Impact of Supply Chain Management Practices

This assignment delves into the critical role of supply chain management practices in driving organizational success. It examines various aspects, including information technology integration, supplier relationship management, and strategic procurement, highlighting their impact on overall performance. Students are tasked with analyzing relevant literature, case studies, and real-world examples to understand how effective supply chain management strategies contribute to enhanced efficiency, profitability, and competitive advantage.

Strategic Supply Chain Management and Logistics

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Executive Summary
This report aims at highlighting the supply chain management and logistics at Ahmed Seddiqi
& Sons. The report is conducted is order to understand the notion of supply chain
management in the organization. The sound knowledge regarding the concept and its
importance in the management of the organization is depicted. The supply chain management
is considered to be the most significant aspect of the organization. The organization chosen to
illustrate this study is the largest and leading retailer of luxury Swiss watches. The complete
study will highlight the subject of supply chain management by using the examples of the
concerned organization. The significant change and management in the supply chain
management will also be illustrated. The role of technology in the supply chain management
and logistics will be clearly defined. There are numerous learning outcomes of this study. The
study emphasizes on various findings and based on the findings of the study,
recommendations are also stated. The report holds a relevant and proper conclusion in order
to prove the best results of the study conducted. This report is prepared in such a manner,
which can be used by the other researchers in the near future. The study is conducted with the
best of information and interest, which has given good results and can be used as a help for
the reference on the similar topic in future.
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Contents
Supply Chain Management & Business objectives................................................................................3
Importance of Supply chain Management.........................................................................................4
Link Between business functions & SCM.........................................................................................5
Key drivers to SCM...........................................................................................................................7
Use of IT for optimise supplier relationships.........................................................................................9
Effectiveness of Strategies.................................................................................................................9
Use of Information Systems............................................................................................................10
Systems to maintain supplier and organization relationship............................................................11
Role of Information Technology in SCM............................................................................................12
Integration of activities through IT..................................................................................................12
Contribution of IT in SCM..............................................................................................................14
Effectiveness of IT in managing supply chain.................................................................................15
Logistics and Procurement practices...................................................................................................16
Consideration of factors...................................................................................................................17
Strategy to improve supply chain........................................................................................................18
Benefits of Supply chain strategy....................................................................................................19
Overcoming the barriers..................................................................................................................20
Findings & Recommendations.............................................................................................................21
Conclusion...........................................................................................................................................22
References...........................................................................................................................................23
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Supply Chain Management & Business objectives
The supply chain refers to the integration of all the business activities that help in the
movement of goods and products from the place of production in the market. The supply
chain management refers to the process of managing the manufacturing, warehousing,
purchasing, transportation and the physical distribution of the product into a seamless
process. Today, the supply chain management has changed a bit and include the services like
operational analysis, inventory management, computer and information systems,
warehousing and design material handling. The supply chain at the Ahmed Seddiqi & Sons
organization is very strong. Since, they deliver high quality products in more than 52
locations, they strongly require a supply chain management that helps in delivering their
products to their clients. The aim of expansion can only be fulfilled by the integration of an
effective supply chain management in the organization. The supply chain management has a
strong and close link to the business objectives of the organization (Li, et al., 2006). The
SCM is such a tool that helps in achieving the corporate strategic goals of any organization.
The supply chain management helps in achieving the organizational objectives by molding
the activities according to the needs and goals of the organization. SCM practices contribute
to the organizational objectives. Likewise, the Ahmed Seddiqi & Sons have certain business
objectives like:
 Diversify in the various regions as the leading retailer of Swiss watches.
 To build good employees and employer-employee relationships.
 To provide and exclusive shopping experience.
 To continuously provide the highest quality services to the brands.
 To attain the highest level of customer base across the world.
