Barriers To Effective Supply Chain Management

supply chain management

Abstract

Purpose -The aim of this paper is to truly have a qualitative research of benefits, barriers and bridges to effective tactical supply string management. Design/technique/approach - The author use a research study approach. Interview was conducted from Provider, SC manager and retailer.

Findings- Results demonstrates client satisfaction is consider as the primary benefits by all string partners. And key hurdle and bridge is satisfactory information system and real human factors.

Research limitations/implications - Due to the tool and time constraint the findings of this research are only based on source chain of a single organization.

Practical implications -This paper provide a understanding of how professionals, suppliers and retailers view benefits. barriers and bridges of SCM.

Originality/value -

Keywords Supply chain management, Strategic management, Romance marketing

Paper type Research paper

Introduction

In today's business community competition is very fierce. Because of the Globalization, move forward technology, and Increase customer demand, organizations need to improve there bar of performance frequently.

As Thomas Edison said, "If there is a much better way, find it. " So professionals must keep his advice at heart. And supply chain management is a better way to compete in market.

Supply chain management is the management of activities from supply and procurement of raw material, their processing into finish goods and then circulation of these goods. The goal of this encompassing process is to improve the business enterprise of the business and fulfill customers.

By Sandra Maria Stammberger

Christopher argues that the true competition is not company against company, but instead supplies chain against supply string. For instance, Wal-Mart and its own suppliers will struggle Carrefour and its own suppliers in consumer markets round the world.

This review has looked at benefits and obstacles to supply string integration. Essential bridges to

supply chain success are also explored.

SCM can reduce inventory, improve production, boost quality, and reduce both product development and fulfillment cycles. As attractive as the potential benefits of supply chain management appear; the obstacles or roadblocks to attaining them appear evenly ominous such as inside external turf security, inadequate information system, poor collaboration among the chain companions etc. And bridges/solutions are the mirror image of the almost all of the barriers (e. g. , poor management brings about barrier; careful management is the bridge).

The purpose of the study is to offer an understanding of the huge benefits, obstacles, and bridges to successful SCM. For this function data is accumulated from the supplier, SC administrator and merchant of PEPSI (Gujranwala).

We conclude that there are numerous great things about SCM but to achieve these benefits we must conquer two main obstacles that is technology and individual barrier. Focus of managers and scholars must not be on any specific barrier, but rather consider these two in combo for strategic resource chains to reach your goals.

We anticipation that the study methodology given in this research provide some useful perception to help professionals and their companies as they make headway over the arduous journey to supply chain leadership

This research article is comprised as follows: books of SCM in conditions of benefits, obstacles, and bridges accompanied by research strategy. And the main part of article includes findings from in-depth interviews, and realization with some ideas for future research. In this way this article provide valuable understanding into the condition and course of supply string practice

research.

Background: benefits, obstacles, and bridges

An tremendous amount of materials has appeared in current years about resource string management in both academic publications and trade press.

Driving forces of supply chain management

The driving causes of SCM stem from two options: external

pressures and potential benefits from tactical SC alignment.

External stresses include such causes as developments in

technology and increased customer demand across national

borders (Mehta, 2004); maintaining lower costs while

meeting these diverse needs (Make meals and Garver, 2002); and

intensified competition utilizing associations among vertically

aligned organizations (Togar and Ramaswami, 2004). These pressures

have begun moving the focus of individual firms vying for

market occurrence and power to supply chains competing

against supply chains (Bhattacharya et al. , 1995).

Top ten benefits, barriers and bridges have been identified by

Top ten benefits, obstacles and bridges

Benefits

Barriers

Bridges

Increased inventory turnover

Internal and external turf wars

Information transperancy

Increased earnings SCM cost reductions

Poor SCM planning

Collaborative planning

Product availability

Lack of SCM vision

IT architecture /internet

Responsiveness

Executive commitment

Formal performance tracking

Economic value added

IT deficiencies

Adopt tactical SCM vision

Capital utilization

Organizational structure /culture

Attention to real human factors

Decreased period to market

Lack of SC measures

Suppply bottom part reduction

Reduced logistics costs

Lack alliance guidelines

Segmented customers:

Poor SCM understanding

Shared investment/benefits

Benefits of tactical supply chain managemen

Increased inventory turnover: Inventory change reflects how frequently a firm flushes inventory from its system. In SCM company has relationships both with supplier and customer so they acquire material on time and deliver goods to customer promptly. So inventory turnover raises. . (Fawcett, S. E. and Magnan, G. M. (2001)).

