There\'s a case related to supply chain management stated as follows: - A compan

Question

There's a case related to supply chain management stated as follows:

- A company have 2 factories in 2 different locations and all factories depend on one store/warehouse to supply them with raw materials in according to planner's forecast, so they work on a specific program who generate inventory and keep a certain level of stock in the store. but they found that information in the program inadequate and has discrepancies with the actual inventory physically residing in the hub.  

- Therefore, planners in one factory have a very low level of trust in the information system data and refuse to interface with this system without knowing the exact level in inventory while this company don't monitor the actual inventory level of goods supplied by vendors physically.

Also, there's no allocation mechanism to split the quantities to support the tow factories, so planners don't know quantities used by another factory.

This company have international customers, so they categorised customers as "ship-direct" customers but this mode of operations lead the company to encounters minimal risk since the customers pay the whole shipment once the order is fulfiled. and the second is "ship-to-hub" customers, they ship the products to the customers' hub based on the forecast from customers, and the customers don't pay until they pull the goods from the hub. so they have to bear the risk of overproduction and shortages as absorb the inventory costs.

This company set up hubs close to customers but that adds a certain degree to complexity to the hub planning process.

What operational improvements can you suggest for this company to implements from Supply Chain management approach? and Why?

Explanation / Answer

I will suggest the following actions/ recommendations to improve the supply chain:

1) It should restructure its business operations with a focus to reduce cost and increased efficiency.

2) An integrated inventory management software will be provide ease of stock management and timely delivery of the products to the domestic customers.

3) There should be two sections of product delivery one is devoted to foreign customers and second one is for domestic customers.

4) A team of efficent managers must be given responsibilities to handle every single requirements of the two factories.

5) Overproduction and shortage of goods can be managed with demand forecasting as well as by maintaining the lead time to product delivery.

6) All the motivational tools must be implemented so that people work with zeal and enthusiasm to contribute maximum .

7) Complexity of hub planning process must be reduced through customized solution to the customers. It will be better to have many local vendors who will be responsible to deliver the products on time.

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