Table of Contents
In the contemporary world, all the industries are developing swiftly. Many changes in economics and information technologies have produced a large impact on the businesses and its objectives. The primary goal of the company is to increase its profits and the number of customers. The basis of the competition has altered under the influence of globalization and expensive communication technology. As the result, supply chain management has become more important. The quality of the relationship between a supplier and a customer is intertwined with the successful development of a firm. Thus, the effective supply chain management and the right supply chain strategy are crucial for most companies.
The two main types of the product are innovative and functional ones. They have different kinds of supply chains. Functional products satisfy the basic needs of people that remain stable in the course of time. Customers buy functional products in various retail outlets. Therefore, they have stable predictable demand and its life cycle is long (over two years). Those items that constitute innovations within the industry are called innovative products. Typically, their life cycle lasts for a few months. Innovative products possess a great variety. Thus, the company should produce more and more innovations to increase selling and gain customers.
There are four types of supply chain strategy. Efficient supply chains are designed to promote the highest level of cost efficiency. Risk-hedging supply chains apply strategies with the purpose of pooling and sharing the resources to endure possible risks in supply disruption, which is typical for retailing. Responsive supply chains focus on being flexible to the various demands of the customers that usually change. Agile supply chains reduce the risks of supply shortages with the help of pooling capacity resources and ensure flexibility to customer’s demands. Supply chain can be responsive and agile because these two functions have common features (the ability to respond to the alteration in the needs of customers).
The basic objective of a firm is to expend and gain more customers and profits. The companies may decide to buy goods or services from other firms that are often the foreign ones. There are several reasons for this decision. Firstly, the price may be lower abroad allowing the entrepreneur to save money. Secondly, the quality of the products and services is also essential. As a matter of fact, foreign companies can boast better quality. Therefore, having foreign partners gives a good chance to promote one’s production in various countries (especially developing ones) and gain access to the new markets. Finally, it leads to an increase in the number of customers who would buy more.
Building strong relationships with the customers is a significant goal for any company. Before launching new products or services into the market, a firm should obtain more information about its potential customers. The age, gender, nationality, social status, education, etc. are the most important factors one needs to consider while setting a long-term relationship.
Outsourcing is an essential means of promoting the company in the contemporary business world. When a company creates the connection with an outside provider based on its internal activities, it outsources. It also transfers the decision responsibility. The examples of outsourcing are logistics, services in finance or jurisprudence. The reasons for outsourcing include having new markets and receiving more profits, increasing the value of goods or services, improving the quality, productivity, and effectiveness, new skills, technologies acquisitions, improving risk management and flexibility to customers’ demands, etc.
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Most companies apply the Enterprise Resource Planning systems aiming at fostering its development, planning and decision-making, and improving its efficiency. These systems have many advantages. One of its main benefits is the opportunity to improve business planning and decision-making processes. Those are the most significant elements of firm’s successful development. The ERP ensures the accuracy of the information. All the employees are able to work with the same data. Moreover, the ERP systems provide the companies with the applications accessing the real-time information. One should emphasize that the ERP systems guarantee the highest security of the data the company processes. Thus, the ERP system is indispensable for planning and controlling the business.
The ERP system ensures the essential activities of the company through its software modules that form its base. The software modules have a connection with a common database. In addition, the system updates the database in the real time. Transactions work from a single database and document every activity that refers to the processes applied to manage the business. In the end, after the transaction is made, all the users of the system see it.
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The ERP systems that the author analyses in chapter 17 place emphasis on the effective management and planning of business. Those systems are the best alternatives for most companies and corporations to foster supply chain planning and decision-making. The ERP system is efficient for large firms, particularly those that function within the information technology industry. The reason is that the ERP system focuses on the areas of finance, manufacturing, logistics, sales and marketing, human resources, etc. Therefore, the ERP system may not be appropriate for the companies that specialize in the other areas.
The information that the ERP systems provide the companies with may be at risk because of several reasons. For instance, all the applications share the same database. If one of the applications fails to function in a proper way, it may damage the database. Moreover, all the employees are usually given the equal access to the information. In many cases, they do not need it during their work. As a result, the firms should not make its database available for every employee since it damages the security.
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The Article Review
The report by CBC News posted in 2010 discusses the issue of the damaged NB Power turbines caused by a mistake during the transportation process. The described event takes place in Canada. The J.D. Irving is the company that is outsourcing its services in logistics. According to the contract, its equipment division was obliged to transport turbine rotors to the company owner. Finally, Siemens Canada Ltd has bought the rotors after the items were manufactured in Germany and sold them to NB Power’s Point Lepreau nuclear generating station.
However, the plan of rotors’ transportation included some errors that resulted in a big damage to all the sides. The turbine rotors sank in the harbor. Consequently, the company has paid twenty million dollars for the repair of the rotors. The report focuses on the failure to deliver the appropriate quality of the outsourced services of the company. Undoubtedly, carrying responsibility is an urgent issue in the business process. In my opinion, the author has written this article to put emphasis on this significant matter.
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As the result, both companies (the Siemens Canada LTD and the NB Power) decided to sue J. D. Irving in order to receive their costs back. The Siemens accused the latter of the negligence of gross and breach of the contract. According to the contract, J.D. Irving had the responsibility to ensure safe transportation of the turbine rotors to the owning company. However, the company did not provide the gross with a safe and reliable handling and transportation. Hence, J. D. Irving is responsible for the damage of turbine rotors and money loss of their manufacturer and owner. According to the law, the company should cover the amount of money spent on the rotors’ repair.