Increased income SCM cost reductions: Main source of cost saving is inventory management. Through SCM it is possible to reduce your inventory level and causes cost cutting down.

Other ways of reducing cost

Better trade relationships and lower transaction cost

Enhance asset utilization via shared resources

Better product design that cost less

(Fawcett, S. E. and Magnan, G. M. (2001)).

Product supply: Involvement of supplier in new product development process can solve many problems like marketing communications and new ideas are made in collaborative design work rather than non-colleborative. In the current marketplace there is a have to have the right product offered by the right time and right place better value than your competition. . (Fawcett, S. E. and Magnan, G. M. (2001)).

Responsiveness: Responding to customers in a courteous, personal and understandable way is vary important. Quickly respond to customers' requests is possible through cooperation with chain partners. Close marriage with partners permits them to foresee their collaborators' needs and handle

unexpected events. Resource chain responsiveness requires exceptional/exceptional production and logistical overall flexibility to meet unique or special demands. Which is possible through integration. . (Fawcett, S. E. and Magnan, G. M. (2001)).

Economic value added: You can find two view items from which share holder value can be measured.

1) Internal view point (Economic value is used) 2) External view point (Market capitalization is used)

EVA is computed by deducting the price tag on capital from its operating income.

Drivers of shareholder value are : Working cost lowering, fixed capital and working capital efficiency and revenue growth. There is absolutely no doubt that supply chain strategy impacts all these motorists straight or indirectly. These are a few of the strategies

Lead time of all incoming products is reduced by having collaboration with the suppliers.

By integrating techniques. internal business lead time can be reduced.

By having a strong relation with distributor information stream from demand size is improved upon.

(Christopher, M. , & Ryals, L. (1999)).

Capital usage: Capital utilization refers to what sort of company's property are best used. Capital usage is us dollars of revenue generated in relation to dollars invested in investments such as accounts receivables, inventory etc.

Examples of supply chain management interconnection

Demand planning

Transportation management

Inventory management

Accurate forecasting

(Timme, S. G. and Williams-Timme, C. (2000)

Decreased the perfect time to market

Successful companies create source chains that react to the sudden changes in market.

Effective supply chain enables a firm to respond to the short term changes in demand and supply in the market because of collaborative romantic relationship with suppliers and vendors. (lee(2004)

Reduced logistics costs: In an integrated supply string, efficiency and effectiveness of procedures can be improved by taking care of the movement of materials throughout the company in an organic and natural and organized way. This permit the firm lowering their purchase cost, transportation cost and inventory and warehousing cost. ( La Londe, B. J. and Experts, J. M. (1994), "Emerging logistics strategies: blueprints for another century", International Journal of Physical Syndication & Logistics Management, Vol. 24 No. 7, pp. 35-47. La Londe, and Experts, ).

Barriers to effective supply chain management

Internal and external turf wars: Conflicts within the departments and within organizations are key barrier to SC cooperation. In almost all of the companies all departments such as marketing, money, operation work independently. However when professionals make decisions they only consider their own section and disregard the impact of these decision on other departments and on complete company. And same is the situation with supply chain partners each spouse work limited to its own interest. So A tug of battle commences as each office and partner draw the organization in their favour. (Fawcett, S. E. and Magnan, G. M. (2001)

Poor SCM planning: Supply string management is a way to combine process and entrepreneurship. The idea of SCM begins with customer and integrates all activities from raw materials procurement to completed product distribution. In many organizations SCM fails anticipated to insufficient forecasting and poor planning process. For correct forecasting, planning process must involve appropriate players and relevant information. Andraski, J. C. (1998).