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The supply chain activities like manufacturing the best quality watches, employee and
customer relationship management, proper warehousing of the watches till the demand is
raised across the regions, providing the best designed watches to the customers with the help
of accurate physical distribution channels will all help in gaining the business objectives of
Seddiqi & Sons. Thereby, it can be clearly stated that supply chain management is must for
an organization to develop in its workplace as it leads to various benefits along with the
achievement of the corporate business goals (Zigiaris, 2000). In order to have a better
insight, this part of the report contains the significance of supply chain management in
achieving the organizational objectives.
Importance of Supply chain Management
The supply chain management helps in coordinating all the functions of various departments
in the organization. The coordinated activities of the organization help in achieving the
organizational goals. The SCM helps in maintaining good relations within and outside the
organization (Ahmed Seddiqi & Sons, 2017).
The sound SCM in the organization has the potential of achieving competitive advantage. By
developing a link between the supply chain functions and the strategy of the organization, the
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demands on the supply chain can be fulfilled. The overall organizational performance can be
improved with the help of sound supply chain system.
The SCM helps in removing all the lean practices that causes hindrance in achieving the
goals of the organization. The organization incurs a profitable growth with the help of supply
chain practices in the organization. The SCM also helps the firm in achieving the corporate
goals like accelerating the cash cycles, reducing the working capital, increasing the inventory
turns and etc. This also helps in increasing the sales of the organization by better physical
distribution of the goods to the market and consumers.
The Ahmed Seddiqi & Sons must contribute to the establishment of a sound and effective
supply chain management at their organization in order to achieve more and more of
organizational objectives (Hofmann & Reiner, 2006).
Link Between business functions & SCM
The other aspect of the study states about the link between the business functions and SCM.
The major five business functions that are somehow linked with the SCM are the organizing
function, marketing function, finance, production and employement function. The organizing
function is backed by SCM, as SCM helps in performing the tasks in the firm according to
the need and time and in correct process The SCM is duly performed as organizing helps in
maintaining the men and material at the right place, which does not cause any hindrance
while performing the logistics functions (Stemmler, 2015).The marketing function is helped
since the SCM managers study the customer needs and accordingly the strategy to market the
product is opted. The SCM supports the marketing function by giving the complete detail of
what is available and not in the firm in order to fulfil the market demands and to cover the
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lead times. The production function is performed as SCM helps in generating the right
amount of raw materials in order to produce the products.The ERP systems in SCM
contribute to effective flow of information that enables proper production flow (Agus, 2015).
The continuous production flow maintains the supply chain flow, which fulfills the demands
of market by proper flow of products from production generated. Coming to the financing
function, the SCM is backed by finance as in order to carry effective SCM in the
organization, the finance is generated, which provides proper allocation of the resources and
credit. Also, does it provides the budget on which the SCM is dependent. Whereas, the
supply chain helps the finance managers to locate the finance on the most needed supplier
and helps in determining the credit arrangements. The last function resorts to the
employement function, which is fulfilled as SCM helps in knowing the manpower required
at various activities, which helps in using the accurate amount of human resources at the
organization and the employees in the organization helps in carrying out the management and
several other components of supply chain (Mentzer, et al., 2008). Performing every function
in the supply chain process involves the usage of human resources, which increases the level
of employement as well. All the five functions involve the use of ERP systems in order to
integrate the internal processes and this also helps in providing information at all the levels
and new technology has helped in managing the supply chain and the business functions
effectively.
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Key drivers to SCM
Also, for Ahmed Sediqi & Sons to develop a strong and integrated supply chain strategy in
their organization, some key drivers must be understood by them. Following are the key
drivers:
Facility: The facility refers to the physical location in the supply chain where the products
are stored and managed. The facility is provided for the factories and the warehouses. The
factories are built based on its focus such as product or function focus. The warehouses are
build for approaches like cross docking, stock keeping unit and job lot storage.
Inventory: This refers to the storage of finished goods, work in progress and raw materials
within the supply chain. The inventory is maintained based on three conditions. The cycle
inventory that is maintained to fulfill the demands of the customers, the seasonal inventory is
maintained to cater to the demands of the seasonal needs and the safety inventory is
maintained in order to overcome the uncertainities.
