The Six SCM Enablers
Enablers are responsible for the overall performance of the SCM. The SCM enablers are a group of carefully conceived and defined behaviors and approaches that allow, encourage and reinforce a firm's commitment to high performance SCM practices. The six SCM enablers are described in detail below.
Alignment
Alignment here refers to the matching of corporate and business unit goals. It also includes consistency in processes, actions, and decisions across the business units to support the supply chain management processes. It is a key organizational behavior within the supply chain management system. As the organizations function with the help of the coordinated efforts of different processes, it is of critical importance to have well-coordinated cross-functional and inter-company activities. This ensures that stakeholders and business processes work towards consciously determined and mutually recognized goals and objectives. Good alignment is achieved through effective planning and execution in conjunction with cross-functional interaction, effective information systems, and organization-wide and continuous communication systems. For better alignment, the company leadership should strive to set goals, objectives and strategies that support successful supplier relationships. For example, if the management rewards the purchasing department for obtaining products at low prices from suppliers, then it might hamper the development of long-term relationships or partnerships with suppliers. Similarly, if an organization does not have faith in its suppliers, it will be reflected in the functioning of the SCM system. Exhibit 16.3 describes how a company can improve performance by improving supply chain activities.
Customer-supplier focus
The basic objective of the customer-supplier focus is to prepare an organization's processes in such a way that they are able to understand and react to customer requirements fast. For organizations like Boeing, which largely depends on the suppliers for their requirements, the health and well-being of the suppliers is critical to provide value to the customers.
In order to improve suppliers' satisfaction, organizations should have clear and mutually understood and acknowledged rules of relationship. Organizations should show commitment for the long-term profitability and success of their suppliers. This commitment would require suppliers' involvement in new product development and improvements in the current products or services.
Design
Design is the aspect of products, processes, systems and services that ensures their successful application. Design is the comprehensive process that after considering feedback from customers and suppliers defines the overall requirements both external and internal to the organization. Design helps organizations develop products, services and business processes that satisfy the requirements of both customers and suppliers.
Measurement
Measurement refers to the quantification of information about inputs, outputs, and performance dimensions of products, process and services. Measurement is the tool used by organizations to evaluate the performance of different business processes and supplier activities. Measurement provides vital information regarding key operating outcomes such as on-time delivery performance, quality, responsiveness to engineering and technical support, etc. of the firm's suppliers. The measurements can provide results only when the organization takes corrective action to improve the areas where the measurements indicate below-par performance.
Exhibit
Supply Chain Improvement at Palm
In order to improve the performance of Palm's supply chain operations, Angel L. Mendez, Senior vice president, global operations and other senior executives decided to transform their supply chain process from push to pull. The team also planned to optimize various supply chain activities, which included demand management, containing manufacturing costs and improving relationships with customers, suppliers, electronic manufacturing service (EMS) and original design manufacturing (ODM) partners.
In order to achieve this, Mendez devised a six-quarter plan. The plan included shifting manufacturing operations to areas where operation costs were low, laying more emphasis on e-collaboration with customers and suppliers, redesigning the company's product introduction strategy and proper inventory control and management. With regard to demand management, it was noted that the Palm's software tools did not match up to customers' expectations. Palm decided to clear inventory items through discount sales.
In order to improve its supply chain activities, Palm implemented an ERP package from SAP. In order to improve the effectiveness of the ERP package, Palm decided to install supply chain planning, demand planning and available-to-promise modules. As the company was transforming its supply chain activities in a pull system, instant information availability was critical. As a result of improvement in its IT infrastructure, Palm was able to reduce the time taken for information transfer between it and its manufacturing partners to 48 hours, one-fourth of the time taken before transformation. The manufacturing and repair facilities that were located in North America, Europe and Asia were shifted to China to derive cost advantages. Currently, China accounts for 95% of Palm's production. As as result of this initiative, Palm has been able to cut the lead time by one-third. Palm's repair and warranty work was transferred to Celestica Inc. which was previously handled by four different vendors. As a result of this move, Palm was able to reduce the total cost of service per unit by 40%. These strategic improvements in supply chain activities allowed Palm to reduce lead time and at the same time minimize the repair expenses.
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Participation/involvement
Stakeholders must be involved in the decision-making process in order to ensure the success of products, processes, systems, and services.
Utilization of available resources in terms of the talents and energies of employees and external stakeholders improves organizational efficiency and performance. Feedback and involvement of suppliers and customers in the organizational planning and decision-making process enhances the effectiveness of the decision-making process. Involvement and sharing of information between different departments of the organization improves the supplier evaluation process.
Periodic review
Evaluation of the performance of the processes, programs and systems, on a periodic basis, supports continuous improvement.
Continuous improvement is based on the periodic review of all the business processes. These periodic reviews bring to notice deviations from the desired performance, and performance bottlenecks. Once they are identified, organizations can devise plans to improve the processes. Periodic review is not restricted to self-contained processes like the purchase order process, but is undertaken for complete SCM processes like the order-to-delivery process.
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