Lack of SCM eye-sight: One of the major obstacles to SCM cooperation is that string partners don't possess clear and common eyesight of SCM. They carry different values and principles and dealer and customer don't talk about common goal. (Akkermans, H. , Bogerd, P. and Vos, B. (1999),

Lack of SCM eye-sight: Insufficient trust is one reason that route partners aren't willing to talk about information openly. because they may have fear that if indeed they discuss their weaknesses with their chain partners then they might use their weaknesses against them in near future. So Trust is pre-requisite in effective supply string management. (Fawcett, S. E. and Magnan, G. M. (2001),

Executive commitment: Top management should here be understood as the group of people that jointly constitute the highest management executive authority in a business. Top management is able to play an important role in successful SCM cooperation. A prerequisite for performing SCM is top management support. The vast majority of the obstacles such as incompatible technology, conflict among resource chain members, lack of employee willingness to share information can only be defeat with top management support. According to (Moberg et al. , 2003) training and education are essential factors for top management to encourage and intensify. (Sandberg, Erik1; Abrahamsson, Mats(2010))

IT deficiencies: As because of globalization suppliers and customers can be found worldwide so integration has become a major challenge. Insufficient included information system is a significant barrier as writing of information is extremely hard without integrated information system. It really is such as a nerve system of SCM. ( E. W. T. Ngai a, *, A. Gunasekaran b, (2004)

Organizational framework /culture: Corporation culture and composition are also very crucial barrier to SC collaboration. If an organization is working independently for a long time then its very hard for it work in collaboration with other string partners.

Lack of SC measures: In order to have a solid collaboration on the list of supply chain partners it is crucial to gauge the supply string performance. (Brewer and speh, 2001;) Measuring supply chain performance

Lack alliance rules: Each route partner in the supply chain has a separate plan for activities such as creation plan and schedules. If a business only have understanding of their on process and they don't have knowledge of their customer's and supplier's operations then there's a gap exist and corporation cant improve their processes as external processes produce an influence on internal processes. Insufficient same performance actions across different departments and over the channel partners leads to conflicting behaviors both internally and externally. ( Barratt, M. (2004a)

Poor SCM understanding: Staff don't have understanding of how SCM is effective for the organization and how it'll advantage their job. This poor understanding is one reason they are not willing to add in SCM execution.

Bridges to effective resource chain management

Information transperancy: ( yu zhenxin (2001) Each person in the supply chain must have complete information about the other users. If members are willing to show information then this brings about the improve performance of the whole system.

Collaborative planning: Planning should be produced with the participation of all people entail in the source chain. Such as for example demand forecasting, production schedules etc might not exactly be effective without the involvement of all partners.

IT architecture /internet: With the duration of time SCM is becoming more and more sophisticated and require online communication system. To be able to enhance the buyer- supplier relationship different information technology such as Electronic Data Interchange, Internet And World Wide Web ARE WIDELY-USED.

Formal performance tracking: To be able to have a solid collaboration among the supply chain companions it is very important to gauge the supply chain performance. (Brewer and speh, 2001;). Measurement of supply chain performance can assist in Minimizing cost, Identify and focus on those sections of market which are more profitable((Lambert and Pohlen, 2001), better and increases decisions and test and use new strategies

Adopt tactical SCM perspective: Chain lovers should have clear and common perspective of SCM. They ought to hold same beliefs and worth and dealer and customer show common goal. (Akkermans, H. , Bogerd, P. and Vos, B. (1999),

Attention to human factors: A fundamental factor for the successful SCM cooperation is the human being factor. People avoid changes and they don't want to talk about information with others. So attention must be paid to human factors first as their determination to implement effective SCM is the key to success. . (Fawcett, S. E. and Magnan, G. M. (2001)).

Suppply base reduction: Supply platform reduction is use by the firms to enhance quality, increase responsiveness, and reduce cost. Coke has followed N+1 guideline for determining maximum quantity of supplies. This means they have got just 1 more dealer then required. (Fawcett, S. E. and Magnan, G. M. (2001)).

