OTHM Level 7 Supply Chain and Operations Management Report

This report delves into the multifaceted world of supply chain and operations management. It begins by defining supply chain and operations management, emphasizing their significance in achieving organizational objectives and their relationship with other business functions. The report then analyzes key success factors for integrated supply chain strategies, including technology, planning, and globalization. It examines strategies for maintaining supplier relationships, the use of IT, and recommended supplier relation systems. Furthermore, the report explores the importance and use of logistics, the effectiveness of procurement strategies, and factors that improve these strategies. It also covers economic order quantity, the role of LIFO and FIFO in inventory control, and evaluates just-in-time systems for managing inventories. The report highlights the importance of effective supply chain management in optimizing business processes and achieving organizational goals.

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Running head: SUPPLY CHAIN MANAGEMENT
TOPIC: SUPPLY CHAIN MANAGEMENT
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Running head: SUPPLY CHAIN MANAGEMENT
Introduction
A supply chain can be defined as the interaction of people and businesses working together to
process raw materials to fully finished products, then on to the consumers. Supply chain
management can be defined as a comprehensive series of activities essential for planning,
regulating and executing the flow of a product, from the initial raw material through the
production process to the final product on to the consumer in a streamlined way, and through
the most effective mode possible.
AC 1.1 Significance of effective supply chain and operational management
A supply chain entirely involves the businesses, its processes, and individual contributions
which are part of the process of making a particular product from the unprocessed raw
materials to the final finished goods. Supply chain management involves the lively
interaction and synchronization of the activities involved in the supply chain to give the
customer and the company the best quality of the product or the service. Different companies
offer the best quality of the products or services they manufacture, through the coordination
of the efforts of various activities involved in their internal and external supply chain.
Operational management
This part of the management which deal with the establishment and regulation of the
production process and other business activities so as to attain the best efficiency level for the
company (Annarelli, & Nonino, 2016). Operational management involves the transformation
of raw materials into products and services in the most effective way so as maximize the
organizational profit.
Importance of operational management
Managing the company’s operations is essential for improving the general organizational
productivity. By controlling the activities, the company knows the efficiency of the
employees and that of the manager. Operational management involves using the
organizational resources in an effective way so as to meet its set goals; thus it improves the
organization’s general productivity.
Operations management helps the company to produce goods that align with the consumers'
needs. This is because operations management is the supervision of all the company's
activities which contribute to aligning the organizational produce with the customers' wants.
Such goods are sold out at a faster rate since they are catering to the needs of the consumers.
Operations management earns the company huge profits from the optimum utilization of
organizational resources. Efficient utilization and conversion of the numerous raw materials
and employees' hard work bring the company to the realization of its set goals. Operations
management has a vital role in every organization as it deals with system maintenance and
the designs of the produced goods.
AC 1.2 Relationship of supply chain management with other business functions.
The performance of the company's chain supply dictates the success of the organization; thus,
the success of an organization begins with an effective and efficient chain supply
management. Well-designed supply chain plans, optimize the use of the organizational
resources, the employee’s efforts, and the management strategies towards achieving the

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organization's goals, and this in return brings huge profits to the organization. Chain supply
management affects the organization's operations for converting the raw materials into goods
and services. It causes enormous changes to the framework of the organization, the
administration, and that of the employees, and this affects the full operation of the system
leading to the production of quality goods and services. The excellent performance of an
organization is a result of an effective chain supply chain management. Chain supply
management brings about a good flow of cash in the organization since the products are in
line with the customers' needs, and they reach them in time.
AC 1.3 Success factors that aid in developing an integrated supply chain strategy in an
organization.
The supply chain allows the business to link to the customers easier and in a super-efficient
way (Mangan, & Lalwani, 2016). The following factors help in creating integrated supply
chain strategies within an organization.
1. Technology – upgraded supply chains are vital due to aggressive competition in the
market. As a result of the competition, the efficiency of the supply chains is highly
recommended, and this can be achieved by the supply chain technology.
Organizations need to conduct regular checks and upgrade to their supply chain
technologies to improve their organizational processes.
2. Planning – planning is very crucial to the organization as it involves identifying the
manufacturing network and defining the levels for carrying out production processes
and transport stream between the sites. Planning also aligns the organization's supply
chain approaches to the business strategies.
3. Globalization – with an effective and efficient supply chain management, a company
has an advantage over the competitors in the market. Globalization brings about high-
efficiency frequency since the company can predict the demand and align its
production processes in that line.
AC 2.1 factors and strategies that drive organizations to maintain supplier relationships
The best supplier management strategies entail working together with the suppliers to
advance the performance of the organization. There are many strategies that can drive an
organization to maintain supplier relationships.
i. Considering the cost and value of the complete supply chain from the raw materials to
the finalized goods.
ii. Being accountable. The organization need sufficient planning to get orders delivered
by the suppliers in time and with ease
iii. Plan how to handle emergencies and the cause of the emergencies analyzed so as to
reduce the numbers in the future.
iv. Relationship meetings conducted by the organizations should be meaningful focusing
on the vital issues like the supplier improvements and ways of strengthening the
relationship between the buying company and the supplier.
AC 2.2 use of IT to create strategies to develop effective supplier relationships

