Supply Chain and Operations Management Report: OTHM L7DSML

This report provides a comprehensive analysis of supply chain and operations management, exploring its significance in achieving organizational objectives. It delves into the relationship between supply chain management and various business functions, highlighting the key success factors for an integrated supply chain strategy. The report critically evaluates the role of technology in supplier relationships, assesses effective strategies, and recommends supplier relations systems. Furthermore, it examines the importance of logistics and procurement, analyzes procurement strategies and procedures, and suggests improvements. The report also covers systematic order of procurement, inventory control, economic order quantity, and the roles of LIFO and FIFO. It concludes with recommendations for improving supply chain strategies, including the choice of strategy for optimal performance.

RUNNING HEAD: SUPPLY CHAIN MANAGEMENT
SUPPLY CHAIN
SUPPLY CHAIN AND OPERATION MANAGEMNT

SUPPLY CHAIN MANAGEMENT 1
Contents
Introduction................................................................................................................................2
Relationship................................................................................................................................2
Business functions..................................................................................................................3
Success factors........................................................................................................................4
Role of technology in supplier’s relationship............................................................................5
Effectiveness of strategies......................................................................................................5
Use of information technology...............................................................................................6
Recommendations..................................................................................................................7
Supply relationship system.................................................................................................7
Importance of logistics and procurements.................................................................................8
Effectiveness of Procurement Strategies and Procedures..........................................................8
Improving Logistics and Procurement Strategies......................................................................9
Systematic order of procurement and inventory control..........................................................10
Designing an Economic Order Quantity..............................................................................10
Role of LIFO and FIFO........................................................................................................11
Improvement in supply chain...................................................................................................12
Supply chain strategies.........................................................................................................12
Choice of strategy.................................................................................................................13
Conclusion................................................................................................................................14
Bibliography.............................................................................................................................16

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Introduction
The report focuses on the concept of ‘Supply chain and operations management’. It refers to
the management of the flow of goods and services (from the alteration of raw material to
finished product). It involves the application of combined planning and implementation of the
procedure to improve the flow of supplies, information, and planning. It allows the
organization to gain competitive advantage (Jacobs et al., 2014). It assists to manage demand
and cut operating costs included in the supply chain process. It allows meeting customer's
demands effectively. It benefits in providing the required product to the customer at the right
location and time. Thus, reduced cost, availability of high demand, and satisfied customers
enables the organization to improve its profitability and financial position (Chopra et al.,
2013).
Focusing on the report structure, the initial section includes the connection between supply
chain management, operations management, and organizational business objectives. It
involves the application of real-world industry scenarios. The next section focuses on the
critical analysis of the role of technology in suppliers’ relationships. The passing section
includes information based on procurement and inventory control. The last part involves the
economical and feasible recommendations for improvement in the supply chain.
The key drive of the report is to emphasize relevant influences for developing effectiveness in
supply chain and operations management. It offers an opportunity to raise an understanding
of operational processes, techniques, planning, and control system.
Relationship
The effective supply chain and operation management attain a high significance in achieving
organizational objectives.
1. Raise output: SCM aims to advance communication, association, and coordination
with vendors, transportation, and shipping companies. Thus, it gave rise to the
completion of activities in an effective manner and gave more accurate output results
(Vries & Huijsman, 2011).
2. Raise business profit level: effective supply chain management involves the
application of new and innovative technologies and also minimizes the requirement of
human resources. The lower dependence on labor reduces the cost and raises profit

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(Jurado & Fuentes, 2014). Additionally, it minimizes the waste material in the
production process.
3. Boosts cooperation: The timely availability of raw material improves and strengthens
the relationship with the suppliers. It also gave rise to the development of fine
interpersonal relationships with the suppliers. Thus, it supports the goal of
establishing a long term relationship with the stakeholder (Christopher, 2016).
4. Lower delay in the process: It enables delivering a merchandise to the customers at
the correct time and accurate location. It aids in maintaining customer convenience
and improving their satisfaction.
5. Improving product quality: effective supply chain emphasized strengthening product
quality and gave rise to more sustainable products (Monczka et al., 2015).
6. Attracting and retaining employees: Increase in customer strength will improve
organization recognition in the market. Thus, the organization can easily recruit
skilled candidates for the organization.
7. Minimizes the risk of negative public relations (PR): Responsible supply chain
management safeguards the organization from negative PR (James, 2012).
8. Creates new market opportunities: Responsive supply chain gave rise to satisfied
customers and improves business reputation. This, in turn, offers the opportunity to
tap into a new market. It allows the organization to fulfill the business objective of
market expansion.
9. Complying with customer’s expectations: Effective supply chain complies with the
internationally recognized CRS standards and guidelines. It assists in the fulfillment
of customer's expectations with the product/service. It aids in maintaining customer’s
interest and raising their satisfaction level (Hugos, 2018).
Business functions
The business functions attain a direct relation with the supply chain management.
Purchase function
The basic function of an organization is to avail of the raw material from the suppliers. The
business organization should purchase raw material from farmers engaged in organic
farming. Additionally, the organization should utilize the material in the best possible manner
to avail maximum productivity. It should purchase the essentials from the specific suppliers