Segmented customers: Corporation should collaborate only with those suppliers and customers who are strategically very important to the business enterprise. This segmentation play an essential role in successful cooperation. (Tang and Gattorna, 2003). Segmentation of customers is performed based on their buying habit and services needed. Different resource chains are created for different sections. An alternative strategy and supportive culture and authority style is necessary for different supply chains. To provide the segmented resource chain a further step is to section the suppliers according to their talents.

Shared investment/benefits: For SCM to become more effective and successful there is a need to talk about benefits resulting from integrated SCM. Profit sharing is really as much important as information posting. even though reliable and trust worthwhile information can be found, there should be a need to reasonably allocate benefits among customers usually it weakens their romance. (Fawcett, S. E. and Magnan, G. M. (2001)).

Methodology

SCM eliminates the limitations of the organization it is therefore known as boundary spanning activity (Bowersos et al, 1999). To Have a macro picture, information is gathered through channel research. In this way more generalized view about the benefits, barriers and bridges can be acquired.

Case studies

The case study method is employed for responding to questions regarding what, why, and exactly how related to SCM implementation. This technique put focus on in detail qualitative analysis.

In order to have a cross-channel analysis interview is conducted from provider, SC administrator and retailer.

A organized, face-to-face interview was conducted and Confidentiality was ensured. Organized interviews are those conducted when it is known first what information is needed. The interview has a set of predetermined questions to be asked. The interview guide was divides into general questions and questions about the huge benefits, barriers and bridges experienced by the organization. Average interview length was 1 and half hour. And face-to-face interview helps in duplicating and rephrasing questions if not comprehended by respondents, and clarify questions. Interview consist of Open-ended questions.

Results and discussion

Top five benefits, barriers and bridges

Benefits

Barriers

Bridges

Customer satisfaction

Inadequate information system

Adequate information system

On time delivery

Lack share risk and reward

Sharing of risk and reward

Response to customer request

Lack willingness to talk about information

Willingness to share information

Order fulfillment lead time

Lack worker empowerment

Senior management interaction

Cost reduction

Measuring customer demand

Supply string training

Benefits

Customer satisfaction: Company customers are satisfied because company is in a position to match their needs, deliver goods promptly and at low priced through included SC.

On-time delivery: The introduction of closer, cooperative romantic relationships with chain lovers alongside the establishment of involved systems and functions be able to consistently deliver goods and services to customer at the right time and at the right place.

Respond to customer demands: Business analysts have been expressing for years-that customers matter most. So reaction to customers need as fast as possible is vital for the success of business. One of the ways of doing this in today's competitive market is to build up strong romance with suppliers, stores and distributers. This collaborative supply chain enables all get-togethers to respond to their customer speedily.

Order fulfillment lead times: Resource string integration also reduces order fulfillment business lead times insurance agencies exact amounts on-hand when needed.

Cost reduaction: One way of cost reduction is to reduce cost of inventory. Another is sharing of resources with your string associates and also by minimizing product development cost through built-in process.

Some other benefits includes

Handle unexpected problems More open and trusting connections enable more accurate information to be distributed on more timely basis. This can help in making Supply chain companions better in a position to foresee their collaborators' needs and handle unexpected occurrences (e. g unique or special demands )

Productivity

One of the most crucial benefit due to which organizations are implementing SCM is to increase revenues and lower costs.

Productivity is the ratio of Outputs/inputs. if prepared and managed appropriately, changes in supply chain relationships can assist in producing same outputs with low cost of inputs and in the end income increase.

This "doubleimpact" of supply chain management is motivating factor for organizations to develop strong romantic relationship with chain lovers in order to constantly reduce the costs of purchased items also to work with them to improve their processes with techniques that increase production.

Product innovation lead times,

Collaborative product development help decrease product innovation lead time. Participation of all the partners results in higher quality, less expensive and less time to advertise. To gain these benefits there should be a need to make strong relationship base on trust and communication is essential to talk about technology, co-locate staff, and accept supplier-generated design advancements.