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Organizations aiming to establish a productive relationship with the suppliers need to
advance their technologies in order to improve their processes (Azadi, Jafarian, Saen, &
Mirhedayatian, 2015).
a. Channels of communication – there needs to be effective communication between the
company and the supplier.
b. E-sourcing – It makes it easier to get bids from suppliers through an online portal. E
sourcing helps to increase the supplier competition, thus reducing the prices.
c. Payment capabilities – improved payment mode for easier transfer of money from the
company's account to the suppliers' account.
AC 2.3 recommend supplier relation systems to maintain relationships with suppliers
Supplier relationships are supposed to be intense and profound. The company needs to keep
every time communications with its suppliers, keeping them updated on the organizational
plans and strategies so they can fit in, help and gain from the plans. Companies may assume
that optimizing their suppliers may result in increased profit. This kind of expectation is
pulled down by many factors, such as the cost of building a new relationship with new
suppliers. Therefore, the optimum number of suppliers preferable for an individual
organization is obtained by comparing the cost of building new relationships with other
suppliers and the expected benefits from the relationships (Chapman, & Carter, 2015).
AC 3.1 Importance and use of logistics in supply chain management in an organization
Logistics management plays a crucial role in supply chain management. The planning,
implementation, and regulation of the efficient flow of goods and service is part of the
logistics. It is also part of the supply chain management that monitors the production process
from the start to the end so as to meet the consumers' needs. It also deals with the distribution
of goods outside the organization and thus forming an essential part of the supply chain
management for every company (Buurman, 2017).
AC 3.2 effectiveness of procurement strategies and procedures in an organization
Procurement is the purchase of the things, say, raw materials or services that a company
needs so that it can carry out its activities efficiently. Therefore, a procurement strategy is the
approach by which the company is aiming to attain these raw materials, supplies, and services
after critically analyzing the cost time of procurement, risks, funds and the benefits. An
effective procurement strategy puts into consideration the organization ‘s objectives, the
supplies, and the raw materials, the resources available, time, and the budget of the firm. An
effective procurement process should follow the below order.
 Recognizing the firm’s need for the product
 Requesting for the procurement of the product
 Request review by the purchasing sector
 Approval by the accounting team
 Request for different companies’ quotation
 The signing of the contract
 Goods procured
 Payment
 Keeping the records

