Supply Chain Integration

Supply Chain Integration
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* Adoption of the Keiretsu Network in the Supply Chain
Of the many strategies available for this company, I would recommend the adoption of the Keiretsu network. The reason for this approach is because, the strategy allows manufacturers and suppliers to achieve long-term purchasing relationships, cross-shareholding, intense collaboration, and the exchange of technology and personnel. Literature studies show that the Japanese auto industry is able to share costs and responsibilities between the assemblers and suppliers, thereby reducing costs, having quick response time to the fluctuating demand of the market (Ahmadjian and Lincoln, 2001). In this method, the manufacturers become major financial supporters of suppliers through the share ownership of loans, while the supplier becomes an important part of the company`s keiretsu.
The goal of this relationship is that the members of the network enjoy the benefits of being partners and provide the company with expertise on how to achieve quality production in manufacturing. The same network can be applied down the supply chain by involving the second and third suppliers in the coalition. In the case simulation, the investor group will own the manufacturing and production facilities along with the first tire of the supplier chain that is the distributors. In this network any external distributor where direct or through outsourcing will be part of the keiretsu network by ownership of the supply chain, owning some obligation and support for the supply chain.
The second and third generation suppliers will also have part ownership at a percentage lower than the first tire suppliers will. Combined ownership of the supply chain entails the ownership, management, and obligation of performance of the warehouses, logistics, distribution and wholesale centers, the supply routes, transportation, marketing, and advertisement of the products along the supply chain. This will also make use of a virtual keiretsu, where hard-wired technology will form a link between the manufacturing firm, its distributors, and suppliers on the virtual network cutting across national boundaries.
* Metrics for the Measurement of Supply Chain Performance
Given the integration of the supply chain, the measurement of its performance must entail its operational, tactical, and strategic level. To measure these, the company can consider the planner order procedures entailing the procurement of orders in the downstream activities and inventory levels. This is through the order-entry method, the order lead-time, and path of order traverse methods. The order-entry method gives the manner and the extent to which the consumer specifications are turned into useful information and are moved along the supply chain, it is important for its affects every scheduling activity in the supply chain (Gunasekaran, Patel & Tirtiroglu, 2001).
The order-lead time is the total order cycle time between the receipt of consumer order and the delivery of goods. The customer order path is the path through which orders traverse and their ability to add value to the supply chain activities, and reduction of risks (Gunasekaran, Patel & Tirtiroglu, 2001). The other metric to measure is the supply chain relationships and partnerships, since they determine the supply chain operations. This looks at the level of partnership, its effect on the consumer, lead-time, supplier, or the problem-solving ability of partners.
* Issues that Complicate an Integrated Supply Chain
In supply chain management, supply chain optimization promises to increase the efficiency and effectiveness of the supply chain by applying tools and processes the lead to the optimal inventory, minimizes operational costs in manufacturing, distribution, and transportation. When any of these are compromised, the supply chain becomes ineffective, losses its time and cost effectiveness and efficiency. Another major impact on the supply chain is the use of incentives on partners. Incentives given to supply chain partners increase their motivation, improves the relationships, collaborations, and network in the chain thereby leading to efficiency and effective performance of the supply chain. Moreover, in the supply chain the purchasing and production of large lots of products allows the suppliers and manufacturer to enjoy the benefits of economies of scale and reduced costs.
Economies of scale arise from the fixed costs linked with the ordering, transportation, short-term discounts, trade promotions, quantity discounts, or the purchase of large lots. In practice by purchasing in large lots and the consumption rate is down the stock or inventory increases sharply implying the warehouse fills up. The depletion of stocks is due to the selling of large lots of stock or the ordering of large lots. Either way large lots affect inventory-holding costs like cost of capital, handling costs, occupation costs, obsolescence costs and miscellaneous costs. Large lots also affect order costs in terms of the buyer time, receiving, and transportation costs.
Another factor that affects supply chain is the "Bull Whip" which is defined by the wall street journal, as a phenomenon, which occurs when a company significantly adds or cuts inventory. In such a situation, any small increment or decrease in demand can lead to a big snap of materials and resources down the supply chain.
* Concepts and Methods of Effective Management of the Supply Chain
Effective management of the supply chain entails the achievement of an external standard of performance in the supply chain. Effective management of the supply chain simply entails the concept of strategy in balancing within the supply chain network. Therefore, the role of the supply chain manager is the dynamic balancing act of maintaining the viability and prosperity of the organization, within a complex network, where success and survival are critical (Thakkar & Arun-Kanda, 2008).
Recommendations
Based on the above description, it is clear that effective management of supply chain is of immense important to an organization. The following are some of the recommendations for adoption of Keiretsu Network:
There is need for the involved managers and stakeholders to balance the strategy of the organization and the supply chain network in respect to adoption of Keiretsu Network. Keiretsu Network involves the manufacturer being a financial supporter to the supply chain management. While doing this, the manufacturer should try to establish and strike a balance between the strategy of the firm and the supply chain network. For instance, it is important for the manager of the company to consider methods used in supply chain integration, planning, strategy, and implementation as discussed by Thakkar and Arun-Kanda (2008) before linking up the chain with the overall business strategy. The main aim for recommending the idea of striking or establishing a balance between strategy and supply chain network is to ensure that the obtained product will not become insignificant within the operations of the firm.
Secondly, it is recommended that the manager of the company involved in adopting Keiretsu Network should analyze the various functions of the company across supply chain. Such analysis should entail systematic and strategic coordination of supply chain functions. It is always import as described by Thakkar and Arun-Kanda (2008) for organizations involved in supply chain management to always ensure that the functions of supply chain is congruent with overall functions of the business. Before embarking on the adoption of the Keiretsu Network, the firm`s manager should ascertain congruency between firm`s functions and supply chain.
Lastly, it is also recommended that from the perspective of collaboration amongst multiple partners within the supply chain, there is need to scrutinize the involved parties or partners. The manager should identify the value added by ...