Overall product quality

Through supply chain integration it is possible to switch the responsibity of quality to the supplier. Better quality is guaranteed by supplier documentation programs.

Barriers

Inadequate information system: Inadequate information system is that shortage in number and quality of information if not enough information is shared or the information distributed is of little value strategic SCM may are unsuccessful.

Lack of willingness to share risk and rewards: As employee don't possess clear knowledge of what SCM is and how will benefit their job so they are not willing to talk about their risk and praise.

Lack willingness to share information: Lack of trust is one reason that folks are not ready to talk about information openly. because they may have fear that if indeed they promote their weaknesses with the chain partners they might use their weaknesses against them in near future. So Trust is pre-requisite in effective supply string management.

Lack staff empowerment: Lack of employee empowerment is a hurdle to SCM to be successful. As staff empowerment is one way to encourage employees to take part in making SC cooperation successful. Staff empowerment is a form of decentralization this means giving employees the power to make decisions regarding their job and duties. One of these decisions includes making purchasing decisions. i. e. when and how much is to be purchased. . This can leads to successful implementation of Just-in Time making concept.

Measuring customer demand: Effectively forecast customer demand is very important for successful SCM integration. In the event manufacturers and distributers does not effectively forecast customer demands then there are likelihood of stock outs and organizations face problems in maintain satisfactory inventory level.

Some other barriers includes

Organizational boundaries

There are two kind of limitations in any organizarion intra and inter-organizational limitations. These boundries should be removed for successful source string integration.

For successful source string integration intra and inter -organizational limitations should be removed.

inter -organizational boundaries

overcoming the business boundaries and working strongly with suppliers and customers.

(i. e. , useful, business process, information/materials moves, and information/communication technology integration)

intra -organizational boundaries

Integration between different willpower and functions, such as production, circulation, marketing, accounting, information, and engineering.

Measuring SC contribution, .

Measuring Supply chain contribution is very important. these four actions can be used to measure supply chain contribution.

Delivery: ratio of complete order deliver to the customer when he or she sought it.

Quality: for this purpose "Customer satisfaction" and "customer loyaty" is examined. Customer satisfaction includes supplying customer what they needs. Customer loyaty is the ratio of customers who still purchase their products after purchasing once.

Time: order fulfilment lead time is effected by inventory level. For total order-fulfilment lead time, first The time spent in inventory should be computed for every area of the supply string (supplier, company, wholesaler, and dealer) and then added.

Cost
measure cost over the supply string is to measure efficiency in value added or output. One way of measuring efficiency is as follows

Efficiency = sales - cost of materials / labor + overhead

Lack resources for SCM

Resource constraints symbolize Serious hurdle in resource chain integration efforts

Although companies are trying to

best make use of the people resources that they have, but because of the dynamics of - always hoping to

do more with less, create issue of insufficient resources.

e. g

The professionals who are

Conside to be best for controlling supply string initiatives

because of these experience, work ethic, imagination, technical

knowledge, and personal credibility are always in

high demand.

interviewed managers identified

other critical resources constraints including capital

and technology

Bridges

Adequate information system: EDI LINKAGES: ERP system is an individual unified system where several computers and software components are being used. This unified system assists with cross efficient integration (e. g between all departments, accounting departments, as well as marketing, proper management, and human resources, in addition to warehousing, Information Technology, logistics, and creation. ). Organizations adopt ERP system to be able to incorporate data and process into an individual unified unit rather than trying to synchronize data and process across different systems

Sharing of risk and praise:

Interview administrator also highlighted the point that in order to construct closer relationship they reveal both Risk and incentive with their string partners.

Frequent communication:

Open and clear broad type of communication should be develop (Mohr and spekman (1994))

Senior management discussion:

Top management is accountable for integrated supply string management.

Only senior director can remove the walls between the organization and between your organizations.

Supply string training: As source chain is now more popular and technology focused, the individuals directly involve with it must give additional training.