Transportation: It is the biggest key driver for supply chain as this provides facilities like,
ship, rail, truck, pipelines, airplanes and electronic transport for moving the products from
one place to another at a lower cost and in less time (Chavhan, et al., 2012).
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Information: The supply chain has a smooth and coordinated flow of information at all the
stages of operations that helps in coordinating the various activities and forecasting the needs
in the future. This helps in increasing the effectiveness of the business.
Sourcing: The supply chain managers help the organization in taking decision regarding the
activities that are to be sourced. Sourcing helps the organization in selecting the best and
suitable supply chain for the organization. Also, helps in identifying the activities that are to
be outsourced.
Pricing: The pricing strategies affect the supply chain performance of an organization. The
transportation cost and the lead time all are involved in this segment, whereby the
organization must curtail to better pricing decisions.
Globalization: The supply chain performance is highly dependent on the globalization
issues. The change and development due to the globalization has also brought changes in the
supply chain networks.
Technology: The technological upliftments have increased the efficiency rates of the supply
chain. Various innovations bring smooth and coordinated activities in the organization with
the help of supply chain networks.
Therefore, supply chain management and organizational objectives have a strong
relationship, which must be understood by every firm in order to reap more and more
benefits. This part of the report has outlined the best knowledge regarding the link between
the business objectives and SCM, which will turn out as an advantage to the Ahmed Seddiqi
& Sons organization while implementing SCM.
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Use of IT for optimise supplier relationships
The supplier relationship management is the way how the company interacts and maintain its
relationship with its suppliers. It has equal importance like customer relationship
management. It is very important for the company to equally build its relationship with its
suppliers as well. With the help of SRM, the processes between the supplier and the
organization can be streamlined. Effective policies can be made to create effectiveness in the
relationship with the suppliers. The SRM helps in increasing the business performance. This
is an procurement strategy that designs the procurement process and develops the supplier
management (Muema, 2016).
Effectiveness of Strategies
The SCM strategies help an organization perform the tasks easily. The first if the JIT strategy
where the stocks are maintained in order to meet the demads. The eefectiveness of this
strategy lies in its advantage of meeting the customer needs with maintaining adequate needs
and this helps in pulling back the stock when the needs changes. Also, it does minimizes the
cost of inventory management as it reduces the space and staff for maintaing the stock. But, it
does leads to having risk as the organization may not fulfil the needs due to situations of too
less and too much inventory (Michael, 2005). The coordination at supplier and retailer level
id required to maintain minimum stock levels, which is hard to maintain. The RFID system
for SCM are the latest sort of strategy, which helps in tracking the products and rduces the
loss of threats. This helps in reducing the cost of labour and improves the visibility of
inventory on real time basis, but the challenge to this strategy is that Ahmed organization will
face is the cost of installation and upgradation of this system in their supply chain. Also, it
leads to problems of employment in the organization and the RFID provides enough data on
traceability, which might raise the challenge of data management (Ovidiu & Dascalu, 2010).
The most common SCM strategy that is used is the ERP system. It is important to evaluate its
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effectiveness, which states that the ERP system helps in better communication and product
designing in the organization. Also, this helps in forecasting the data for meeting the future
needs, but ERP system is very expensive and no further customization can be adopted in this
system. This also causes a threat to the sensitive information of the organization, thus with
advantages to such strategies, there are various challenges to them (Broyles & Beirns, 2012).
Use of Information Systems
For maintaining the relationships with the suppliers the use of information systems have been
developed. The organizations have to maintain strong relationships with the suppliers in order
to achieve organizational objectives. Information technology has played a vital role in
creating the strategies that can help in retaining the supplier organization relationship. E-
commerce helps in collaborating with the suppliers and this also helps in transmitting the
information electronically to the suppliers. Intranets & Extranets are used to create a network
where the suppliers inside the organization and suppliers outside the organization are
contacted and made available in order to contact different suppliers and provide useful
information to them in order to build relations and work collaborately (Kearney, 2012).
