Supply Chain Management Solutions

This homework assignment presents a series of solved problems related to various aspects of supply chain management. The solutions cover topics such as economic and market value, logistical performance cycles and uncertainty management, transactional vs. relationship marketing, inter-functional conflicts between marketing and manufacturing, challenges in Enterprise Resource Planning (ERP) system implementation, the impact of demand variability on supply chains, inventory push-back systems and buy-back agreements, economies of scale and distance in transportation, the advantages of warehousing, and the benefits of collaborative transportation management using SCM Globe Simulation. Each solution provides a detailed explanation and, in some cases, relevant references to support the answers. The assignment aims to enhance the student's understanding of key concepts and challenges within supply chain management.

Answer1
The economic value of a product or service is the maximum price that anyone is willing to pay
for it. The economic value of an asset depends on and varies according to personal preferences of
its takers. Any given product may have a very high economic value for one person and may be
worthless for someone else.
The market value of any given asset is the minimum price of that given product or service in the
market. The general price any asset would fetch in normal conditions in the market when traded
is called market value (NPPPU, 2011).
Relevance is defined as the amount to which the product or service holds importance for an
individual. Thus, relevancy value is the value that any individual associated with the given asset.
For any given asset, the market value is generally same across competitors whereas the economic
and relevancy values may be varied and non-uniform. The concepts of valuation are significant
for management of assets and their supply.
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Answer 2
A logistical performance cycle provides us with a basic outlay of the working of an operating
system. It connects the overall participant supply chains and the key participant firms. They may
be constituted for a one-time transaction or for regular cyclic arrangements (Boonyathan &
Power, 2008).
Uncertainty is a situation when we are lacking the information about the consequences and the
outcomes. Uncertainty is ubiquitous in today’s dynamic and ever changing environment and so is
its presence in a logistical performance cycle. The demand and supply are two ever changing and
integral functions of logistics management. Therefore, uncertainty cannot be done away with,
but only managed and minimized. Performance cycle variance can be controlled in many ways
that include, but are not limited to the following:
 Having improved planning systems
 Having a risk-management plan in place
 Regular monitoring of the supply chain performance
 Proactively working on the existing systems and mapping market needs
 Managing and doing away with the loopholes
 Being open to feedback from any source
 Having a flexible approach (Schulze, 2011).
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Answer 3
There are two widely practiced and varied approaches to marketing when it takes into picture the
role of the receiver or buyer. Transactional marketing is purely business oriented and focuses on
making as much profit as possible from the deal. It considers sale to be a one-time event and the
seller is only trying to get the maximum value for the product or service being sold. And a very
different approach is followed for relationship marketing. It focuses on developing relationships
and making bonds that last longer than just the sales deal and transaction. Relationship marketing
works towards winning the trust of the buyer and has goals that are long-term rather than
immediate (Fruchter & Sigue, 2005).
Both these approaches impact the detailed implementation and organization of the business
operations. For example, following a transactional approach, the seller views the buyer solely as
a business opportunity and uses discounts and buzzwords while the relationship marketing
approach will focus on conveying the benefits of the products being sold and how they will make
the life of the user easier (Sonkova, 2015).
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Answer 4
Inter-functional conflicts are very common in workplaces. All functions of management impact
each other’s performance and they have thus forced us to challenge the existing marketing and
manufacturing strategy formulation and implementation. The marketing strategy of a firm plays
a key role in the development of its manufacturing strategy. The above can be better explained
with the help of following examples-
 If a firm is marketing its eco-friendly approach, the manufacturing strategy has to be such
that the firm decreases its carbon footprint and lowers the pollution being caused.
 If the marketing attempts of an organization are targeted towards the economically
affluent class of the society, then the manufacturing has to be of superior quality and
standards (Hallgren, 2007).
Thus we see that marketing and manufacturing strategy is interdependent and each one should be
devised so as to enhance the other function’s working. The objectives of both the strategies must
not be divergent by aligning towards the common goal and aligned to make the working more
effective and efficient for the firm.
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Answer 5
The Enterprise Resource Planning (ERP) systems are the software tools for business
management that are used by the organizations to manage their data. They are used to organize
and streamline separate complex processes followed for business (Adaileh & Alganam, 2010).
ERPs are famous for being challenged by the organizations and their employees, however, their
systematic and proper implementation has proved to be quiet profitable for organizations all over
the world. Some of the common challenges faced while implementation of ERP systems are
listed below according to the various functions:
 Finance – Implementation of ERP system in an organization is generally expensive and
drains out the financial resources of the organization. Also the profits that it may result in
are brought in over a period of time and are not immediate.
 Supply chain – Compatibility with the vendors and the suppliers is also needed in order
to change the existing processes and their varied competencies may result in results that
may be different to the ones expected from the ERP system.
 Human resource – The first and natural instinct of any person to change is to oppose it.
Thus the implementation to ERP system may garner opposition from the workforce.
Additional training and support from the management is also required for successful
implementation that may not always be so readily available (Nemati, 2013).
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Answer 6
Demand for a product is ever changing and this variability has a massive impact on the supply
chain and its subsequent links. A minor change in the demand at retail level can have a snowball
effect and build up to huge proportions while reaching the manufacturing part of the firm.
Increase in demand leads to decrease in unit production cost of the product and even if the
demand at the retail end has varied by a small proportion, its effect multiplies as it reaches up to
the distributors, manufacturers and raw material providers. The aim of supply chain management
is to optimize the flow of the products. The demand of product is of prime importance here.
Higher is the demand, the greater is the stock required and hence greater is the quantity
manufactured. The same goes for a fall in the demand of the product in the market (Li, Nathan,
& Rao, 2006). Thus we see that demand is the driving point for the entire supply chain right from
the raw material providers to the manufacturers, the distributors and the retailers.
