Question

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Questions:

1. Why in in the current modern trade, the integration of economic affairs from design to completion is an important priority to every Manufacturing Companies?
2. Define the parties involved directly and indirectly in supply chain and their role for smooth running of business?

The Answer should be within 2- 3 pages in length including the cover and appendices.

You can take any company of your choice as an example reference should be included.

****** complete my answer to be long answer please use your own words ************

In the current modern trade, the integration of economic affairs from design to completion is an important priority to every Manufacturing Companies because of the following reasons:

1) It expedites the product development cycle.

2) It allows companies to control product pricing as well as gain market share.

3) It helps the companies to roll-out products that are well-tuned to the latest technologies.

4) It allows companies to develop customized products that are targeted at specific market segments.

Answer 1

INTRODUCTION

Trade is a basic economic concept involving the buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties. Trade can take place within an economy between producers and consumers.

Channel of Trade

A trade path or channel of distribution or channel of trade refers generally to the route through which a product must travel to reach the consumer.  The path through which goods and services travel from the vendor to the consumer or payments for those products travel from the consumer to the vendor. A distribution channel can be as short as a direct transaction from the vendor to the consumer, or may include several interconnected intermediaries along the way such as wholesalers, distributers, agents and retailers.

Modern Trade vs General Trade

Time moved and with it the way human’s trade changed. Sneaking in our past, the only form of trade was the Barter System. People used to exchange goods with no monetary transaction. However the changes today brought us to another world, the web world. Let us have a closer look at both of them and find how time travelled and change the way we trade:

• General trade is basic retailing, i.e. small scale business targeting the consumers who opt day to day purchases in small quantity while the modern trade is about selling products to big houses. Due to this the retail business or let’s say that the consumers dependent over the past steps suffer to a lot of extent.

• A closer analysis of general trade will highlight its similarities with the traditional sales strategies. Back in time the houses used to focus more upon quality and less over the sales strategies like marketing and promotion. However, with the entry of modern trade, things went to the other pole of the axis. Today the houses focus much over marketing and promotion and thus the consumers have to bear this amount invested in form of either increased price or deteriorated quality.
• Today with modern trade it’s much about showcasing; massive infrastructures with creative/catchy interior. Considering this as a form of investment done by the house, it indirectly comes over the consumers. Introduction of various forms of taxes (eCommerce, etc) makes the modern trade stand a bit back in comparison to the general form, where one can get things on road sides or a very normal outlet.
• Back then when the general trade existed, the margin might have been high, but still the prices were low. However, with the introduction of modern forms of trade margins earned by the houses could be low, but the marketing strategy and implementation getting blend with the ambience make things costly.
• This one in particular might sound standardized, but think of those days when you had someone taking your order and getting things for you while today on the name of ‘growth’ and ‘standardization’ you have to get yourself all the things (at certain places this includes billing also).

Benefits of Integrated Supply Chain Management in modern trade

Companies that have an integrated supply chain increase their flexibility to adjust to client requests, competitors’ actions, and events within the industry. They also reduce waste and lower costs. Overall, with an integrated supply chain they are gaining an advantage over the competition and the whole business benefits.

Flexibility

The ability to be flexible and adapt to different situations is important in any competitive industry. Having an integrated supply chain allows companies to do that much more quickly and fluidly than would be possible with a traditional logistics model.

One example of this flexibility is just-in-time capability, in which just enough freight is used to meet daily demand. This limits the amount of warehouse space used and helps keep costs down. While very beneficial to a company’s costs and space, this method can be detrimental if the supply chain isn’t effective or responsive enough, limiting inventory and creating delays and ultimately costing more than the savings are worth.

Eliminate Waste

Reducing or eliminating waste is a constant goal for most companies, partly for the long-term cost savings, but also to meet increasingly numerous requirements for eco-friendly manufacturing.

Integrating your supply chain will dramatically reduce waste in several areas. You will save on space in warehousing due to better route management. This will also save on emissions helping you to meet low-waste environmental goals. Trucks will be filled on every leg of the route maximizing cube and ensuring that you don’t have empty trucks driving around. This means that you will be more efficient and save money.

Lower Costs

How can you be more effective and save money while doing it? Being flexible and getting rid of waste will help to lower costs. There are other things that can help such as the expertise of your team, the dependability of equipment and cost sharing. Having a dedicated, knowledgeable team will increase productivity and improve workflow.

Finally, cost-sharing by using Supply Chain Management providers instead of working independently is a great way to cut cost without losing any quality or deadline requirements whatsoever. A fully integrated supply chain is a requisite strategy for companies who wish to become or remain competitive.

Supply Chain Management

At the most fundamental level, supply chain management (SCM) is management of the flow of goods, data, and finances related to a product or service, from the procurement of raw materials to the delivery of the product at its final destination.

Although many people equate the supply chain with logistics, logistics is actually just one component of the supply chain. Today’s digitally based SCM systems include material handling and software for all parties involved in product or service creation, order fulfillment, and information tracking―such as suppliers, manufacturers, wholesalers, transportation and logistics providers, and retailers.

Parties involved in the supply chain

. A supply chain is a network of suppliers, distributors, manufactures and retailers/customers that participate in the production, delivery, and sale of a product to the consumer. Typically, the supply chain is made up of multiple companies or by themselves who coordinate activities to differentiate themselves apart from competitor. Moreover, John J. Coyle (2007, p.257) states that “supply chain can be regarded as a pipeline or conduit for the efficient and effective flow of products/materials, services, information, and financials from the supplier’s suppliers through the various intermediate organizations/companies out to the customer’s customers or the system of connected networks between the original vendors and the ultimate final consumer.”

Suppliers, distributors, manufacturers and retailers/customers are regarded as different parties of the company’s supply chain.

