ASSIGNMENT

Unit 1: 21st Century Supply Chains

1 Find out the trends in supply chain management?

If we look back on supply chain trends in 2019, it's interesting to note the focus even then on AI,
and advanced analytics. This trend appears to be accelerating. What's also notable is the new
focus on sustainability and circular supply chains as customers flex their muscles regarding
waste and the environment.

Following are the trends in supply chain management.

1.Artificial intelligence and Automation
2.Increased Focus on Sustainability
3.Customization
4.The internet of things
5.Digitization
6.Strengthened Relationships
7.Risk Management and Resiliency
8.Increased visibility
9.Circular supply chain
10.Cloud based solutions

These current trends in supply chain management can also be useful tools to strengthen your
supply chain and make it more agile and resilient. Technology integration is the key to future
supply chain success which is why so many firms are digitally transforming their operations.
Here are the core concepts to keep in mind as you do the same:

Supply chain management will continue to face disruptions in 2022 and beyond. The
repercussions of the pandemic continue, which makes supply chain innovation and evolution
more important than ever.

One of the biggest challenges threatening the integrity of SCM is the cost of goods and the cost
of shipping. In some instances, shipping costs have skyrocketed by as much as 600%, a non-
sustainable amount.

The current economic recession is impacting the supply chain, even after some relief from the
impact of COVID-19. There is now too much inventory compared to consumer demand, which
threatens freight demand. SCM experts are calling this the ‘bullwhip effect’ where manufacturers
and retailers have more inventory than they can sell.
However, SCM experts predict that the supply chain will recover, even if it happens at a slower
than desired pace. If the pandemic and global recession have taught us anything, it’s the
importance of building in sustainability and intelligent sourcing for our supply chains.

2 Find out the role and Importance of supply chain management in today’s business

The 6 most important reasons for supply chain management are:

Interconnected Supply Chain –

All the stakeholders from the producer, manufacturer, stockist, supplier, to the consumer are the
main actors in the supply chain landscape. They are interconnected and constantly ought to be in
communication with each other for a product to go through various hands before reaching its
final destination. Considerable issues pertaining to the growth of corporations, partnerships,
global brand expansion, and outsourcing is dealt with by Supply Chain Management.

Integrated & Co-operative Logistics –

Supply chain management (SCM) is the lifeline of all critical supplies for the existence of all
societies. Effective supply chain meets the needs of both producers and consumers and takes an
integrated & holistic approach towards management. If operations across different geographies
are cooperating and communicating in synergy, this only makes supply chains all the more
efficient. This facilitates the logistics to easily manage every part of an integrated supply chain in
supplying the inventory backed by more than one entity.

Better Supply Chain for Better Business and why supply chain management is important –
Having an enhanced supply enhances your business prospects & sustainability. Delivering
correct product & correct quantity in a timely manner fulfills both producer’s and distributors’
requirements. Likewise, consumers too want to obtain the goods that they want to be delivered to
their doorsteps. Since the consumer is the king, having an effective supply chain management
provides direct improvement to consumer service. This ultimately leads to better business
growth.

Seamless Movement –

A key reason for not being able to effectively deal with potential problems within their business
operations leads to a dearth of risk management capability for many businesses. Supply Chain
Management streamlines the flow of everything from goods to any unexpected natural disaster.
Globally, every organization’s logistics are managed by supply chain managers. With effective
supply chain management, supply chain managers can easily diagnose problems/disruptions for
seamless movement of goods.

Reduced overall operating costs –

Not just investing in the right areas of your business, but also minimizing extraneous expenditure
wherever you can, will help you maximize your ROI. In other words, improving key areas of
your supply chain will help you reduce your overall operating costs. This will allow you to
minimize purchasing expenses by expediting the delivery of the right amount of inventory at
right time to your warehouse and thereby avoid high inventory costs. More so, for a
manufacturer, optimizing the supply chain ensures the suppliers deliver crucial parts to the
assembly line when required. This helps avoid material shortages, which otherwise can hinder
production and waste precious financial resources. Consequently, an efficient supply chain helps
minimize delays, which is crucial for maintaining financial efficiency and efficacy. It directly
improves your bottom line by expediting product delivery and minimizing the cost involved per
consumer and adds to your competitive advantage.

Vitalized quality of life within the warehouse –

Having a good work culture & quality of life within your own business is critical, irrespective of
your role as a supplier, a warehouse manager, a manufacturer, or a retailer across the supply
chain. Implementing automation and integrating the best practices in your industry will improve
your supply chain. This will optimize handling, storing, and picking times for all goods, and will
significantly minimize the risk of error in the warehouse, and beyond. Thereby, it will effectively
vitalize the overall quality of life of the workforce within the warehouse and in turn, improve the
bottom line of your business significantly.

Improved visibility for Supply Chain Operation –

One cannot run a business blindly. Visibility across the Supply Chain has a far-reaching impact
on the success of a business. Lack of synchronization in workflow often ensues when the
workforce in an organization cannot comprehend the ongoing activities a level below or above
their own position in the supply chain. With SCM in place, visibility & transparency across
every stage of the supply chain is increased. It helps create opportunities for the workforce across
various departments to collaborate and make informed decisions.

