Supply Chain Management Systems at PC World

CHAPTER ONE

INTRODUCTION

I would like to undertake the study of Supply Chain Management Systems at PC World, United Kingdom. The study covers the processes in the organization, the value chain in the firm and its analysis. I made an analysis of the ambiguities in the processes of the system and put forth recommendations needed for the improvements in future. Relationship Management at the value chain, the customer services in the organization, its impact, Information and Communication Technologies (ICT) was given concentration in the studies.

Objectives of the Study:

There are multiple objectives for my studies of research. Mainly the supply chain system in PC World is analysed in detail. Improvements for the development of the supply chain system in future is also aimed in my research as it has its own significance for a purchase led kind of business. Information and Communication Technology systems in PC World and Supplier Relationship Management in the work place are given importance as the secondary objective of the studies. An analytic thinking over the improvement of customer satisfaction with use of value chain has done as another objective of this research.

Why is this study important?

The economic crisis of 2009 was the most severe one after the Great Depression of 1929. The much expected GDP growth had not happened in the third quarter of 2009 and the growth was 0.3 in the last quarter of the year (statistics.gov, 2010). Most of other European countries have shown modest growth rates, UK is still in search of positive triggers. We have seen six consecutive quarters of negative growth and the crisis has affected the economy very dangerously. 5.7 per cent of the market capitalization has been wiped out in UK in the last 18 months. These numbers look worst when the economy faced inflation in the same time period. The doldrums in the job market and the virtually frozen consumer spending have affected many industries in the country (guardian, 2010). Still we are not at all survived from the crisis and waiting for much horrific double dip recession. So the organizations which have better operating systems only can survive in market. The organizations who serve an improved customer service will be benefited in this situation. So the organizations are trying to improve the satisfaction of customers, reduce costs and improve their profitability. Companies are in search of synergies and positive triggers with restructuring and reorganizing their strategies and operations. The Information and Communication Technology systems come across a lot of developments in this period. This is the real opportunity for the companies to come up in the market with ideal strategies and improvements in the operations. My research will be a benefit for the companies which are eagerly in search of ways to improve their efficiency as it is done in the wake of these tough situations.

Theoretical Framework

I would be guided on mostly by the studies of Geoff Walsham, Professor in University of Cambridge. The series of publications of his works by University of Cambridge are well respected in this area of study. “Globalization and ICT: Working across culture” by Geoff Walsham would be the primary theoretical resources of my research. These works shows lights on the significance of Information and Communication Technology in the present status of the economies.

Another resource for my studies is “Supply chain management: more than a new name for logistics”, by M. C. Lambert and D. M. Pagh. These works are published in IJLM (International Journal of Logistics Management). They formed a primary thought for the subject of my proposed study.

“Introduction to e-supply chain management: engaging technology to build market winning business partnership” by David Frederick Ross inspired me to work with the advanced methods of improvements for supply chain management systems and its operations.

Problem of Research:

The problem of the proposed research is insufficiencies and the opportunities of improvements for the improvements in the system of supply chain in PC World. Suggestions are made to improve the efficiency and productivity of the PC World as a part of this research. The research would be done concentrating on 3 dimensions. Implementation of Information and Communication Technology in the operations, customer satisfaction and Supplier Relationship Management are the three main points where the concentration has been given in this study. The main questions raised for the purpose of this research are listed below:

• How is the organisation of Supply Chain at P C World?
• How is the value chain organized in P C World?
• What role does the ICT system have in value chain?
• How does the ERP system work in P C World and what is the impact of it on value chain?
• How does P C World manage the supplier relations of it?
• In what way P C World manage the relations with its key suppliers?
• How does the supply chain affect the satisfaction of customers?
• What improvements can be made in P C World?
• How can the proposed changes be implemented in P C World?
• How will this change improve the efficiency of business?

Ethical Issues

Ethical Issues:

In conducting this study, I would be guided by the Guidelines set out in the British Educational Research Association (BERA) 2004 ethical issues for Educational research. The guidelines state that the researches are wholly responsible to their sponsors, the research community and participants of the research.