Enterprise Resource Planning system is used to connect with the suppliers in order to inform
them regarding the orders and purchasing system as this will help in tracking and placing the
orders quickly and the supplier can easily issue the invoice. Online of analytical systems
helps in evaluating the sales performance and forecasting from different suppliers. It can be
inferred that use of technology and information systems have changed the outlook of
managing the supplier relationship with the organizations. The Ahmed Seddiqui & Sons can
make use of various information systems that help in colliding all the suppliers and staff
members in working together in order too achieve the targets of the organization. The
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development of virtual networking systems can easily help in creating strategic and various
other types of relationship with the suppliers (Subramani, 2004).
Systems to maintain supplier and organization relationship
The information systems can help in maintaining the relationships with the supplier. The
main focus of the organization is to reduce the costs, achieve the objectives and maintain
relations with the suppliers. All this is possible by developing the systems in the organization.
The role of the procurement departments is the most important while developing the systems.
Ahmed Seddiqui & Sons must build effective channels of communication and technology
like, social media platforms, intranet and extranet platforms, ERP systems and various other
channels in order to contact the suppliers (Chavhan, et al., 2012). The organization an
develop the relationship by providing the benefits to the suppliers for the services they
render. The use of Electronic Data Interchange will help in better order processing techniques
and it will futher reduce the costs of maintaining relationships with the suppliers. The system
of scorecards must be developed in order to ascertain the performance of various suppliers,
which will help the organization in knowing who are better and good for the organization. By
proper direction and supervision on the suppliers and their needs, the organization can
develop effective relations with them. Also, the tools like financial stewardship and
assessment of the suupliers contribution in developing the re-orineted processes to achieve
the objectives must also be used and ascertained. This will benefit the organization in a
multiple manner where the buyer supplier relationship is managed and the procurement
performance of the organization is also enhanced (ESMT, 2016). This will help the
organization in achieving its targets and strategic objectives. The business enterprises must
focus on using such tools in order to create value and relationships with the suppliers.
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Role of Information Technology in SCM
Use of Information Technology in the Supply Chain Management of the organization will
create effectiveness in the organization. The use of IT is the pre-requisite for the Ahmed
Seddiqui & Sons organization. The IT structure in an organization helps in gaining
competitive advantage to the company. In the recent past, the importance of IT in the supply
chain management has considerably rised. Information Technology has plays a vital role in
the strategic planning of the organization, which helps in integrating the activities in order to
manage the supply chain system. IT is very much useful for the coordination and cooperation
in the supply chain management (Mishra, 2004).
Integration of activities through IT
IT can help in integrating and assisting the activities in a supply chain of an organization.
Ahmed Seddiqui organization has evolved the concept of IT in their organization in order to
reap the benefits.
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 The use of devices like computers, bar codes, scanners, web based technologies,
social media platforms have helped the organization in transmitting various
information to their trading partners. The bar coding systems have helped in tegrating
the procurement operations in the organization.
 The use of Enterprise Application Integration system helps in integrating the
functions in supply chain of the organization. An integrated ERP system in the
organization has helped in integrating all the functions of the various departments in
producing the watches by the organization. This helps in tracking down the order.
 EDI systems have helped the organization and suppliers in transferring the invoices,
cheques, documents easily. The web based technologies help in integrating the
functions that are related to the customer services and feedback (Lee, 2012).
 Record organize strategy has helped in easy recording and organization of the
inventory according to the demand and supply through the technological elements in
the supply chain.
 Allocation network strategy helps in maintaining the smooth flow of information
between the suppliers and the organization that reduces the costs and enables proper
allocation.
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Contribution of IT in SCM
Prior to Information Technology, the activities performed in the supply chain system of an
organization were very slow. It took lot of manpower and time in performing the activities,
but the invent of Information Technology has changed the ideology of working in the supply
chain management of the organization. Ahmed Seddiqui & Sons incorporated the use of IT
platforms in the organizations in order to uphold its benefits (Bhandari, 2017). Following are
the contribution of IT in the supply chain:
 IT has evolved the concept of Just In Time Inventory, where the proper use of
technology has helped in maintaining accurate levels of inventory.