Suppliers

Suppliers are the first stage of supply chain. Generally, suppliers are responsible for purchasing and procurement operations in supply chain. Raw materials or natural resources are purchased by suppliers for which a company’s needs to procure goods or services that are required to manufacture a product. These topics are considered by organizations who try to improve the overall efficiency and effectiveness of their supply chain. Before a company purchase raw materials, it needs to forecast the market demand of its finished product, and then do so, it can avoid waste of materials and reduce costs. The selection of supplier is important for a company. Factors that a company needs to be considered when select a properly supplier are quality, reliability, risk capability, financial and desirable qualities. For example, if the company select a supplier who provide excellent quality resources, low risk and reliability, but supplier is located in long distance, hence, the cost of transportation is taken into account.

Distributors

Brian Gibson (2007, p.462) states that ‘distributors no longer focused on long term storage of inventory in static warehouses, it provides a variety of capabilities for the supply chain.’ The goal of distributor is to serve the supply chain quickly and accurately. Distributor can be regarded as a transshipment point in supply chain. Generally, what distribution do of the supply chain are shipment of finished products from manufacturer to retailers/customers, or movement of finished products from distribution facilities to retailers/customers. Roles of distributors of supply chain are balancing supply and demand, protecting against uncertainty, allowing quantity purchase discounts, supporting production requirements and promoting transportation economies. For example, Distributors can use their facilities to receive and hold large amount of inventory for company for future requirements.

Manufacturer

In supply chain, manufacturers are responsible for receive raw material or natural resources from suppliers, and then produce finished goods through manufacture procedure. Finally, it sells finished goods to retailers/customers. Brian Gibson (2007, p.331) states that ‘In many organizations, manufacturers are measured by how efficiently they can produce each unit of output.’ Usually, Manufacturers will face long and short production runs. For long run production, manufacturers require high level of inventory of raw material for finished product. Hence, more and more manufacturers tend toward shorter production runs to reduce costs. On the other hand, long production runs provide low labor and machine costs per unit.

Retailers/Customers

Retailers and customers are regarded as the final stage of the supply chain. In commerce, retailers buy a large amount of finished goods or products from manufacturers, and then sell small quantities to customers (the end user). For example, Woolworths and Coles are the most famous and successful retailers in Australia. Furthermore, Customers are not only acting as the end user, but also determine where the market should be positioned. Robert A. states that ‘Considering that manufacturing and logistics facilities are positioned in the supply chain between customer and supply markets, any changes in these markets should cause a firm to reevaluate its logistics network.’ For instance, Chinese population shifted from north to southeast, new warehouse and distribution facilities are built.

Supply chain activities span procurement, product lifecycle management, supply chain planning (including inventory planning and the maintenance of enterprise assets and production lines), logistics (including transportation and fleet management), and order management. SCM can also extend to the activities around global trade, such as the management of global suppliers and multinational production processes.

EXAMPLES

Best-in-class supply chains incorporate a key list of characteristics that define their success and set them apart with exemplary management. These characteristics include a proactive use of big data, highly optimized inventory management, flexibility and speed with order fulfillment, customization with process implementation, energy sustainability, and of course, compliance. Sustainable supply chain companies are the ones that will succeed far into the future, since these practices reduce costs and improve efficiency, in addition to preserving natural resources.

UNILEVER

British-Dutch consumer goods company Unilever is the third-largest of its kind, and offers food, beverages, personal care products, and cleaning agents. At the beginning of 2000, Unilever began a five year growth strategy, which included a significant restructuring of their supply chain management. They focused on organization, global procurement processes, supply chain executives, supplier involvement, and technology. As a result, they achieved $14.24 billion in savings in 2003 from its initiatives, and Unilever became a leader in the consumer packaged industry for technology adoption.

McDONALD’S

The leading fast-food brand has consistently ranked high for excellent supply chain management due to a system where success is shared and value is exchanged between McDonald’s and their suppliers. This approach has been wildly successful, as McDonald’s is now in more than 100 countries with over 35,000 restaurants serving 68 million people each day.

INDITEX

With eight brands and nearly 7,300 stores worldwide, Inditex is one of the largest fashion retailers in the world. The company has achieved notable success from a flexible supply chain that includes more than 1,700 suppliers and almost 6,300 factories that are strategically located in over 50 countries. What’s more, everyone involved in Inditex’s supply chain shares the same values of social and environmental responsibility values as set out in the company’s Code of Conduct for Manufacturers and Suppliers.

CISCO SYSTEMS

Leading the world in IT and networking with their revolutionary computing architecture, Cisco Systems has a highly diverse and extensive supply chain that spans the globe. The company recently transformed its supply chain management in order to increase business scale and agility. They were able to increase their agility, resilience and ability to scale by implementing new business models, a single ERP instance, standardization and automation throughout the supply chain.

H&M

Worldwide fashion retailer H&M has been globally recognized for their financial and marketplace success. The company’s reliance on efficiency and integrated systems for some of the major components of their supply chain, such as inventory management, has played a significant role in their success with stock control. H&M’s strategy with their supply chain is focused on cost-efficiency with production and reducing lead times for inventory—both factors that have led to their notability for offering chic, trendy styles with rapid turnarounds.

INTEL

Manufacturing technology and operations are at the heart of Intel’s business, but the company has put significant additional resources into transforming their supply chain to be more responsive and integrated in order to meet market demands. This effort has successfully increased productivity, while reducing process cycle time and making inventory levels more efficient.

NESTLE

Nestlé is the largest food and beverage company in the world, with over 2000 brands and presence in nearly 200 countries. Last year, the global food manufacturer launched a crowdsourcing initiative to engage their supply teams with problem solving and new business solutions for key aspects of their supply chain, including responsible sourcing.

APPENDIX

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