final exam essay
Supply Chain Management Case Analysis: Woodsynergy Inc
A successful supply chain management system is the outcome of a process, technology and people that have been efficiently tapped when anticipating potential benefits that will be realized in the form of more profits and revenues (Geunes, Panos and Edwin 2). Woodsynergy is in the process of implementing a radical IT-based supply chain management system in two phases, and already the first phase has been completed. The second phase is anticipated in the future, and it is associated with more costs, but a potential for higher profits in the future. A strong case exists for the organization to continue investing in the new system, as the system will bring more clarity in meeting customers’ demand (Li et al 7). Eventually, the system will be subjected to measures and appraisals using certain key performance indicators and which include, cycle time, fill rate, lead-time compared to the industry norm, vendor pricing against that of the market, cash flow method efficiency, and supply booking procedures.
Issues that are pertinent to the company include the following:
Implementation of a unified Enterprise Resource Planning system that would coordinate and order work tasks and share information towards production and distribution of the Woodsynergy products. Ultimately, the company settled on a remediation system that worked more closely with the present partners, despite the high contracting risks involved.
Building a supply chain management model for the organization was the next critical item on the table for the organization. The Supply Chain Operations Reference Model, a creation of Supply Chain Council was further identified as a model that could suit the organization, and it incorporated the five processes that could make the organization tick, and they included the following plan, source, make, deliver and return. Implementation of this model would be conducted in two phases. The first phase is already complete, and the costs versus the benefits have been identified, overlooking integrity and timeliness of the data in the system. The benefits attributed to the new percent relates to the regional distribution managers who have overwhelmingly gave a positive report on the model, indicating that the system was more efficient, enhanced communication, and information sharing in the company was effective. Such improved processes in the company were translated into a saving of $1.5 million. However, the phase came at a cost of $400,000. The second phase of the system could cost an additional $500000, with further labor costs of $150000 per month during the period it will be installed, inspected and implemented. The new phase would be associated with new benefits that include gaining access to important innovation and acceleration of time to market cycles, and these would be translated into profit and revenue growth.
Environmental and Root Cause Analysis
Woods Synergy provides premium products to their customers, and the advantage attributed to premium products is that they fetch better margins compared to low priced items.
Integration of IT into its supply chain system would translate into more profits and revenue in the future.
According to industry experts, Woodsynergy depends on resurgence demand.
More cost cutting measures as Implementation and integration of IT continues into the entire fabric of the organization.
The new supply chain management system shall result in new market penetration, as well as better management of imports, customers, suppliers and RDM’s and this shall obviously translate into more money. Threats
Volatility in demand and supply of woods remains the main threat to revenue management.
Costs continue to pile when the systems are being implemented; for instance, the first phase and the second phase of the new system cost $400, 000 and $500000 respectively plus other fragmented associative costs.
Root Cause Analysis
This framework commences from the root problem that leads to a deviation from the plan, and the business anchor informs of supply demand and utilized to adapt to the corrective action.
The basic problem that must be solved is the integration of IT into Woodsynergy supply chain for a realizable gain.
Causes of the Problem
The problem is caused by a current supply chain that has failed to meet its objectives and does not suit the present market and production dynamics.
Solution to the Problem
The basic solution that can be done to the problem is the implementation of an Enterprise Resource Planning system that amalgamates the entire spirit and letter of the organization into a single organization.
Implementing the solutions
This is being spearheaded by the CIO of the company, who has already overseen the first phase, and has scheduled implementation of the second phase of the system.
Alternatives and Options
Alternatives to the outlook must be compared in terms of both the potential costs and benefits to the organization.
Outsourcing Supply Chain Management
The alternatives include a look at the traditional approach; Woodsynergy can choose to outsource supply chain management from companies that have it as their core competency. The risks of outsourcing might manifest in the form of unanticipated costs, potential drawbacks, integration problems, and quality mistakes (Bowersox et al 51). However, the realizable benefits from an outsourced supply chain management processes include the following; Woodsynergy can concentrate on its core competency and that is supplying fine woods to their customers. Others include, minimized costs, the ability to meet the customers’ demand, and more flexibility.
Traditional Supply Chain system
A traditional supply chain model is one, which is vertically integrated, and the firm controls all the processes from production to the final point in which the company issues goods to the customers. The main advantage of this supply chain is that the company controls all the processes from beginning to end, and hence, all the profits become attributable to the firm. On the other hand, the disadvantages include improper planning that lead to a fall on harmonization between different channel partners. It does not take into account intermediaries, and it is devoid of long-term growth and focus.
Network Supply Chain Management and IT initiative
This system is founded on pull distribution and anchored on accurate feedback methods and customer demand. The system depends on a high scope in receiving and reviewing feedback from different partners across the network (Tan 43). The major disadvantage of this system is that it costs more to build. However, the long-term benefits shall be realized through cost savings and high profitability, as well a target for high growth, which must be aligned with the vision and mission of Woodsynergy.
Recommendations and Implementation
The best way of evaluating the supply chain management system is through an implementation of measures and performance metric, and this must become the anathema for that gauge the success of Woodsynergy. Effective management is vital to the organization of a rapid management of demand, given alerts that are produced from the revenue appraisal of the performance measurements (Croom, Pietro and Mihalis 81). Moreover, a possible alternative to an improved activity through invoking of a demand or supply anchor, and events can determine and implement for practical decision-making. Demand anchors that can be used include pricings, promotions, incentives on sales, and overrides. On the other hand, supply anchors include changes in capacity, frequency changes on current markets that are served, besides entry into a new market can also be a good choice.
Monitoring and Control
To attain the most from a supply chain management system demands persistent monitoring of both vendors ends and the customers ends to ensure a persistent feedback process (Lambert and Martha 68). For the customer end of the spectrum, the historical performance of sales is determined after goods have been dispatched to the customer. Cycle Time is a good key performance indicator, and it is measured as the time it takes to complete a process, for instance, the production of a single fine wood in the company’s plants. The fill rate is the other effective key performance measure given that tracks the performance of the supply chain, this KPI measures the effectiveness of the company’s inventory in matching demands. Other important KIP’s include delivery performance of a supplier, lead-time compared to the industry norm, vendor pricing against that of the market, cash flow method efficiency, and supply booking procedures. The major goal was the identification of KPI in a system that links performance evaluation, and they relay the performance of the organization on a strategic planning and control level.
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