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only by referring to their material quality. It should purchase the material in bulk as to avail
maximum discount and minimize purchase price. It will aid in
Distribution function
The organization should opt for hybrid and electric trucks to transport the products to the
warehouse and further distribution to the end-users. It will offer a dual benefit to the
organization. Firstly, it will aid in fulfilling corporate social responsibility towards the
environment. Secondly, it assists in minimizing the cost incurred in the transportation
process. Lastly, it contributes to the organization's reputation in the market.
Personnel function
It is a highly significant business function as it benefits in fulfillment of other business
functions like accounting and purchasing. It deals with the human resource department of the
organization. The organization should offer promotional opportunities, fringe benefits and
managerial support for effective work performance. Additionally, it should recruit skilled and
educated individuals for the work.
The availability of skilled employees assists in the manufacturing of products and effectively
delivering services. The skilled employees will indulge in less wastage of resources.
Additionally, they will suitably operate the machinery and deliver error-free work. It will
save the organization cost in training and assists in the full utilization of resources (Lofstrom,
2013). Thus, it will mainly aid in the production stage of the supply chain.
Success factors
A business organization lays a high emphasis on the effective management of the supply
chain. The supply chain excellence enables the organization to attain attractive market share.
It is broadly established as a constituent of general business strategy (Talib et al., 2015).
Given below are the success factors for the integrated supply chain strategy in an
organization.
Realistic goals: An organization should consider the precise business problem concerning the
supply chain. It should undertake decisions alternative against each other to understand the
impact of each (Thebalancesmb, 2019). Setting realistic goals increases the possibility of goal
fulfillment as it adds 15% to the chances of success.

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Effective plan: The business organization should develop an effective detailed plan to reach
the set goals. The detailed plan must cover the details of hardware, software, data input,
security provision and many more. It also involves the consideration of managing change,
pulling together an effective team and managing the budget for the best result. Therefore, the
organization should reach out to the personnel and consider their viewpoints engaged in the
supply chain. The development of an effective plan boosts the chances of success to 35%.
Assemble good resource: The SCM projects demands a need for skilled and qualified
candidates that positively accept challenges and committed to a positive outcome. Therefore,
the organization demands multiple resources like subject matter expert, competent staff, and
experienced project manager (Kinaxis, 2020).
Role of technology in a supplier's relationship
Effectiveness of strategies
The supplier’s act as the backbone of an organization because they help to meet customer
demand promptly. It develops the organization's duty to opt for supplier relationship
management strategies to seek benefits (Lambert & Schwieterman, 2012). The use of
effective strategies is a significant ay for the organization to upgrade its performance.
Communication: The organization should develop strong and steady communication with its
dealers. It should regularly inform the suppliers about their strategies and plans. It should
appreciate the work and consider them as their partners. Thus, a strong, deeper relationship
with clear and regular communication allows message to become more realistic with the
suppliers. Additionally, transparency in each other's operations builds trust and improves
communication (Husain, 2013).
Solid agreement: An organization should frame a detailed agreement with regular vendors. It
should include service explanation, price distribution terms, payment terms and more. A
well-documented supplier relationship contract minimizes the likelihood of misperception
and arguments.
Supplier relationship management program: The organization should play fair and must not
misuse the power as a customer. The organization should set SMART (specific, measurable,
achievable, relevant and time based) supplier relationship management goals.

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Develop a clear vision: The organization should set a clear understanding with the suppliers.
It enables the organization to set a clear vision with the suppliers.
Risk evaluation: An organization should evaluate the risk to deal with the suppliers in the
complex supply chain. It should seek information about their previous work, years in work,
area of expertise, financial stability, and knowledge to deal in crises. Thus, evaluating the
vendor risk profile gave rise to a good supplier’s relationship.
Timely payment: An organization should emphasize to pay their suppliers on time. The
suppliers perceived the organization as a reliable customer. The organization should pre-
inform the suppliers for a sudden delay in payment.
Focus on a targeted group of suppliers: It is a difficult task to develop strong interpersonal
relations, collaborate and build trust with each supplier for supply relationship management.
Thus, the organization should lay attention on specific suppliers and prioritize those
relationships. Therefore, the organization should divide the suppliers based on their
significance in the supply chain process. It should determine the suppliers that should attain a
higher level of attention.
Ensure everyone benefits equally: The supply relationship management aims for the mutual
fulfillment of goals of both the parties. The organization should consider the supplier's
interests and objectives as well. It should undertake strategies that are advantageous for
suppliers. It will aid the organization to uphold and improve long term dealings with the
suppliers.
Act strategically: The organization should frame contingency plans with the suppliers to seek
a solution for a future problem. The organization will not face difficulty in the sudden
emergence of the problem and it does not have to invent a solution on spot. It will enable the
organization to act strategically and rationally and eradicates the possibility of degrading
relationship with the suppliers (Mangan & Lalwani, 2016).
Use of information technology
1. E-Collaboration: It permits the organization to connect communicating and
interacting with the suppliers via the digital network. Additionally, it allows
integrating suppliers to design expertise in the product design. Additionally, it
enables to plan and execute supply chain operations with the suppliers (Chan et al.,
2012).

