Advantages and Disadvantages of Implementing a Supply Chain Management System
A Supply Chain Management system is an information system which integrates the primary inbound logistics concern activity. Supply Chain Management system supports inbound and outbound logistics procurance every bit good as procurement support activities. Supply Chain Management systems support three BASIC processes which are beginning, purchase and settee ; because Supply Chain Management systems support the three basic processes the procedure itself of the supply concatenation has become faster and more efficient. One advantage of implementing a supply concatenation direction system within an organisation is that it has expanded supply concatenation velocity which is the dollar value of good exchanged in a given period of clip ; this allows for companies make their procedures quicker and more efficient. Another advantage for implementing a Supply Chain Management is that the Supply Chain Management System enables both the provider and the client to cut down the size of stock lists hence cut downing stock list costs which in the long tally will help the company grow because they are maintaining their costs low. This decrease in stock list costs is possible because the velocity and the efficiency provided by information systems enable processing of little orders fast. SCM Systems besides help better bringing programming this occurs because the providers are able to present stuffs and constituents at the clip and sequence needed this enables just-in-time stock list which allows makers to cut down natural stuffs and grip of natural stuffs. SCM Systems besides are an advantage because it creates procedures to accomplish schemes. The SCM Systems are chiefly developed for support for concern procedures which assist organisations achieve competitory advantage over other companies every bit good as assisting to avoid making systems that are unrelated to organisation ‘s scheme. The last advantage of a SCM system is it fixes bullwhip consequence which is the inclination of consumers to purchase more than they would necessitate in the immediate hereafter.
The disadvantages to implementing a Supply Chain Management System are that it can be expensive and hard for some employees to larn. While some employees want alteration and are non loath to alterations to their current system many other employees will defy the alteration ; which would ensue in the organisation holding to cover with this which can drive costs of implementing such a system even higher. Another ground implementing a SCM System is a disadvantage is because for some organisations it may necessitate them to alter well because their current system is really basic ; hence, execution of such a extremely advanced system could alter the organisation well. If a company grows significantly, such as NIKE did, so SCM can go a hinderance because the company grows and the system could go irrelevant towards the company ‘s chief aim. An extra drawback of implementing a SCM System is that there could be a deficiency of grasp for the system merely as there was for NIKE ; this is based on the statement made by the Nike CIO, Gordon Steele, he thought that that this system would hold been an easier solution for the jobs Nike was confronting but in kernel it turned out to much more complicated. Another disadvantage for implementing a SCM System is that even though a company may believe that they have trained their employees plenty, the world of this can be that there is ne’er plenty preparation available, which Nike ‘s CIO stated once more.
Options for Geting a SCM System
Companies must foremost admit that there is a job with their organisational system. In the instance, Nike sensed that there was an issue with their current concern theoretical account in that it focused on centralisation but progressively became more and more decentralized. Its lone option was to get a SCM system to make greater supply concatenation visibleness.
They were to happen sellers by shopping about for SCM systems and the organisations that plan them. So they had to seek for information on how to work out their job. Nike understood that they had to rapidly and accurately analyse the impacts of proposed SCM. Business should utilize information to measure alternate trade names in the pick set and measure the capablenesss of each. Negotiation of the footings and conditions would follow. The purchase determination follows and the concern decides to purchase the plan. Nike addressed this issue by implementing SAP ERP in concurrence with i2 package to be its information system. The concluding measure is the station purchase rating in which the company takes farther action after the purchase based on their satisfaction or dissatisfaction. The advantages of each option: Reduce costs of purchasing and merchandising, increases supply concatenation velocity, reduces size and cost of stock lists, and improves bringing programming. This disintermediation that occurs when extinguishing the in-between beds in the supply concatenation will increase market efficiency. The disadvantages of each option: Technology and user preparation.