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Answer7
Even though fairly accurate systems of demand forecasting have been devised, there are still
chances of being over or under stocked when it comes to inventory. This has resulted in the
implementation of a new system of inventory push back. According to this system, the inventory
is pushed back towards its sources and then redirected to ensure less wastage and stock blocking.
This system is not only beneficial for the retailers who get the unsold stocks taken back, but also
for the wholesalers and distributors who have the stock available with them for supply to the
retailers having demand for the product (Liu, Zhao, & Zhou, 2015).
The most common example of the above mentioned practice is buy-back agreement. In this
agreement, the seller agrees to buy-back the sold products at a later date for a price agreed upon
at the date of the agreement.
These arrangements drive away most of the uncertainty out of the deals and instills trust in the
seller.
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Answer 8
Economy of scale is defined as the cost advantage that an organization has when the production
increases because the cost of production of each unit drops. This makes the manufacturing more
economical and profitable for the firm.
Economies of distance also known as long-haul economies is the reduction in shipment cost per
product per mile.
The economies of scale and economies of distance can be combined to devise an effective and
highly efficient strategy for the transportation of the goods from one place to the other. Any
company that ships large amount of products over long distance is going to get a lower cost of
shipment than a company that ships small shipments over short distances a number of times
(Alexandru, 2013).
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Answer 9
Warehouse and warehousing is an integral part of logistics management in a supply chain. As
opposed to the common belief of a warehouse just being a place to store the products, it provides
the firm with a centrally located hub to receive, store and distribute the product. The economic
advantages of having a warehouse for the products are:
 Economies of scale are achieved by producing goods in large volumes.
 Economies of transportation are achieved as the shipping cost reduces by shipping a large
number of products at the same time.
 Acts as a buffer to balance the ever changing supply and demand of the products in
uncertain market conditions.
 Higher customer satisfaction as the shipping time is reduced for the product.
 The products end up being economical to the customer due to reduced costs of production
and transportation (Mohan, 2009).
 Increase in the goodwill of the organization due to reliable and economic product
availability and delivery.
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Answer 10
According to my point, SCM Globe Simulation is very easy to use and it is a complete package
to learn about the supply chain management. One change that would suggest is related to the
collaborative transportation management that would have great impact on the efficiency of the
Supply chain management. The reason of bringing collaborative transportation management is
that it helps to eliminate the inefficiencies in the supply chain transportation and reduce cost. The
inefficiencies in supply chain management and the reliability of the products is the biggest issue
and only the action of installing collaborative transportation gave the best results. The results
obtained from this change are like improvements in the on time services by 35%, reduction in
lead time as well inventory by 50%, improvement in sales of 23% and the reduction in the
administrative expenses of 20%. All these results are measurable and based on the performance
of the collaborative approach of transportation (Sutherland, 2006).
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References
Adaileh, M., & Alganam, K. (2010, May). The Role of ERP in Supply Chain Integration.
IJCSNS International Journal of Computer Science and Network Security, 10(5), 1-6.
Retrieved from http://paper.ijcsns.org/07_book/201005/20100539.pdf
Alexandru, C. (2013). How supply chains affect economics of agglomeration.
Boonyathan, P., & Power, D. (2008). Impact of supply chain uncertainty on business
performance and the role of supplier and customer relationships: comparison between
product and service organization. Retrieved from
https://pdfs.semanticscholar.org/a678/48dd656d0f5970e9092d679653ac9234b87f.pdf
Fruchter, G., & Sigue, G. (2005, August). Transactions vs. Relationships: What Should the
Company Emphasize? Journal of Service Research, 8(01). Retrieved from
http://www.biu.ac.il/soc/sb/papers/fruchter/2.pdf
Hallgren, M. (2007). Manufacturing Strategy, Capabilities and Performance. Department of
Management and Engineering. Retrieved from
http://www.diva-portal.org/smash/get/diva2:23684/fulltext01
Li, S., Nathan, B., & Rao, S. (2006). The impact of supplychain management practices on
competitive advantage and organizational performance. Omega. Retrieved from
http://mcu.edu.tw/~hyu/paper/4.pdf
Liu, Z., Zhao, Y., & Zhou, M. (2015). Study on Supply Chain Buy-Back Contract Model under
Riskaverse Condition. AIDIC. Retrieved from http://www.aidic.it/cet/15/46/092.pdf
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Mohan, V. (2009). Warehousing and inventory management. CII Institute of Logistics. Retrieved
from http://ciilogistics.com/coursware/sem2/Warehousing.pdf
Nemati, S. (2013). Impact of Enterprise Resource Planning in Supply Chain Management.
University College Of Boras. Retrieved from
http://bada.hb.se/bitstream/2320/13316/1/Nemati%20Durai.pdf
NPPPU. (2011). Supply Market analysis. Retrieved from
http://etenders.gov.ie/Media/Default/SiteContent/LegislationGuides/23.%20Supply
%20Market%20Analysis.pdf
Schulze, L. (2011). Uncertainty in Logistics Network Design: A Review. Retrieved from
http://www.iaeng.org/publication/IMECS2011/IMECS2011_pp1466-1471.pdf
Sonkova, T. (2015). Customer engagement: transactional vs. relationship marketing. Journal of
International Studies, 8(1), 196-207. Retrieved from
http://www.jois.eu/files/JIS_Vol8_No1_Sonkova_Grabowska.pdf
Sutherland, J. (2006). Collabaration transportation management: A solution to the current
transportation crisis. Retrieved from http://www.espncricinfo.com/india-v-australia-
2016-17/engine/match/1062575.html
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