The guidelines states that all research work must be conducted at the highest levels of honesty. Research findings are to be published without falsifying and misstating the work done. The guidelines set out the responsibilities of the researcher to participants of the research, sponsors of the research and the research community. (BERA, supply chain management is important to deliver the products and services to end customers. However, it appears that the notions on supply chain management may only be indirectly associated with the issues surrounding consumer behaviours toward maintaining and/or otherwise pushing customer satisfaction. As referenced in many publications, undoubtedly, the role of supply chain management is an important factor in boosting the organizational success. On a separate perspective, consumer behaviour is also an essential factor toward organizational viability into years to come.

Qualitatively, preliminary studies have been undertaken concerning the connection between supply chain management and customer satisfaction, as well as the connection between consumer behaviour and customer satisfaction, in trying to recognize the clear distinctions of each topic toward ensuring customer satisfaction. This paper attempts to bring out the significance of both issues combined in relation to customer satisfaction. If the preliminary studies emphasized in automotive and food industries, this paper attempts to analyze the small and medium enterprises in service industry. It is expected that the increasing roles of supply chain management and consumer behaviour in small and medium enterprises are able to improve the overall organizational performance.

A cluster sampling methods is incorporated in this study to note the characteristics of those small and medium enterprises in certain locations. Variables chosen in this study are mainly covered the traditional SERVQUAL dimensions of tangible, reliability, responsiveness, assurance, and empathy. Aside from the qualitative analyses, which are based on interviews and field observations, a combination of statistical software packages are utilized as tools toward building quantitative analysis of the study. Research is conducted by gathering data from primary and secondary sources in service industries in Jakarta, and Bandung. As stated, it is expected that such studies would reveal the significance of supply chain management and consumer behaviour in boosting the customer satisfaction level toward organizations’ products and services. It is expected that such issues are mostly true for small and medium enterprises, perhaps.

Limitations

I would be attempting the research in a much comprehensive way as possible, following limitations may be underlying in the research

• Time Constraints: A detailed and exhaustive study was not allowed by my course semester as few significant areas are there where I was forced to leave out. However, most of the significant disciplines would be covered in the research.
• Security Issues: a supply chain in an organization, information on ERP and key supplier contracts are very sensitive kind of company information and it would be too tough to reproduce them. So I foresee myself as not being capable of publishing a few of my findings. The support of management which I had secured beforehand for the research would allow me to bring most of the findings out in the studies.
• Financial Constraints: Some suppliers of the organization are located overseas. So it would not be feasible for me to cover all major suppliers of the organization financially. Thus the major suppliers who have their physical operations in UK are confined in my research.

Contributions of the research

A dynamic and innovative concept of Supply Chain Management systems are anticipated as my study is chiefly a research led exercise. Fast growing systems of ICT in Supply Chain and management of Supplier Relationship would be invaluable resources academically. Different paths would be shown for P C World to strengthen their existing not so good supply chain, consolidate their supplier relations and to construe its customers’ needs in the research as a sense of business, for increasing the efficiency of processes and profitability of business.

Project Plan of Research

The proposed work for research would be conducted within a period of ninety days. The studies for research have being got worked since mid December and would be finished by March. The first month of my studies has been utilized for background studies and literature review. Over the next two months, twenty hours a day would be allocated for my work of research. The SCM systems and various practices in the work place, the Information and Communication Technology systems used, will be analysed in the actual company locations. Structured questionnaires would be prepared for the empirical studies of my research and to interview the customers of P C World and the suppliers of it. The last month of research would be used to analyse the findings and data, bring up recommendations for the improvements of supply chain and to get it slimmer and efficient, and to report the entire studies of research.