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AC 3.3 factors that may improve logistics and procurement strategies in an
organization
0rganizations should always strive to improve their products to offer the best to the
consumers. Improving supply chain management improves the end product, thus giving the
best to the customers. The following factors help in improving logistics management
 Strengthening the employee’s relation – the conduct of the employees portrays the
character of the organization, and thus the managers should empower employees so as
to enhance the company
 Efficient inventory keeping – managing inventories is useful; it helps the company to
achieve its relationship with the customers and also in managing its operations and to
get rid of waste.
 Keeping the customers updated – these are the most crucial strength of every
organization. Improved logistics management would result in inefficient customer
service, which in turn would make the customers remain loyal and the business makes
huge profits.
 Learning from the market forces – logistics managers should monitor what their
competitors are doing so as to be updated and to make necessary improvements.
AC 4.1 effective and economic order quantity for procurements in an organization
Companies purchase order quantity for their inventories, assuming a specified rate of
demand, production cost, among other variables. This is important so as to reduce expenses
being held by the stock and additional costs related to the order. Economic order quantity is
applied if the demand for a particular good does not change for a year, and every new order is
procured fully upon the inventory reaching zero. The company wants to know the maximum
number of units to purchase so that they reduce the total cost of purchasing, delivery, and
storing the goods. The parameters include total demand for that specific year, the cost of
buying every item, the cost for the placement of the order, and the fixed cost for storage of
the purchased items. The frequency of order placement does not alter the total cost (Teng,
2017).
AC 4.2 role of the principles of LIFO and FIFO in inventory control.
The LIFO principle illustrates that goods that are shelved last will be used or sold out first.
Last in, First out. This principle applies to products that are kept in significant quantities or
the ones that have a longer shelf-life. The LIFO accounting technique suggests that the
inventories purchased last will be sold first. By use of LIFO accounting technique, the
business is allowed to value the remaining stocks at a less price than that prevailing in the
market than cutting taxes (Cohen, & Pekelman, 2015).
The FIFO principle suggests that the old inventories are sold out first at the prices of the
production cost. In a warehouse that uses the FIFO principle, the inventories that are received
lately are sold or used after all the other items that were in the warehouse previously have
been released. This system reduces the cost of outdated or expired goods. There is a proper
rotation of goods when the FIFO system is used (Libby, 2017).
AC 4.3 Evaluation of just in time systems of managing inventories

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Running head: SUPPLY CHAIN MANAGEMENT
A just in time inventory is a system that optimizes the efficiency and minimizes waste as the
raw materials which are required for the production process are purchased at that time when
they are needed. Goods are manufactured to take care of the need for a specific customer.
Doing this minimizes the inventory cost. The JIT inventory system reduces the cost of
expired goods as there is no piling up of raw materials or of produced goods (Gunasekaran,
Papadopoulos, Dubey, Wamba, Childe, Hazen, & Akter, 2017). JIT inventory lessens the
working capital, and there is an insignificant risk of having outdated goods. There are no or
very few defects in JIT inventory as the goods being produced are little. Defects are identified
with ease and replaced. This strategy also reduces the time of the production process.
AC 5.1 Factors involved in developing a strategy to improve an organization's supply
chain.
Developing effective supply chain strategies smooth lines the organizational production
process from the processing of the raw materials until the final product reaches to the
consumers (Kim, & Chai, 2017). The following factors are involved in the development of
strategies so as to improve the organization’s supply chain.
 Purchasing of items automatically – with an improved system, purchasing can be
automated such that it can place orders with the sellers depending on the inventory
levels.
 Standardization – standardizing the systems increases efficiency and saves time and
total cash to be spent.
 Increasing transparency – it minimizes losses of finance and the inventories that are
unaccounted for.
 Regular Check of the vendor’s performance – this will improve the relationship and
maximize the benefits.
 Streamlined accounting – ERP systems reduce the processing time of payments and
minimize paperwork.
AC 5.2 Planning various supply chain strategies to improve an organization’s supply
chain
Tactically planning a supply chain strategy, the aim is to reduce the cost of the supply chain
in the production, storage, and distribution of manufactured goods. Companies with
globalized supply chains should combine their strategies with their operations (Best, de
Valence, & Langston, 2007). Planning the strategic supply chain that connects the designing
of the company’s strategies and the pre-emptive supply chain, can bring more value than
planning for each alone.
AC 5.3 choices of supply chain strategies
There is no “all-time best” supply chain strategy or inventory supervision. Supply chain
strategies may not work for all the businesses at each given time. The organizations are
supposed to choose a strategy that works for them and the customers. Companies should not
adopt a supply chain because it is being used by its competitors or it's on fashion, that may
not work for the business. Companies should consider their market and adjust their supply
chain according to the firm’s demand. They should also consider the needs of the customers
and produce goods that align with that. Businesses also should put into consideration their

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business shape and product portfolio. They need to do an analysis of the requirements of the
supply chain across their lines of product.
Conclusion
In conclusion, the process of production is effective and efficient with good supply chain
management. SCM maximizes the company's benefits and the fulfillment of its customers'
needs. However, not all supply strategies will work effectively for each company. Different
businesses need to consider a number of factors (as illustrated herein) to come up with their
unique supply chain strategy that works for them and their market segment.
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