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2. Online analytical processing system: It aids in evaluating the forecast from distinct
suppliers (Chae & Olson, 2013).
3. Forecasting system or inventory planning: It involves the use of inventory records to
predict the market demand of a product. It aids in determining demand and placing
appropriate order for the fulfillment of the demand (Fredendall & Hill, 2016).
4. Enterprise resource planning system: It allows the association to monitor the
performance of stock and enables in sharing data to the suppliers. Thus, ERP business
management capability allows offering a quicker response to the suppliers. It also aids
in managing the sales and purchasing of the material from the start to the end. It
allows timely managing of the supplier's payments and depicting commitment to the
business. It assists in balancing the sales demand and inventory control with the
supplier's assistance. Moreover, it encourages transparent dealing with the suppliers.
Thus, it can be stated that technology attains a strong role in effective supplier
relationships (Ince et al., 2013).
Recommendations
Supply relationship system
1. Transparency through technology: Availing the use of technology assists the
organization to easily share required information with the suppliers. Thus, technology
enables to share information at the right time and it gave rise to transparency. This, in
turn, improves the relationship with the supplier.
2. Use of online channel: The organization should avail the use of the online network to
initiate communication with the suppliers. Thus, it can be stated that the organization
should rely on an online channel to communicate (24*7). This strategy will give rise
to smooth and consistent communication with the suppliers.
3. Use of the latest software: The supplier relationship management software enhances
the business relationship with the suppliers. It aids in controlling an interaction and
evaluating the best supplier for transportation and professional service. The
organization should develop the use of the latest software like Oracle Supply chain
management, SAP Ariba, Tradeshift and Supplyhive (G2, 2020).

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Importance of logistics and procurements
There is a huge importance of logistics in supply chain management. It allows the
organization in the planning and coordination of the movements of goods more securely and
safely. Also, efficient logistics can be the key element in meeting the customer demands
through expanding globally through depending on the supply chains (Zijm et al., 2019). A
coordinated logistics can help the organization in on-time delivery of products by using the
convenient pattern of movement of merchandises from one place to another which is the
effective method to be used in supply chain management. Particularly, logistics can create
value for the customers as logistics can facilitate the availability of the products. Moreover,
better logistics can be helpful in the availability of the product to the increasing group of
people.
Further, the business value will be created by improving the merchandise and making the
availability of the products through efficient logistics. Moreover, logistics have become the
heart of supply chains and also reduced the cost by making partnerships with the other
businesses that give transportation and warehousing (Sweeney et al., 2018). It allows the
organizations in the on-time delivery of the merchandises and seeks to satisfy the clients with
the best outcomes. The partnerships with logistics professionals can enable the business to get
the knowledge of the needs and requirements of customers by relying on effective logistics.
However, supply chains are regarded as the unique networks that can ship, warehouse and
deliver the products promptly, there is the importance of logistics which can help the business
to meet the goals. Also, a well-recognized logistics can help the organization to make a
positive public image and also the organizations can satisfy the customer requirements by
relying on effective logistics (Ellram & Murfield, 2019).
Effectiveness of Procurement Strategies and Procedures
A procurement strategy is related to the long-term planning of supplies from the list of
vendors that will provide the quality of products. The effectiveness of procurement strategy
and procedure depend upon the number of factors purchasing timeline and cost of ownership
(Eriksson, 2017). The effective procurement strategy will be used as a means of reducing the
cost and mitigation of the risks which can be helpful in better visibility into the organizational
budget and also the quality of good to be delivered. This strategy depends upon the business
requirements and makes the greater efficiency for finding a solution to the unforeseen
circumstances particularly labor shortage or surplus and economic instability. The strategy is

