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Logistic and Supply Chain Management

Question:

Discuss about the Logistic and Supply Chain Management.

Answer:

Introduction

The efficient logistic and supply chain management have been driving the organisations towards accomplishing the pre-determined objectives. Stadtler (2015) explained that the overall functionalities of a firm are signified as the logistic system whereas the supply chain refers to the formulation of networks of the associated companies. The traditional logistic procedure depends on several organisational functionalities, such as distribution, procurement, and inventory management. The study will be discussing the logistic and supply chain management of IKEA, which offers the world class furniture to the customers worldwide. The inventory management procedure of IKEA will be specified in this report. The outcome derived from such discussion will be clarifying the in-depth idea about the supply chain management in a significant way.

Background of the Company

IKEA has managed impressing the customers by offering them high quality and affordable home furnishing items. However, the competitors around the world have been undertaking the unique supply chain management procedure in order to strengthen the competitive position in this globalised market. IKEA has several franchisors in different countries. Each of the stores of IKEA offers more than 9,500 products to the customers (Supplierportal.ikea.com 2016). The vision of the company is to offer the functional and well-designed products at low rates. One of the key parts of IKEA’s supply chain is to build up the efficient relationship with the customers. The company deals with the high volume retailers. The company in fact maintains the cost-per-touch inventory management tactics to facilitate the proper SCM method.

Inventory Management and Strategic Planning

Improvement of the inventory management is one of the most promising functionalities undertaken by any firm. The efficient strategic implementation will be facilitating the proper inventory management process. Among the different inventory management software options, it is required to select the best solution for the business. The maintenance of the proper synchronisation among the different inventory systems is necessary (Seuring 2013). The use of the proper inventory optimization is helpful in delivering the right products at right time. The real-time inventory data analytics helps in providing the accurate forecast of the sales ratio. It even facilitates the process of proper adjustments to ensure the finer details that create direct impact on the profitability.

SCM in the Globalised World

Supply chain management in the global world follows several processes. The eight-step procedure is essentially needed to be maintained to establish a proper supply chain management. These steps are:

  • Customer Relationship
  • Customer Services
  • Demand chain
  • Fulfilment of the order
  • Flow management
  • Product development
  • Procurement
  • Returns

 Process of Supply Chain Management          

Figure: Process of Supply Chain Management

(Source: Ecsocman.hse.ru 2016)

The first process is the customer relationship method that provides the insightful idea regarding the establishment of the effective relationship with the customers. In such case, the management needs to recognise the target customers and the demands. The effective team work can facilitate the process in an effective way. According to Hsuan et al. (2015), the customer service management is the method of facing the customers with the stock of information. For example, the customers of IKEA may seek for the information regarding the quality of the furniture. The effective customer service has to provide the information to satisfy the queries of the customers. It helps in building reliability for the future prospects. Demand management signifies the synchronisation among the demand forecasts. Waters and Rinsler (2014) implied that the demand management procedure defines the entire functionalities of the organisation that facilitates the supply chain management.

The next step of the global SCM process is the fulfilment of the order. In order to meet the requirements of the customers, it is important to identify the basic needs and demands. After recognising the requirements, the firm needs to fulfil the order. It helps in reducing the total costs. The flow management process maintains the flexibility while manufacturing the products that will be delivered to the customers (Ecsocman.hse.ru 2016). The maintenance of the supplier relationship is essential in such cases. Product development procedure signifies the improvisation of the product features and introducing in the market place. After recognising such process, the SCM specifies the proper procurement, which is the act of managing the activities that influence the buyers to purchase the products. The final step is return management, which ensures the sustainable development process of a firm. Following such steps, the firm can establish the proper SCM functionalities.

Sustainability Practices in SCM

The sustainability practices in SCM include proper strategic implementation that is helpful for reducing costs. It has been observed that the application of the green technologies within the network of logistic and transport is effective enough for the sustainable practices. The collaboration with the external and the internal supply chain management is also much fruitful for maintaining sustainability (Prajogo and Olhager 2012). In such regards, the companies need to keep the focus on the proper product packaging process and measurement system. The continuous monitoring of the associated activities in the supply chain management process is essential for a firm to strengthen the sustainable position.

Managing Inventories

The management of the inventory is essential for the long term sustainability of a firm. Similarly, IKEA has also undertaken the effective inventory process in order to accomplish the business goals. The company has been establishing the long term relationship with the suppliers by keeping the steady prices of the product supply. The company uses the flat packaging process for fixing the order costs of the products. Another strategy that can be useful for an efficient inventory management is the effective demand and supply plans. Concentrating on the product stock, it is required to improve the supply and demand chain procedures (DeCroix 2013). In such cases, it is required to identify the proper supplier for the business. The use of the effective mobile technologies is also much beneficial for establishing an effective inventory management.

Impact of Information Technologies on SCM Process

The emergence of the innovative technologies has been changing the business functionalities in a significant way. The information technology is helpful for the business management to boost the coordination of purchases and communication techniques. With the help of the effective information technology, the companies can improvise the market analysis procedure. In fact, delivering the on time information is effective enough for the better customer services. The extensive use of the mobile technologies and e-commerce processes is ensuring the hassle-free return policies (Prajogo and Olhager 2012). Merchandising companies need to maintain the balance while shifting from various stores to warehouse. Hence, it can be inferred that the impact of the information technologies is much commendable in supply chain management procedure.

Conclusion

The global perspectives based on the supply chain procedure undertaken by the firms are one of the necessary parts for a sustainable business management. IKEA is a furniture manufacturing company, which has been following the sequential and synchronised process of supply chain management in order to accomplish the business goals. The sequential steps for the supply chain management are needed to be followed. The company has been even maintaining the proper inventory management to strengthen the competitive position. The impact of the information technologies in supply chain management is also much remarkable.  

Open-ended Discussion

In order to gather information regarding the supply chain management and logistic process undertaken by IKEA, the conversation with the operational manager was much helpful. It was observed that the company has been maintaining the effective relationship with the suppliers. Therefore, the company has undertaken the proper pricing strategy. The steady prices of the furniture materials are quite feasible for the existing suppliers. In fact, maintaining the effective relationship is quite beneficial for the company to fix the rate of the suppliers. Hence, it was important to conduct a small survey among the suppliers associated with IKEA and derived feedbacks from them about the facilities provided by the company. In spite of receiving several biased responses, it was found that most of the suppliers are much loyal to this organisation and they are receiving enough facilities. The information derived from the responses was aligned to the theoretical perspectives of supply chain management. As a result, it has been seen that the company is following the well-maintained logistic and supply chain management process.

References

DeCroix, G.A., 2013. Inventory management for an assembly system subject to supply disruptions. Management Science, 59(9), pp.2079-2092.

Ecsocman.hse.ru, 2016. The Supply Chain Management Processes [online] Available at: [Accessed 10 Sep. 2016].

Hsuan, J., Skjøtt-Larsen, T., Kinra, A. and Kotzab, H., 2015. Managing the Global Supply Chain. Copenhagen Business School Press.

Prajogo, D. and Olhager, J., 2012. Supply chain integration and performance: The effects of long-term relationships, information technology and sharing, and logistics integration. International Journal of Production Economics,135(1), pp.514-522.

Seuring, S., 2013. A review of modeling approaches for sustainable supply chain management. Decision support systems, 54(4), pp.1513-1520.

Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

Supplierportal.ikea.com, 2016. Supplier Portal. [online] Supplierportal.ikea.com. Available at: [Accessed 11 Sep. 2016].

Waters, D. and Rinsler, S., 2014. Global logistics: New directions in supply chain management. Kogan Page Publishers.

 

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