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SUPPLY CHAIN MANAGEMENT AND SOURCING
Table of Contents
1. Introduction    3
2. Overview of Selected Topic: Supply Chain Management (SCM) and Sourcing    3
3. Why the Topic was Interesting    3
4. Impact of SCM on View of Operations in Organisations    4
Relation between SCM and Operations    4
Financial Operations    4
Optimise Production and Distribution Capacity    5
Capacity of Logistics    5
Role of Sourcing    6
Outlook for Future    6
5. Description of Selected Organisation: ZARA    7
Application of SCM in the Organisation – ZARA’s Supply Chain Model    7
Sourcing Method:    7
6. Reasons for Successful Implementation of SCM in Zara    8
Strategy    8
Sourcing:    8
Supply Chain Strategy    8
Design:    9
Marketing:    9
Competitive Advantage    9
Customer Value    10
7. Conclusion    11
8. References    12
1. Introduction
The concept of supply chain is relatively new in management field. Keith Oliver who once used this term in one of his interview in 1982 considered as the father of the concept. This was used by Ford initially in 1920s and its successful implementation created large-scale efficiency in trade and supply chain systems. It was mainly used for production line and was limited to areas such as logistics. With industrialisation when production was increased and the shipping capabilities expanded, the global movement of goods was revolutionised (Foerstl, Schleper & Henke, 2017). As the technology advanced, ERPs and EDIs have changed the scenario and converted it into a specialised subject.
2. Overview of Selected Topic: Supply Chain Management (SCM) and Sourcing
Supply chain can be explained as a network, which is constructed between a company and its suppliers so that the produce can be distributed to the final buyer. Supply chain management is a specialisation in four areas namely: logistics, planning, operations and sourcing. Therefore, as mentioned by Wieland et al. (2020), it is concerned with transportation, inventory and warehousing as well as network design of logistics. It can be rightly said that from creating a product to handling the production flow and finally delivering it to the consumer, it deals with all the processes. In present time, it has become an inseparable part of business operations and organisations are actively participating in co-ordination, management as well as strategy designing based on Supply Chain Management systems.
Last few years witnessed social media becoming a platform, which has influenced businesses in a different way. The practices, which were not efficient and obsolete were demanded to be replaced by sustainable and environment friendly ones so that social, environmental and economic aspects of the business can be improved. As affirmed by Sandberg (2017), due to technologies such as artificial intelligence, big data and GPS, the real time visibilities has increased and have more become accessible to every organisation. It is being a complex structure can only be managed by communication as a whole.
3. Why the Topic was Interesting
In the era of globalisation when physical boundaries are no longer able to restrict the businesses, the global mobility has opened the doors for cross border trade. It has become a part of competitive culture to streamline the flow of everything from goods to any unexpected natural disaster. If as a supply chain manager, one is exploring the possibilities of the profile in terms of vastness then from reducing sourcing and production costs to finding ways to lower the total supply chain cost, one can find himself troubleshooting and strategizing on a daily basis.
As informed by Bettayeb, Ben-Ammar and Dolgui (2021), the new and unique challenges are part of this subject. When profit margins are getting reduced then retaining customers at low cost of business operations is what organisations are looking for. With supply chain as a new tool at disposal, there is a hope that timely delivery of products can be ensured to global customers. It helps to collaborate with suppliers, track the availability of goods, create value out of that, contributes in creating an infrastructure for global logistics and through performance oriented measurements synchronise demand with supply. Overall, this helps in gaining knowledge of flow of production and art of distribution.
4. Impact of SCM on View of Operations in Organisations
Relation between SCM and Operations
There is a close relationship between supply chain management system and operations management. Both are considered with the activities at the production level. SCM looks for extensive links between the processes while operations deal with their management at different production levels. Business operations are dependent on supply chain because consumption of resources is determined based on activities to be carried out. As indicated by Sandberg (2017), this decision is based on the plans, which are developed for the organisation of production process.
Supply chain will direct about what to produce and when to produce, whereas operations management will help in making the arrangements for the same so that efficiency can be maintained as well as targets can be pre-determined. Supply chain will help in forming strategy about how to outsource raw material and operations will look into human aspect such as supervision, organisation and maintenance. As argued by Bettayeb, Ben-Ammar and Dolgui (2021), though the supply chain analysis will be conducted to forecast and monitor, the processes and operations will follow those guidelines. Therefore, it can be said that supply chain will be directive while operations will be responsible for its implementation thus affecting its activities.
Financial Operations
Due to external factors such as pandemic, change in government regulations, trade policies, trade laws, low sales, reduced margins due to competition or new entrants or any kind of legal implications supply chain functions can be restrained at times. This creates pressure on liquidity and earnings. In order to maintain positivity in the flow of business companies need to exploit forecasting capacities and test them with real capital requirements at a periodic interval.
This will help finance domain to look for options in value chain from where liquidity can be freed. This can be done by reducing inventory of final product, availing facilities of government schemes or investing savings in beneficial plans. As supported by Jia and Jiang (2018), other actions can be reducing purchases and converting them to just in time, pressure dealing with suppliers to eliminate non-essential procurement will help in cash infusions. Supply chain helps in identifying and analysing the quantity of consumption based stock and follow of optimised manufacturing models through designing of favourable terms and negotiations.
Optimise Production and Distribution Capacity
In order to optimise production and distribution capacity, the aid of demand forecast is taken. It helps in...