CHAPTER TWO

LITERATURE REVIEW

Literature Review

Other than the theoretical resources we discussed above, the following resources are also added to the knowledge related to this study. “Transition to B2B e-Market place enabled supply chain: Readiness Assessment and Success Factors” by Movahedi B., Lavassani, M K, Kumar V would be the principal resource material of the research. A great gamut of management of supply chain, role of information technology and recent development in the area of supply chain management, and numerous case studies are discussed in the book. This book allowed me to grasp a clear picture on the subject of research. “Knowledge management systems: information and communication technologies” by Ronald Maier provided more detailed technical aspects for the research. The latest developments and happenings in the field of research are updated with the Journal of Supply Chain Management and Journal of E Commerce.

INTRODUCTION

There is a drastic development in the use of information and communications technology (ICT) in logistics and supply chain management. ICT is today being applied in many organisations in a wide range and operations areas. It has provided new ways to store, process, distribute and exchange information both within companies and with customers and suppliers in the supply chain. ICT used to exchange information in the supply chain is often named inter organisational ICT or inter organisational information systems (IOIS).In supply chain management, ICT has especially been recognised as an enabler for information sharing which companies in the supply chain can use for eliminating the so called bullwhip-effect (Lee et al., 1997). Information-sharing is also a key component in many of the recent automatic replenishment programs (ARP) (Daugherty et al., 1999). Initiatives such as vendor managed inventory (VMI) and collaborative planning, forecasting and replenishment (CPFR) are based on an increased level of automation in both the flow of physical materials and goods and the flow of information between companies to improve the efficiency in the entire supply chain. In a operations management perspective, companies seek to further improve the efficiency in the supply chain by sharing information related to matching demand and supply such as short- and long-term production planning, demand forecasting and materials and capacity planning. Information that can be relevant to share between customers and suppliers typically includes point-of-sales data, forecasts and inventory levels. There is a significant amount of research demonstrating a positive impact of ICT in the supply chain. As companies seek to improve the efficiency in the supply chain through increased integration, ICT can be considered as a key enabler for supply chain management through its ability to support information sharing and shortening information processing time. Supply chain integration can however be expressed in a wide range of dimensions such as integration of processes, information, organisations and systems (Bowersox et al., 1999; Mouritsen, et al., 2003). Similarly, the impact of ICT can be demonstrated in terms of for instance changes in relationships, interorganisational changes and performance (Wilson and Vlosky, 1998). The many dimensions in which supply chain integration can be expressed and the wide variation of factors in which the impact of ICT can be defined in terms of integration indicates that previous researches have been limited to studying a few dimensions and variables relationships at a time. The aspect of how to control and coordinate the activity between the companies in the supply chain, and how ICT affects the level of control integration in the supply chain is a poorly developed area. We propose in this paper a research model for further research exploring the impact of ICT on integration in supply chain control. The model is primarily based on theory within supply chain integration and the impact of ICT. It also incorporates the supply chain control perspective, which defines the scope of application of the model. In contrast with previous research, this model does not intend to limited to a few pre-defined dimensions or variables for investigation but can be used to examine situations involving any type of integration dimension and influencing factor.

Supply Chain Management

Supply Chain Management is effective management by planning, implementing and controlling the activities in the supply chain system in an organization. Activities from warehousing the inventory to movement of products to the consumer are controlled and co-ordinated by the supply chain management.

“Supply Chain Management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities, it includes coordination, cooperation and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers” – APA (American Professional Association).

Characteristics of Supply Chains

• The management of supply and demand in and across the companies are integrated by supply chains
• It coordinates the network of business operations which provide the products and services.
• The logistics and supply chain management are distinguished by some researchers. At the same time some of them consider them as similar terms.
• The management of supply chain can be used as a software also
• A study on supply chain event management allows knowing how the system of supply chain is coordinated in an organization and how resolutions are produced for the problems that occur during the effectuation of supply chain in an organization.

