Prepare a presentation for the Board of Directors (BOD) outlining the justificat
ID: 1163495 • Letter: P
Question
Prepare a presentation for the Board of Directors (BOD) outlining the justification for implementing a new SCM function describing activities, applications, justification and benefits of implementing a SCM operating unit. Your slides must convince the BOD of the many advantages of SCM and highlight specific initiatives that SCM will address in your company. Offer examples where applicable and provide concrete problem/action/result strategies to overcome apparent company obstacles and how to incorporate modern technological advancements to increase efficacy. Your presentation should also address any ethical and social responsibilites and impacts.
Explanation / Answer
Slide 1)
Meaning of Supply Chain Management SCM and how it will have an impact on the company
Supply-chain management (SCM) is a technique used in businesses that helps improve the way manufacturing companies find raw components needed for production of goods and services. SCM is a system that collaborates with many businesses with a focus on meeting customer demands. This system contains five basic components: plan, source, make, deliver and return. Companies using an SCM system enjoy easier purchasing activities, lower costs, improved collaboration and improved cycle times.
Gone are the days when companies relied on one source of manufacturing. Any company looking to grow must include SCM ( Supply Chain Management) as part of its strategy. This is vital at ensuring minimum possible costs and helps in increasing productivity and further enhances the profits that the firm will earn.
Consider an example of a company that doesnt rely on SCM, meaning it has no forecast of what materials are to be ordered, it does not callibrate the production life cycle and pays no heed to how, materials would be sourced. It relies or one or two suppliers that are unable to supply it at peak demand season. Calculate now how much loss the company will occur in terms of opportunity cost lost as well as shaken customer satisfaction levels and profits.
Therefore, it is vital for the company to implement strategies that allow it to produce its goods and services at the minimum possible price and must procure in adequate quantity as well. Both over calculating and under calculating it would be disastrous for an organisation.
Slide 2 Advantages:-
Purchasing Benifits:-
SCM offers an advantage of making it easier for a company to manage all aspects of purchasing and production. Companies using this system develop a set of metrics to monitor the supply of goods. This metric system promotes purchasing raw products both in an efficient manner and in a way that customers receive high quality in goods produced.
Example:- If our firm implements SCM we can easily negotiate prices with vendors and order in quantities that will neither waste raw material, and ensure that these are consumed in the life cycle as and when required, and also we can keep the quality as per our standards further helping win over customers and ultimately gaining profits.
Collaboration
SCM develops a chain of businesses to work with. This group of interconnected businesses works together for one main goal: to provide customers with the goods and services they demand. SCM systems choose suppliers for raw products as well as distributors. The company uses different suppliers and distributors based on customer demand.
If implemented in the company, SCM will not only cover the demand side but also the supply side for us. The suppliers can be sorted and selected to meet minimum requirements. We can ensure that suppliers pitch in a minimum ammount of sales once we go big. Also, a check would allow us better quality control at supplier level and the end goal is to reach the customer in the best possible manner.
Lower Costs
These systems use many suppliers and distributors, allowing a company to choose the most cost-effective ones. An SCM system helps companies plan how much raw material is needed to meet customer demand. This allows companies to have a lower amount of inventory on hand at all times. Purchasing agents can then identify ways to save money when purchasing raw products.
Also since we are planning well in advance, about the costs we can keep it at a minimum ensuring that our profits get maximised. With proper storing in place we can also think off purchasing in off season when prices tend to be low if carrying costs allow us to suffice in case of peak season or emergency situations.
Cycle Time
A cycle refers to the amount of time it takes a business to complete an entire process. When the methods of SCM are used, the most efficient means of operations are discovered. This helps improve the time it takes to complete a cycle.
It is often seen that companies that do not adhere to cycle times suffer because suppliers are unable to pitch in during peak season. SCM would cut down on this and help the company manage this in a better way.
Higher Efficiency Rate:
When our business is able to incorporate supply chains, integrated logistics, and product innovation strategies, we will be in a great position to not only predict demand as well as to act accordingly. And this is, without any doubt, one of the main supply chain management benefits. When our business implements supply chain management systems, it will be able to adjust more dynamically to the fluctuating economies, emergency markets, and shorter product life-cycles.
Slide 3:-
While SCM is adapted it is also important for our company, to be compliant with social norms and other ethical practices and industry norms this will further help our company in the following ways.