CoukieLogistics and IT technology Strategies II
May 26th 2006 06:29
Core issues 2 and 3:
Demand Management
Since the supply chain is evolving to a demand pulling structure, where efficiencies and costs reductions are gained along the supply chain by addressing correctly the changes in the market, there is the necessity to establish controls in the key points of source of information along the supply chain management. The controls will help the overall SC to “read” the market and adjust the processes according to the new market’s scenario (Li, Shaw and Sikora, 2001).
Benefits from this SC strategy are the reduction in buffer inventory amongst members, enhancement of the procurement activities, enhanced customer service because of the more accurate product mix and reduction of the order cycle.
A key concept here is to build strong information flows that give visibility to the members of the SC in order to coordinate and react efficiently. The IT strategy implementation is based then in control points of information at the end of the supply chain near the customer based in POS systems, reduction of transaction times and costs and accuracy of orders via EDI or Internet based applications.
Manufacturing flow management
Manufacturing flow management is all about flexibility, companies are called to implement flexible process that can move according to the changes in the market. In an environment where the market is changing all the time no company can afford to maintain a high costs structure that makes it slow and with a lack of cash flow. Some of the approaches used by companies to bring flexibility and cost reduction to the manufacturing process are JIT, Postponement and outsourcing (Hoek, 1998).
These strategic need to be backed by and IT strategies that involves coordination amongst the supply chain members in order to give continuity to the manufacturing process, at this specific stage of the supply chain the use of an ERP system is vital to give visibility to the suppliers about the company’s own process and the company itself about lead time and how to meet the market demand. IT alignment is necessary amongst the members of the supply chain to capitalize adequate visibility, coordination and cycle time reduction.
Image Source: Gilbarco Inc.
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