SUPPLY CHAIN MANAGEMENT: MULTICHEM LTD
Category : Supply Chain Management and Logistics
Supply Chain Management: MultiChem Ltd.
Table of Contents
Supply chain is considered as one of the most important aspect of any business or organization. It is define as the flow of the different products, services, information, together with the money from one important unit to another. It also serves as an important aspect that connects the different units that are working as a team in order for them to meet different opportunities, desires, demands and tastes of the customers. Furthermore, it is considered as an important infrastructure that holds the different important processes inside and outside the company, such as production, distribution as well as consumption of products and services from the suppliers to the manufacturers, from the distributors to the retailers up to the customers. All of the said units are considered as connected and interrelated in the demand market ( 2006, ).
Each and every company is connected with other organizations and business, such as suppliers and customers, together with the third-party logistics providers and other intermediary parties. That is the reason why the competition had been moved from the competition between different organizations and businesses to the competition between the different supply chains. Consequently, the overall performance of each and every organization relies on the performance of other partners and other members of the supply chain where it belongs ( & 2005, ).
As a result, nowadays, supply chain had been considered as one of the most important sources of competitive advantage due to its ability to reduce the overall production or manufacturing cost as well as focus on the different back-end processes like purchasing, manufacturing and the physical or actual distribution. That is the reason why it is considered as a great aid and help for many companies in order to develop their overall strategies, and eventually maintaining their position in the market ( & , 2005 ).
Supply chain is consisted of 4 different categories that can be used and applied in different activities in the supply chain of any company (see Appendix A).
This paper will show and analyze the current situation of the supply chain management of MultiChem Ltd and show some recommendation about the problematic areas and future problematic areas of the company’s supply chain.
Supply chain management is facing different changes in the environment and other aspects that can affect its overall performance. Like any other company in different fields and industry in the world, the supply chain of Multichem is also facing several problems regarding its supply chain, and it is being affected by the two of the most important aspect in the world of business: globalization and technology.
The supply chain is also being affected by different risks and problems regarding the integration and outsourcing, concentration, more demanding customers, dependency over the information communication technology or ICT as well as e-commerce, legislation as well as secured supply chain ( 2004, ) (See Appendix B).
Supply chain risk is considered as the uncertainty or the unpredictable event that might affect one or more of the different entities that are involved in the supply chain as well as the setting of the business that can negatively influence and affect the overall performance and achievement of the business objective ( 2004, ).
There are two categories of risk in the supply chain management, first is the operating risk. The said category of risk pertains to the risks that are inherent in the design as well as the execution of the supply chain such as different events such as dock strikes, hurricanes as well as different accidents and natural calamities ( & 2007, ).
The second category of risk is the project management risk. It can be encountered during the effort of the management to develop and to change the supply chain. It can be the missing requirements or data while setting up a computerized system, introduction of new product and forgetting about the supply chain as well as the perils of the installation and the upgrade of the information system ( & 2007, ). The following are the risks that the company is facing in terms of their supply chain management:
- Market Misses ( & 2007, ) – This is one of the major risks that the company will be encountering in the near future, this is due to the fact that the company is still using manual system in monitoring and processing the different flow of data and information as well as money and product inside the company. Market misses pertains to the differences from the expectations for the success of a new products or even the old one that are sold into a new markets. It will also arise when there is too much or even not enough products are produced in order to meet the demand of the market. Therefore, the supply chain will no longer have the ability to make the needed adjustments.
- Forecast Error Consequences ( & 2007, ) – The company had been known for its ability to produce adequate or enough amount of their product for the demand of their customers. That is why they are not having problems when it comes to the disposal of different dangerous chemicals that might affect the overall management of the supply chain as well as add up to the cost that the company will be spending. It will cost a short-term error in the process of estimating the demand of the end-users or the customers ;
- Insufficient Production Capabilities ( & 2007, ) – This risk pertains to the underperformance or the inability of the company to handle as well as perform an operation or the management inability to use the capacity that are available. In terms of the company due to the fact that they are using the manual system in handling the different data and information about their products and services, there is a huge or voluminous workload for the employees that is why the human resource of the company is not used to the fullest.
- Quality Performance Weaknesses ( & 2007, ) – This pertains to the problem of the company due to the request of their customers to pass the responsibility in disposing the empty containers. That is why it will add cost to cover the processing of waste.
Risk and Supply Chain Vulnerability of Multichem
Globalization and expansion of the company to Europe and Scandinavia had affected the supply chain management of the company that had created several vulnerabilities in the overall flow of production inside and out of the company. Due to the expansion of the company, many of its customers started to order large amount of chemicals. The said scenario helps the company to buy bulk packs from their suppliers that enables them to gain trade discounts. On the other hand, it can cause additional cost in terms of effort and other needed materials, because the company has to do the repacking process in order to break down the chemical into small quantities for distribution.
