The supply chain management applies various ideas. First, every product reaching a consumer represents efforts made by multiple firms. Thus, a supply chain refers to the organizations that play a role in the creation of a product. Further, most firms are concerned with the occurrences and happenings within their organizations regardless of the existence of a supply chains in their corporations (Ivanov, 2010). Supply chain management is the distribution processes aimed at maximizing the client worth to achieve a sustainable aggressive advantage against the competitors. Moreover, the process represents efforts by the supply chain firms to ensure that the warehouses run efficiently. Chip Supreme case study covers some supply chain management activities that are inclusive of product development and sourcing of materials required to offer and create baked goods. In addition to that, Chip Supreme makes up a supply chain that links the information and physical flows in the company since the entrepreneurs made decisions of opening websites to sell to individual customers due to the high competition from other baking firms. The information flows in the Chip supreme are used in the coordination of various supply chains while the natural flows are inclusive of the transformation, movement and storage of goods. Recently, the entrepreneurs of the baking firm decided to expand their storage houses to increase their market areas.
The Chip Supreme has an efficient supply chain since it focuses on the improvements of the internal processes rather than the needs of the stakeholders and the supply chain. Chip Supreme is aiming at expanding its warehouses and increasing the number of baked products produced. Improving the interior practices plays a significant role in developing both the physical and the information flows within an organization (Ivanov, 2010). Further, the chip supreme supports and aligns the corporate goals of innovation and future growth within the organization. In addition to that, the baking company has identifies suppliers that will assist the firm in achieving its future goals through the collaboration processes that enhances the processes of idea sharing. Contrary to that, the chip supreme has a risk management plan that helps in the prevention of interruptions in the supply chain. Consequently, a risk management plan is helpful in handling and solving the unexpected events that would result in the lack of competition of a brand hence making it unattractive to a customer. Besides that, the entrepreneurs that formed the baking company examine the performance of the entire supply chain constantly with aims of identifying potential constraints. As a result, the chip supreme baking company has an effective supply chain management thus resulting in its success as seen in the case study.
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Issues Involved In Demand Management and Customer Service
A link exists between order management and demand forecasting in that organizations do not have to wait for purchase to arrive to learn what is happening outside an organization. Various issues are involved in the demand management and customer service that are inclusive of order management, order fulfillment and customer service (Ivanov, 2010). The term order fulfillment refers to the steps that are involved in the processing, receiving and delivering of orders to the consumers. Importantly, order fulfillment often applies to different order types that could be from one business to another or direct to the consumers. The chip supreme company has applied various steps of order fulfillment to satisfy the needs of the customers. For example, the firm ships commodities to their stores depending on the demand or forecast. As a result, order fulfillment is carried out effectively in the company resulting in customer satisfaction. Contrary to that, order management is the administration of business processes that are related to the purchases made for goods and services in a corporation. The chip supreme baking company, in the case study, had its entrepreneurs call for a meeting that discussed about ways of expansion that were related to the purchase of goods in the firm. In most cases, order management ensures the streamlining of the order processes. The meeting held by the entrepreneurs of Chip Supreme provided a database for both the vendors and the customers, records of consumers’ refunds and returns, billing and payment information and the processing records of orders. Order management is crucial in supply chain management since it helps align the process of manufacturing of a commodity to the needs and wants of a customer.
Customer service refers to the support offered by a company to a consumer both before and after the purchase of a commodity. In Chip Supreme, customer service is important and considered since the firm has encouraged customization of products in all their stores. As a result, this shows that the company is concerned with the needs of the customers. Further, the customer service in the chip supreme has enabled the clients to have a comfortable and enjoyable experience with an organization. Besides that, customer service is a fundamental promise that a business makes to its shoppers. Further, customer service plays a vital role in the consumer retention processes. Most shoppers leave since they are upset with the treatment received. Thus, prioritizing customer support, as seen in the Chip Supreme baking company, helps the firm to attract and retain the quality consumers. In addition to that, an excellent customer service is a competitive advantage to the organization. Before, people used to choose firms depending on the prices attached to commodities. However, this is entirely different in the recent years since customer support drives customer experience that enables customer retention. An excellent customer experience helps in the creation of a winning experience that helps a firm stand out while competing with other corporations. Further, the Chip Supreme allows free delivery of their commodities to the customer. Free delivery of products to the consumers is part of customer service and helps in the retention of customers.