Raw Material Purchasing Procedure
In order for at that place to even be a natural stuff buying procedure there must be a supply concatenation for which the altogether stuffs get transferred through. A supply concatenation is considered a web of organizations/facilities that transform natural stuffs into merchandises delivered to clients. The chief intent of a natural stuff buying procedure is for a company to be able to successfully reassign natural stuffs into intermediate goods which can so be transferred to finals good and delivered to the client ; this is all done to guarantee that the client gets the service as expeditiously and motivate as possible. The procedures itself is started one time the client realizes that there is a demand or desire for a merchandise. The client so places an order for their service through the retail merchant. The retail merchants so in-return must order from the distributers that would distribute to the retail merchants. The distributors are so required to order from the industries that develop or create the merchandise but in order for the distributors to develop or make the merchandise they have to order the supplies from the providers that they receive their stuffs from. The providers are the 1s with the original natural stuff. Once the supply concatenation is complete from the client ‘s realisation up to the providers being notified of the natural stuff being needed all points are delivered and the provider ‘s payment goes through the same procedure ; retail merchants get paid by client the retail merchants pay the distributers distributers pay manufactures-manufactures wage provider.
Potential Pitfalls in Implementing a SCM System
The increasing outsourcing that occurs is one of the possible booby traps that may be Encountered when implementing a supply concatenation direction system. Shriveling merchandise lifecycles, escalating economic force per unit areas, and changeless alterations in supply, demand, and merchandise make supply concatenation optimisation harder than of all time. Existing systems generate programs that become obsolete the minute they ‘re finished, while spreadsheets and ad hoc databases lack the visibleness and collaborative capablenesss organisations need to swiftly and efficaciously proctor and respond to alter. Another ruin encountered is that user preparation must be administered and completed before implementing a supply concatenation direction system.
Major Undertakings that need to be Completed
Obviously Nike has non spent adequate clip and attempt in implementing their supply concatenation procedure to co-occur with the organisation. Which is why they now must buy a new SCM system, but before implementing this new system, major undertakings must be done in order for it to work expeditiously. A successful SCM System requires a alteration from pull offing single maps to incorporating activities into cardinal supply concatenation procedures. Supply Chain Management entails coordination and constellation of the procedure that is necessary to do merchandises available in a timely, consistent and pleasing mode.
Nike must foremost come up with a scheme for pull offing all the resources that go toward run intoing client demand for their merchandise or service. A large portion in Supply Chain Management, that Nike failed to endeavor in, is supervising the supply concatenation so that it is efficient, costs less and delivers high quality and value to clients. As Nike grew and times changed, their cardinal control became more centralised taking them to 27 different order directions systems worldwide. This clearly has led to their ruin, and obviously Nike must look over and choose providers to present the goods and services they need to make their merchandise. Supply concatenation directors must develop a set of pricing, bringing and payment procedures with providers if non satisfied with the original and besides create a better system for monitoring and bettering their relationships.
The fabricating measure is most of import because this is when supply concatenation directors schedule the activities necessary for production, proving, packaging and readying for bringing. Nike must develop a proper procurance procedure, this is of import because Nike extends globally. This is the procedure of strategic programs made with providers to back up the fabrication flow direction procedure and the development of new merchandises. Procurement delivers the duty for guaranting the quality of purchased natural material/services and associating supplier operations to distribution through fabrication activities. This measure allows for measuring of quality degrees, production end product and worker productiveness. Nike must guarantee that the fabrication procedures are flexible to react to market alterations and accommodate mass customization. The merchandise development and commercialisation must be looked at every bit good because it is such a drawn-out undertaking.
Customers and providers must be combined into the merchandise development procedure in order to cut down clip to market because the appropriate merchandises must be developed and successfully launched with shorter time-schedules to stay competitory. If Nike is to achieve competitory advantage, so their ultimate purpose should be to accomplish supply concatenation excellence before their rivals do.
What Nike realized, subsequently than other companies, is that the most of import assets to an organisation are their employees and consumers. Steele quotes “ You can ne’er develop sufficiency ” which is merely the truth. To guarantee that this new system is successful the employees must all necessitate to cognize how to utilize work with the system. Hence this is why Nike has now made developing an of import portion of concern. As of import is the client service direction procedure ; an organisation that strives to be successful should utilize the undermentioned stairss to construct client relationships: determine reciprocally hearty ends for organization/customers set up and keep client relationship, and produce positive feelings in the organisation and the clients. We all know companies like Nike exist to function their consumers ; hence they must happen a clear and concise manner of cognizing precisely what their consumers want and go throughing that information through the supply concatenation to the providers right.