Issues in Supply Chain Management

Following limitations must be dealt with the management of supply chain:

• Configuration of distribution network is the main limitation of the management of supply chain. It implies the supply chain is bore on by the number of suppliers, their locations, and missions of network of customers. The facilities for production, centres for distribution, cross docks, ware houses etc influence the supply chain management.
• The supply chain is also affected by the strategy of distribution. Replacement strategy and transportation is the other concerns for the management of supply chain.
• The total supply chain management is affected by the sharing of valuable information on the demand signals, inventory, transportation and the forecasts.
• The location and quantity of inventory which include finished goods, work in process goods and raw materials influence the supply chain.
• The cash flows in each and every level of supply chine will also affect it.
• The task flow like order fulfilment, inventory procurance, goods transporting and ware housing

SUPPLY CHAIN MANAGEMENT PROBLEMS

Supply chain management must address the following problems:

• Distribution Network Configuration: number, location and network missions of suppliers, production facilities, distribution centres, warehouses, cross-docks and customers.
• Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking, DSD (direct store delivery), closed loop shipping; mode of transportation, e.g., motor carrier, including truckload, LTL, parcel; railroad; intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar); ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated, private carrier, common carrier, contract carrier, or 3PL).
• Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These tradeoffs are key to the most efficient and effective Logistics and SCM strategy.
• Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc.
• Inventory Management: Quantity and location of inventory, including raw materials, work-in-progress (WIP) and finished goods.
• Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain.

Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional.

ACTIVITIES/FUNCTIONS

Supply chain management is a cross-function approach including managing the Movement of raw materials into an organization, certain aspects of the internal Processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement.

Several models have been proposed for understanding the activities required to manage material movements across organizational and functional boundaries.

SCOR is a supply chain management model promoted by the Supply Chain Council. Another model is the SCM Model proposed by the Global Supply Chain Forum

Activities in Supply Chain Management

• The movement of raw materials for internal processing in an organization.
• Conversion of raw materials into finished goods.
• Movement of finished goods to the consumer or end user.
• It is the responsibility of supply chain management to bring down the ownership of raw materials for the organization for a long period and to help the company to achieve the competence for the organization.
• The functions can be outsourced to increase the cost effectiveness and the satisfaction of customers’ demands.
• The management of supply chain has to construct trust among the members in the supply chain and it must better the association among them.
• The organization should be helped to actuate the inventory immediately and must develop the visibility in the supply chain.

A Supply Chain Management model projected by the GSCF (Global Supply Chain Forum) demonstrates that the activities in a supply chain can be characterized as strategic, operational and tactical activities.

Strategic Activities

• The optimization of strategies of an organization like number of warehouses, locations, centres of distributions, facilities and locations of warehouses etc are included in strategic activities.
• Strategic activities include the communication network creation among the supply chain members and it must develop an improvement in the activities of supply chain such as shipping, docking, transport, and logistics etc.
• The organization of designing of the products and development are included in strategic activities of an organization and the strategic activities must integrate the new and existing products into the supply chain.
• It should support all the activities in supply chain.
• All the activities of supply chain must be integrated with overall activities of the organization by the strategic activities.

Tactical Activities

• It includes decisions concerning to purchase of inventory and contracts.
• It includes decisions pertained to production such as the location, schedule, contracts, plans and definition of processes of production etc.
• Decision making in relation with the quality, transport, quantity, location, and use of inventory.
• The strategy formulation in concern with freight like the transport frequency, the cost, routes, contracts and logistics etc are included
• It involves the best process benchmarking in the industry throughout its operations.

Operational Activities

• It includes decisions and activities in relation with day to day activities connected to production and planning at each levels of supply chain.
• It involves forecasts of production facilities and necessities in supply chain in every instant.
• It involves forecasting and planning of Demand and converting the overall demand into supply and share it with every the members of the supply chain. Forecasting, planning and coordinating the demand forecast of each and every customer and share bode with all suppliers.
• Inward operations, such as movement and transport of goods and stocks in the supply chain.
• It involves operational decisions and planning from ingestion of inventory to the current of finished goods in the chain of supply.
• It includes the promises of orders, accounting for all processes in the supply chain from suppliers to consumers or end users.

Scope of Supply Chain Management

To compete in the global market, companies rely on effective networks of supply chain According to Peter Ducker, business networking concept covers beyond the conventional enterprise limitations and broadens to coordinate the entire process of business throughout a value chain of multiple companies included in it.

