturing and service industry requires the supply chain management to be involved to ensure that each individual performs the task expected of him or her (Hackman, 1995).
Therefore, the adoption of lean tools by both the service and manufacturing industry aid in streaming services and result in increased organizational profits. However, the use of the right lean tools or a combination of some of the devices will only produce the desired outcome. The tools that are efficient for both include Total Quality Management, Just in Time, and the human resource tools. TQM is mandatory as both industries tend to be affiliated with the production of quality products and delivery of quality services. Additionally, supply chain optimization and utilization of the TQM will result in high-quality goods resulting in not only customer retention but as well as increased sales.
As a result of globalization, communication between the management and the employees in the organizations have to be optimized. The use of human resource lean tools has been more impactful in the service industry, which requires constant communication with the client. Additionally, the use of this thin tool boosts collaboration between the employees and increases the availability of the customer responses—however, service-oriented organizations such as the healthcare sector. Just in Time, tools are mandatory to ensure they meet their patient’s needs in the required timeframe. JIT lean tools in the Healthcare industry are very critical in medication production and prescription. Additionally, JIT ensures that the right medication is available for the patient and is in the right quantity.
Supply Optimization facilitates the identification of potential problems in the supply plan and provides solutions to the issues identified. Additionally, supply chain optimization improved organizational efficiency as well as decreased costs of production to the organization. Equally, the supply chain optimization focuses on enhancing order delivery, customer service, decision making, and inventory management. However, for efficient customer delivery, the area that needs to be optimized is the customer delivery process. For an organization to produce and deliver the best to its customers, Quality Management lean tool needs to be incorporated in its delivery system.
Additionally, the supply chain needs to implement the Human Resource Lean tool to maximize customer delivery. Supply chain optimization results in the improved workflow as a result of the collaborative and responsive human resource lean tool. Equally, communication between the customer and organization is improved, resulting in streamlining of supply.
Customer delivery enhancement requires the optimization of the entire production process. Additionally, it revolves around, ensuring the organization is flexible in meeting the ever-changing customer needs. However, the effectiveness of the supply chain optimization strategy relies entirely on the strategic plan in place and the organizational supply chain management. Enhanced Customer delivery results in better order processing, improved inventory control, and efficient service delivery as a result of the implementation of lean tools and dynamic supply chain optimization backed by a capable management team of the organization.
References
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Shah, R., & Ward, P. T. (2003). Lean manufacturing: context, practice bundles, and performance. Journal of operations management, 21(2), 129-149.
Krishnan, V., & Parveen, C. M. (2013, July). Comparative study of lean manufacturing tools used in manufacturing firms and service sectors. In Proceedings of the World Congress on Engineering (Vol. 1, pp. 01-05).
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