 Proper distribution systems have been introduced.
 Reduction in the use of paper based work.
 Gaining competitive advantage
 Better customer services
 Better and strong relationships between the organization and suppliers
 Reduction in the various costs in supply chain
 Productivity enhancement
 Better flow of information through communication channels
 Better IT infrastructure of the organization
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Effectiveness of IT in managing supply chain
The Information Technology creates a positive impact on the supply chain management of
the organization. Following is the effectiveness in the management of supply chain:
o EDI has helped Ahmed Seddiqui organization in placing instant purchase orders with
the suppliers.
o IT has enhanced the efficiency of the organization.
o The enhanced efficiency has helped the employees to focus more on working
effectively (Chen & Paulraj, 2005).
o The effective IT infrastructure has helped in building virtual teams in the organization
o The IT systems have helped in increasing the efficiency of the production and
manufacturing departments
o The electronic based systems have increased the levels of customer services
o Has helped the organization in gaining competitive edge.
o Increased the efficiency levels of employees.
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o The organization’s departmental activities have been increased immensely with
proper flow of the information through differet channels (Westbrook, 2002).
Logistics and Procurement practices
The logistics and procurement practices are the key to the success of any organization. such
practices influence the overall working in the supply chain management of the organization.
Ahmed Seddiqui & Sons must consider the role and importance of the logistics and
procurement practices in their organization and further take necessary steps to improve such
practices. These practices help in serving the needs of the emergency issues in the supply
chain process, the ongoing process, the needs of the customers and the needs in the future
course of time (Oyuke & Shale, 2014).
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Consideration of factors
Various factors must be considered while improving the logistics and procurement practices
in the organization. Following the factors that require due to attention before making changes
in the procurement and logistics practices of the organization:
Planning: The planning of the procurement policies and regulations must be accurate, which
help in seeking the best results. The policies must be curtailed according to the change
required in the organization (Chandrasekaran, 2012).
Flexibility: The improvement in the logistics and procurement practices can only come, if the
flexibility in the employees while adapting the changes are encouraged. The employees must
be encouraged to remain flexible and the organization must be flexible.
Outsourcing: The outsourcing strategy to complete their business process must be
considered by the Ahmed Seddiqui organization. Alternative options to outsourcing can be
considered as this will help in increasing and uplifting the logistics and procurement
practices.
Vertical Integration: This organization has various suppliers, thereby, the organization in
order to improve the practices and to reduce the cost and improve the efficiency should try to
integrate their suppliers. This will help in reducing the transportation costs and turn out time
for the procurement activities (Bakar & Peszynski, 2010).
ERP Customization: Better ERP customization in the logistics and the procurement
practices will help in imporving their condition and implementation in the organization. The
procurement activities like tracking, delivering, monitoring and other functions must be
customized through ERP systems.
Off the job training: The improvement in logistics and procurement functions can be
brought by organizing off the job training for the employees in order to make them learn the
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new skills and knowledge that will in implementing the new improved practices and systems
of logistics and procurement practices (Quesada, et al., 2013).
Inventory management: Better forms of practices that help in inventory management must
be considered for improving the conditions of the logistics and procurement practices in the
organization.
Information Technology: The various forms and tools of information technology must be
considered and used as this will help in improving the procurement practices. The effective
tools will enable the organization to reach out to the necessary information required to
perform the tasks, which will bring improvement.
Strategy to improve supply chain
There is a need to develop a firm and sound strategy for effective improvement in the supply
chain. Following is the strategy for improving the supply chain in this organization:
 Manufacturing to be done on right time
 Use of pull and push approaches
 The goods are brought to warehouses
 Distribution centers must have IT based systems
 Use of bar codes while tracking and matching the products
 The goods to be transferred through conveyor or DC
 Coordination and effective communication in supply chain
 Use of JIT method for inventory management
 Use of postal services for effective delivery
 On time delivery of goods and maintainance of goods
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There this strategy helps in creating value and quality of products and the appropriate
products are reached to the customers on time and with reduced cost. With JIT and effective
inventory management, the cost will be reduced, whiche is the major improvement in the
supply chain.