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also seen as the difference between effective vendors and underperforming vendors (Wang et
al., 2019). The effective procurement strategy can help in the planning of the organization’s
spending and making the procurement process more reliable that can make the strategy
effective.
Further, procurement procedures can enable the organization to make the products better
through innovation through seeking innovation that they can use and provide a competitive
edge. Moreover, an effective procurement strategy will be useful in the minimization of
errors, reducing the cost and meeting the policy compliances. Determination of
organizational spending is the first step in the procurement procedure. Assessing the market
conditions and defining the procurement policies are the best practices for eliminating the
inefficiencies in the process. Further, an effective procurement strategy is also being
maintained by implementing the procurement software for reducing human errors, delay
timings, and late payments. Thus, this software can be an effective way of reducing the time
wasted on manual activities and the tracking of the day to day process of business through the
addressing of process gaps and manual intervention. Thus, the effective procurement strategy
can be used to increase the competence of supply chain management that can increase the
risk management capacity in which the organization can make the listings of the products and
the vendors which will improve the efficiencies in procurement procedure (Keulemans &
Van de Walle, 2017).
Improving Logistics and Procurement Strategies
Certain factors will improve logistics within the organization. The first factor that can be
improved is the proper planning which will allow the proper work in the least possible time.
Further, the organization can improve automation which is the major factor for the
appropriate logistics in which the use of software such as SAP and ERP can automate the
movement of goods. Another factor that can be improved is the Warehouse Management
System which can optimize the warehouse functionality (Ellram & Murfield, 2019). This
management system can support the warehouse operations that contain the standard
warehouse elements to be managed and handled. Further, transportation is the major factor
that could be improved for the cost-effective delivery of the products. The decisions on
transportation can be taken through the delivery route and ensuring the safety of goods when
transported and gets delivered to the customers (Lai & Yin, 2018). Lastly, performance
improvement metrics can be used in the appropriate supply chain performance.

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Furthermore, some factors can be improved for efficiency in the procurement strategy. The
building of supplier relationships can be an effective way to streamline the procurement
strategy. This can be possible through surrounding with trustworthy suppliers. Further, this
can be coupled with expanding the network through the tools of communication which speed
up the process and increasing the efficiencies. Another factor that can be improved is the
improvement in the negotiation and analytical skills which can help maintain good contacts
with the vendors (Abolbashari et al., 2018). Rather, inventory and supply chain management
can be an well-organized way to reduce the complexities in supply chain management.
Systematic order of procurement and inventory control
Designing an Economic Order Quantity
Economic Order Quantity is the quantity of units that a company should add to the inventory
with each order to lessen the cost of an inventory. It enables the organization to save several
costs like holding cost, order cost, and shortage cost. It assists to purchase the optimum
quantity to minimize the cost. Kindly consider the following points for the below EOQ.
 The ordering cost is constant
 Total demand is known in advance
 No reduction is applied on order quantity
 The unit price of inventory is constant
EOQ= √2*S*D/H
 S= Setup cost
 D= Demand rate
 H= Holding cost
Example: A retail clothing store sells 2000 pants each year and it cost 75 rufiyaas to hold a
single pant in inventory. The fixed cost to place an order is 30 rufiyaa.
Therefore, EOQ= √2*2000*30/75 = √120000/75
EOQ = √1600
EOQ = 400 pants
Thus, it states that the ideal order is 400 Pants to minimize cost and meet customer demand.

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Role of LIFO and FIFO
The last-in-first-out (LIFO) method states that an inventory that has the latest procurement
date should be sold first to the customers. Described below is a simple example to understand
the concept of LIFO (Murray, 2019).
Example: A vegetable vendor has procured the vegetables on the following dates. As per the
LIFO method, the vegetable vendor will sell the vegetables purchased on the 25th of April
2020.
April 10, 2020
April 15, 2020
April 20, 2020
April 25, 2020
The business organization has to lay minor efforts to understand the process and implement
the same in inventory control. It is highly suitable for matching cost and revenue figures and
benefits in gaining complete recovery of material cost. However, it is not suitable for the
organization as the employees have to lay extra efforts to conduct the LIFO procedure. LIFO
method calculation is complicated in the presence of fluctuating prices. Additionally, it is
mainly suitable for the organization engaged in domestic business as it is not appropriate for
valuing the company's current assets. It is hard and complex to maintain as it gave rise to
older and out-dated inventories.
First-in-fist-out (FIFO) focuses on selling the inventory that is firstly purchased by the
business organization. Described below is a simple example to understand the concept of
FIFO (Rosemary, 2019).
Example: A digital technology company has launched a computer in the year 2019. It has re-
launched a new computer with upgraded technology and new features in the year 2020.
Under the FIFO method, the company will try to sell the stock of 2019 as it is out-dated and
attains low demand in the market. The new computer ill directly has fine demand as it aligns
with the latest technology and offers attractive features to the customers. Therefore, the
digital company will sell the stock of 2019 before 2020.