Outsourcing of Information Technology has enabled the organizations to be processed in such a way that each partner of business concentrates in the few significant areas in which he is specialized.

This inter organizational network is the innovative trend in form of organization with the complex interactions among the key players; the structure of network is not a hierarchical structure or a market structure.

It is ambiguous of what kind of performance level impact that various supply network structures could have on organization, and little is known about the conditions of coordination and tradeoffs that may subsist among the players. From point of view of a system, a structure of complex network can be decayed into individual component companies (Zhang and Dilts, 2004). Conventionally, companies in a supply network focus on the processes’ inputs and outputs, with little matter of concern for the internal management of the firm working on other individual players. Therefore, an internal management choice control structure is known to make a major impact on performance of local companies (Mintzberg, 1979).

There have been large changes in environment of business which has contributed to the supply chain networks’ developments. Primarily, as a result of globalization and with the increase of big multi-national companies, strategic alliances, joint ventures and business partnerships, have found to be making important factors of success, following the earlier practices of “JIT” (Just-In-Time), “Lean Management” and “Agile Manufacturing”. Secondly, changes of technology, especially the dramatic fall in the cost of information communication, which is a predominant component of transaction costs, have led to changes in organization among the members of the network of supply chain (Coase, 1998).

The exceptional transformation towards activities of integration from managing functions of individuals with processes of key supply chain in place could be the first significant step in establishing a successful supply network. For example; the department of purchasing places orders as necessities become appropriate only, when Department of Marketing responding to consumer demands and convey the same with all the distributors and retailers across to go with the demand of customers. The overall integration process leverages the whole shared information among partners of supply chain of an organization towards its advantage.

The key to Successful consolidation of Supply chain business process is by employing the collaborative work across suppliers and buyers, common systems along with the shared information and joint product development.

In 2000, the Lambert and Cooper expressed their view as the whole as “The continuous information flows in the integrated supply chain process supports an organization to achieve best product flows”. Despite such expression, there subsists an opinion among organizations and networks of management, that product flows’ optimization cannot be realized without implanting a process access to respective businesses.

The supply chain significant processes by Lambert (2004) are listed below:

• Customer relationship management
• Management customer service
• Management of demand
• Fulfilment of orders
• Management of flow of manufacturing
• Management of supplier relationship
• Development of a product and commercialization
• Management of Returns

In addition to points of Lambert other keys are:

• Procurement
• Physical distribution
• Outsourcing and partnerships
• Measurement of performance

1. Management of customer service process

As the information of customer is the basic source for service of customers, the important aspect of Customer relationship Management is between the organization and its customers. This real- time information makes customers cognisant on various details such as product availability, product information, probable delivery dates through multiple interfaces of information about the company’s operations of production and distribution.

Steps to build an efficient and Successful relationship with customers:

• Establish goals which are commonly rewarding between organization and customers
• Customize and invest efforts to preserve customer resonance and support always
• create positive outlook with customers in the organization
1. Process of procurement

In laying good strategic plans for process of procurement, the interests, opinions and support of the suppliers is very important; because their confidence in the plans lay foundation for newly build manufacturing flow management and it is the same in case of a development of a new product.

When activities are global and far reach across, the companies need to accommodate processes to manage and source them accordingly. For achieving success in creating the preferred product, it is significant to have mutually beneficial relationship, cut down times cycles in design and development of the new product play very important role.

Communication systems can be boosted by deploying tools like Internet connectivity and electronic data interchange (EDI), of the purchasing function of a firm to drive activities.

These powerful systems of communication streamlines a lot of processes in managing, obtaining and tracking information about products and materials and products, which supports organization in dealing with issues successfully; supply sources, inbound transportation negotiation phases, resource plans, order placement, delivery status, storage capabilities, handling and quality assurance. Also, it actuates the organizations to handle the responsibility and to organize commitment with suppliers over supply continuity, delivery scheduling, misrepresentation, and research support studies in creating new product and sources of programs.

1. Development of new product and commercialization

This helps organizations to reduce time cycles of development of product with aspects of customers, suppliers so as to capture markets better by being competitive, innovations of products