Some means of supplying training to individuals are

On the job training

Take classes out of work

Online training

Some other bridges includes: Suppply bottom reduction, Vendor maintained inventory (vmi), Usage of total cost analysis, Common goals and distributed mission statement, Use of cross-functional groups and cross-functional processes

Suppply base decrease:

Supply base reduction is use by the organizations to enhance quality, increase responsiveness, and reduce cost.

Coke has adopted N+1 guideline of thum for identifying maximum amount of supplies. It means they may have just 1 more supplier then required.

VENDOR MANAGED INVENTORY (VMI).

Supplier is accountable for controlling inventory at customer 's location. Customer is not required to reorder. Its the duty of supplier to keep the stock of customer at ideal level.

Use of total cost analysis

As everybody knows that Competition in todays marketplaces is much more then before. so to be able to compete in market, organizations need to provide products at good deal and high quality.

Through SC cooperation it is possible to reduce Total production cost. by having long term romance with supplier, company reduce the price tag on their supplies. in this way total creation cost is reduced.

Common goals and distributed mission statement

For SCM cooperative attempts to reach your goals, increase understanding and respect for companions businesses is vital.

This process will involve common golas and distributed mission statement. If they all have a common goal, combine work are created to achieve that goal. And decisions are created for the success of every party.

Use of cross-functional groups and Cross-functional processes

Effective supply chain requires coordination across businesses and within the business enterprise. Coordination within the business can be done through Cross-functional groups and process.

.

For example, a cross-functional team is often used to plan and control the get good at schedule for production. The team includes reps from marketing/ sales, creation, recruiting, and accounting/ financing. The team advances a forecast of future expected orders, blueprints the capability of production, and schedules customer orders. Everyone then agrees to work toward performing this plan. With out a cross-functional team of the type, marketing makes a forecast, development runs on the different forecast to plan creation, and the capital is not made available to provide the capacity needed.

Clear Alliance management recommendations.

alliance management techniques, none of them of the interviewed

firms have everyone set up.

Clear roles and responsibilities are described and communicated.

Risks and rewards are distributed on the mutually suitable basis

Technology linkages may be used to routinize information exchange.

Overall product quality Through supply chain integration you'll be able to move the responsibity of quality to the supplier. Better quality is promised by supplier documentation programs.

Conclusion and Limitations

This article tries to identify potential benefits, barriers and bridges of successful execution of SC integration.

Results implies that all chain companions are enjoying benefits from SC cooperation. Primary benefit pointed out by all chain associates is "Client satisfaction". In resource chain, Supplier want to satisfy their customer (i. e. producer) and company want end user to be satisfied. So for this purpose they must be aware of what customer desires from the product or service and then make work to meet their objectives.

SC supervisor, supplier and merchant do not talk about the same worth and beliefs regarding the primary hurdle and bridges of source chain management. SC director identify real human factors as the primary barrier to SC cooperation. Supplier and store identify insufficient information system as the most significant hurdle to successful SC collaboration.

We conclude that both human being factors and insufficient information system are evenly important obstacles to SC cooperation. As if there's a adequate information system but people aren't trained rather than willing to share information then such system is useless. In case people are willing to show information but information system is not satisfactory then successful SC collaboration is not possible.

Bridges are the ways to overcome barriers. Corresponding to SC administrator the introduction of human being factor play vital role in overcoming the obstacles to SCM. Folks are key to successful SCM collaboration. So companies need to focus on the the introduction of human resource and really should provide them with proper training of SCM and stimulate them to talk about information with others. Other chain lovers said that cooperation requires sufficient information system. Companies need constant improvement in technology for effective supply string management and increased competitiveness. To be able to collaborate with their business lovers companies need to realize the energy of technology and use of Electronic commerce, Internet technology, World Wide Web will improve the collaboration.

Limitations

This research was finished with the intention to do as effectively as it could be but there are some limits of research.

The selection of sample was limited by a single corporation because of time and budget constraint. The idea of generalizability of research may be influenced because of restricting the study to one firm.

Only one method of data collection (case study) was used.

Due to the resources and time constraint the findings of the research are just based on resource chain of an individual organization.

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