Need For and Costs Of Inventory
Costs of inventory are defined as the expenses that are related to the storage and maintenance of inventories of a firm for a specified duration (Ivanov, 2010). The inventory costs vary widely depending on the field of business. The costs of inventory are inclusive of the fixed order quantity, fixed order interval, and the economic order quantity. The fixed order quantity is an inventory regulation technique that fixes both the high and low levels of an inventory. Moreover, restocking occurs in the case where the high and low levels of an inventory reach an auto set restructure point. Chip Supreme has adopted the fixed quantity order system since it helps in the reduction of reordering mistakes. The company’s entrepreneurs have decided to expand their company using the internet. The transportation manager objected the idea with claims that expanding the commodities online would squeeze the baking capacity of the firm. However, the fixed order quantity is beneficial to the company since it helps in the management of the storage capacity and it prevents the blockage of funds. Furthermore, this system helps in ensuring regular restructuring and restocking of the inventory items used during the production processes.
Besides that, the fixed order interval is a hybrid system of stocks whereby an analyst reviews the inventory position at a fixed time (Gibson, 2013). The entrepreneurs in the Chip Supreme analyze the inventory position of the firm and come up with new ways of expanding and increasing the sales of the company. Importantly, no action is usually taken in a case where the level of inventory is above the stipulated array point. However, when the inventory level is below the preset adjustment point, analysts may order a variable quantity that is often equal to the maximum stock level and the current amount. Lastly, the economic order quantity (EOQ) is defined as an equation that resolves the idyllic order number that a firm should buy given the given the demand rates, the cost of production and other variables (Gibson, 2013). In most cases, the EOQ is done in the Chip Supreme to minimize the costs of inventory. Moreover, it is done to view the areas in which the firm can increase the sales in the company. The equation for the EOQ is shown below.
Whereby, S = Setup costs D = Demand rate P = Production cost I = Interest rate (Gibson, 2013)
Economic Order Quantity Model
EOQ model helps in minimizing of total holdings and the ordering costs in a year. Moreover, it would assist the company in determining if it is wise to expand their commodities through the internet since the transportation manager in the firm argues that it would not be a great idea because it will increase the costs incurred while transporting the goods. The following diagram shows a sample of an EOQ model used in a company.
Basic Warehousing Decisions
A warehouse is a planned place used for the storage and handling of goods in a company. Moreover, a warehouse, according to Gibson, (2013), is a focal point where the product and information flow within an organization. The Chip Supreme Company has made various warehouse decisions such as the expansion of their storage areas. Further, the Chip Supreme has made the decision of selecting and setting up of storage whereby the management of an organization needs to consider the determining needs. The determining requirements include considerations such as the volume of goods that a store can handle, the transit point, and the momentum of throughput that is required for the storage. The company has opened and set up several warehouses that are stocked with the finished products. Further, the firm owns distribution centers concerned with the transportation of products to each stores. Each store conducts a customization process thus allowing satisfaction of the needs of the customers. Therefore, the basic warehousing decisions made in Chip Supreme have played a role in its recent success and expansion.
References
Gibson, C. (2013). Supply Chain Management: A logistics perspective (9th ed., p. 736 pages). South-Western College Pub.
Ivanov, D. (2010). An adaptive framework for aligning (re)planning decisions on supply chain strategy, design, tactics, and operations. International Journal of Production Research , 48 (13), 3999-4017. doi:10.1080/00207540902893417