3 Explain the role of logistic operations in supply chain management.

In supply chain management, logistics are responsible for the movement and storage of goods
and services, along with the documents and reports that record those movements throughout an
item’s journey to the customer.

Logistics include the numerous transportation methods that get inventory from one location to
another. This component is responsible for figuring out where goods can be kept at each stage
until they’re needed at another location, which is essential to effective supply chain management.

Logistics are a critical piece of supply chains because it manages and tracks the people and
resources needed to store and transfer goods and services. Logistics ensure that materials and
products reliably move at the right time and on budget.

Specific aspects of logistics that support supply chains include:

 Delivering the right products at the right time.

 Reducing costs and improving efficiency.
 Helping retain customers and increasing loyalty.
 Providing a unique value proposition for some businesses.
 Providing a means to deliver goods from the most cost-effective location for production
to the location of the customer.
4 How can owners deal with financial sophistication challenges in supply business?

The financial benefits of timely response are straightforward. Fast delivery translates to less
inventory and reduced need for distribution facilities. Faster to customers means less working
capital is required to support supply chain operations. Three aspects of financial sophistication
are cash-to-cash conversion, dwell time minimization, and cash spin.
Cash-to-Cash Conversion
The time required to convert raw material or inventory purchases into sales revenue is referred to
as cash-to-cash conversion. Cash conversion is generally related to inventory turn: The higher
the inventory turn, the quicker the cash conversion. A goal of supply chain design is to reduce
and control order receipt-to-delivery time in an effort to accelerate inventory turns.

In traditional business arrangements, benefits related to cash-to-cash conversion have typically

been enjoyed at the expense of business partners. Given typical purchase discounts and invoicing
practices, it is operationally possible for arms to rapidly sell merchandise and still qualify for
prompt payment discounts.

In response-based systems, cash-to-cash conversion benefits can be shared by managing

inventory transfer velocity across the supply chain. This ability to manage inventory velocity
from origin to final destination has the potential to achieve greater efficiencies than attainable by
a single firm. Coordinated operations may require that a designated firm in the supply chain
serve as the principal inventory stocking location.
Such practice means that risk and benefits related to inventory need to be shared by participating
firms. To facilitate such arrangements, supply chain members often replace the discounts with
dead net pricing. Dead net pricing means that all discounts and allowances are factored in the
selling price. Thus, incentives for timely payment are replaced by specific performance
commitments at a specified net price. Invoice payment, based on negotiated net price is
completed upon verification of physical receipt. Such payment is typically in the form of
Electronic Funds Transfer (EFT), thereby streamlining both the flow of physical goods and cash
among supply chain partners. Managing supply chain logistics as a continuous synchronized
process also serves to reduce dwell time.
Dwell Time Minimization
Traditional distribution arrangements typically involve independent business units loosely linked
together on a transaction-to-transaction basis. A transaction view of traditional business
operations results in a series of independent transactions buffered by inventory. In contrast, a
supply chain has the potential to function as a synchronized series of interdependent business
units. At the heart of supply chain operating leverage is the willingness to transfer inventory on
an as-needed basis, taking advantage of as much collaboration and information as possible. Such
collaboration and information can be focused on maintaining the continued flow and velocity of
inventory moving throughout the supply chain. The potential of such synchronization is a key
benefit of supply chain connectivity. A significant measure of supply chain productivity is dwell
time.
Dwell time is the ratio of time that an asset sits idle to the time required to satisfy its designated
supply chain mission.
Designating a specific firm to perform and be accountable for the value-added work can serve to
reduce overall dwell. Likewise, timely arrival and continuous inventory flow between supply
chain partners reduce dwell. When a product flows from a supplier through a retailer’s cross
dock sortation process without coming to rest or being diverted to warehouse storage, dwell time
is minimized. A collateral benefit of reducing dwell time and the associated logistics cost is the
ability to reduce investment in inventory and related assets.
Cash Spin
A popular term for describing the potential benefits of reducing assets across a supply chain is
cash spin, sometimes referred to as free cash spin. The concept is to reduce overall assets
committed to supply chain performance. Thus, a dollar of inventory or the rent of a warehouse, if
eliminated by a reengineered supply chain arrangement, represents cash available for
redeployment. Such free capital can be reinvested in projects that might otherwise have been
considered too risky. Naturally, cash spin opportunity is not unique to the supply chain. The
potential to spin cash applies to all areas of a firm. What makes the potential of supply chain
cash spin so attractive is the opportunity to collaborate between firms. The benefits flowing from
fast cash-to-cash conversion, reduced dwell time, and cash spin combine to increase the financial
attractiveness of effective collaboration. Another major force driving expansion of supply chain
management is the growing involvement of most firms in international operations. Expanded
global business is a result of two significant opportunities: market expansion and operating
efficiency

5. Describe the flow of information in supply chains.

Information flows allow the various supply chain partners to coordinate their long-term plans,
and to control the day-to-day flow of goods and material to the supply chain. It consists of flows
both from vendor to the customer and from the customer to the vendor. The downstream flow of
information has important components like capacity estimates for plans, stocks available,
dispatch advices, stock transfer notes, quality assurance reports, warranties, etc. The upstream
components of information flow are inputs for forecasts, marketing plans, dispatch plans,
production plans and procurement quantities and timing, orders from customers and dealers,
quality feedback, and warranties.