Benefits of Supply chain strategy
The effective and sound supply chain strategy will affect the overall performance of the
organization in a positive way. Following are benefits, which can be reaped by Ahmed
Seddiqui organization:
 Reduction in stock holdings: The effective supply chain management helps in
reducing the unwanted stock holdings. The proper supply chain maintains the
inventory according to the needs, which reduces the stock holdings. This futher
affects the overall performance of the organization (Qayyum, et al., 2013).
 Information sharing: The supply chain helps in proper information sharing in the
organization that helps in connecting with its employees and partners. This increases
the overall efficiency of the organization.
 Improve manufacturing process: The supply chain management helps in improving
the manufacturing process with the effective flow of information and availability of
raw materials.
 Eliminates the waste: The overall performance of the organization is improved as the
supply chain management helps in eliminating the wastes from the warehouses and
manufacturing process (Kimechwa, 2015).
 Just in time: The supply chain brings the effective system in the organization i.e.,
Just in Time Inventory, where the goods are produced and delivered according to the
needs and eliminates the stocking of the goods. This leads to higher efficiency levels
of the organization.
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 Improved customer satisfaction: With effective supply chain management, the
needs of the customers are fulfilled according to their needs and aspirations at the
right place and on the right time. This increases the performance and benefits the
organization.
Overcoming the barriers
The Ahmed Seddiqui & Sons organization will face certain issues and barriers while
implementing the improved supply chain strategy in their organization. The internal barriers
are the lack of managerial skills, lack of technology, lack of collaboration among partners,
lack of communication, resistance to change. These are the barriers that are internal to the
supply chain of the organization while the external barriers are persent outside the supply
chain of the organization. The external barriers are the lack of government support, social
environment, legal issues, environmental issues and etc. All these barriers have to be handled
by the Ahmed sedddiqui organization. Following are the steps and methods:
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Improved internal collaborations: The management of the internal functions in the
organization relating to the product design, relations with supplirs and employees, logistics
practices and etc., the barriers of implementation can be overcome (Fawcett, et al., 2008).
Improved forecasting: The forecasting concept must be energized, which will help in
enabling the future risks of implementation. The accuracy in forecasting will help in handling
the barriers.
Use of information technology systems: The use of IT systems will help in easy and smooth
functioning of the various logistics and procurement practices in the organization, which help
in handling the hurdles of implementing the strategy.
Understanding the environment: The organization must strive to analyze the dynamic
environment in which it operates in order to understand the future changes. This will help in
bringing and adapting the changes before the change in the environment. The supply chain
will be managed effectively by analyzing the complete environement.
Findings & Recommendations
From the above study, it has been found that the supplu chain management is the most
essential element of the organization. The supply chain helps in performing the business
functions and with the help of IT it brings efficiency. Certain improvements are always
required in the supply chain strategy in order to overcome the external and internal barriers.
The propose plan is also designed for the organization. The Ahmed Seddiqui & Sons
organization must cater to the above study and understand the role of the logistics and
procurement activities in the organization. Effective use of information technology must be
deployed in the organization and constant support must be addressed from the government
and financial institutions in order to bring such changes in the supply chain. Technical and
managerial skills must be developed in the employees. Better relationship with partners and
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suppliers must be maintained. The proper monitoring of the business functions must be
developed.
Conclusion
It can be fairly concluded that supply chain management must be properly monitored and
exhibited in the organization. The various transformations in the supply chain and the
emerging issues must be constantly understood by the organizations in order to reap the
benefits of an effective supply chain the organization. Since, supply chain management is
increasing with the change in the overall global environment, the need for improving the
supply chain strategy is also increasing. Thereby, the Ahmed Seddiqui & Sons must build and
improve the supply chain strategy in their organization in order to reap various benefits.
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