Globalization also affected the process of production of many companies in the world. Outsourcing is one of the most crucial as well as most used impacts of globalization in the world of business. However, the outsourcing was not applied by the company because they stand that the company is a sourcing and redistribution company, not a manufacturing company. The said decision of the management of the company can impact the supply chain as well as the overall performance of the company. This is due to the fact that any change in the price and flow of the supplier of the company can affect its relationship with the customers.
It is also important to consider the proportion and number of employees or staff in different aspects of the supply chain. The number of the employees in the process of production function had reduced by 50% during 2005, the said situation is opposite in the sales order processing and the packaging department that had increased by 50%. The said situation can affect the flow of products and data in the supply chain of the company. That is due to the fact that it can affect the balance of effort in different areas of production. The said situation leads to the problem that some of the chemical lines are still produced in house because some of them can be considered as not feasible. It will cause additional effort and money in order to review those chemical lines.
The customers are also beginning to become more demanding in terms of their request regarding the disposal of the empty containers. The said request will add up cost for the company in terms of delivering and disposing the containers.
Above all, the company is also having a problem in different processes and manufacturing activities that can affect its overall supply chain, one of this is the process of labeling of the different chemical products to be sent to the customers. The process and time that is being implemented and practiced by the company, in processing the orders of the customers is somewhat long and unaccepted, more specifically for those customers that are running after the time.
Information Technology or IT can be considered as the important aspect that pushes the effective supply chain management. This is due to the fact that IT had become of the most important aspects that affected the performance and transactions of all firms in the global industry ( & 2004, ).
Information Systems can support the supply chain of the company in terms of its internal operations as well as its relationship with other entities inside their supply chain. It can be done by using high speed data networks as well as databases that can help the company to share different data and information that will eventually lead to the better management of the supply chain in general as well as to maintain their effectiveness in the supply chain. The use of the technology can be the key aspect of the success of the company ( 2006, ).
There are three main functions that are important in the information system of the company: data capture and communication; data storage and retrieval; as well as the data manipulation and reporting ( 2006, ).
Due to the fact that the company is also planning for future development in terms of globalization, a real-time supply chain is needed. A real time supply chain or online supply chain can be used in order to connect the customers, distributors, manufacturers as well as the suppliers. It can also enable the processing of information and data in simultaneous manner among all of the entities that are involved in the supply chain. It can also help to integrate different information about the public as well as private partners or entities. Above all, it can also enable the company to create its web-based business model that will create a single event such as customer order that will trigger different actions at once across the overall supply chain ( & 2004, ).
Due to the growing service and expansion of the company, it is facing one of the major changes in any business, more specifically in its supply chain management. The company is still using manual system in handling its ordering as well as sourcing methods. The said situation can lead to more serious problems such as wrong delivery and record of customers order and sending wrong orders to the suppliers. The said situation can add cost to the company in terms of repacking process and delivery.
Globalization has a huge impact to the supply chain management of many companies and industries in the world. It had helped the process of outsourcing possible. Outsourcing is considered as one of the trends that are highly applied by many companies in their manufacturing process to the suppliers at the higher level in the supply chain. This is done by outsourcing the production of many high-tech companies to contract different manufacturers in low-cost countries ( & 2004, ).
This is due to the fact that the competition in the industry as well as to the global market is increasing and many of the company’s competitors are merging into the said activities. The said activities is triggered by the need of the companies to lower down the costs in a large competitive but slow economy of the world ( & 2004, ).
One of the primary solutions that can be applied in the situation of Multichem is the application of outsourcing or the process of subcontracting. The said activity can help to speed up the service of the company, by letting other outsourcing service provider to process different manufacturing activities such as labeling. The company can also outsource some parts of its manufacturing and production in other countries with low labor cost such as China, India etc, in order to save cost; however, it can also be expensive due to the great needs of distribution and delivery channel.
On the other hand, the company must also apply Information Technology or IT in order to improve its connection with different entities in its supply chain. A real time supply chain or online supply chain can be used in order to connect the customers, distributors, manufacturers as well as the suppliers. It can also enable the processing of information and data in simultaneous manner among all of the entities that are involved in the supply chain. It can also help to integrate different information about the public as well as private partners or entities. Above all, it can also enable the company to create its web-based business model that will create a single event such as customer order that will trigger different actions at once across the overall supply chain ( & 2004, ).
The company can use the mega-portal. It is an online, Internet-based hub of information and services that can be accessed via the use of different devices such as personal computers as well cell phones. It is capable of providing different personalized contents as well as views that can help the managers to run their enterprises in better way ( & 2004, ).
The said technology will enable to have a unified data picture that is compose of the different transactions of the firm or of the business. Furthermore, it can also enable real-time sharing of data across the organization as well as the whole supply chain with accordance to the different business rules that had been established by the organization. It can also recognize all of the users as well as their authorizations in viewing data as well as performing transactions ( & 2004, ).
The said technology will help the company to manage the demand of their customers with their different products. Eventually it will help them to develop the demand forecast that will help the company to save cost in terms of savings in disposal of unnecessary chemicals that will also help the company to improve their corporate social responsibility.
Furthermore, it can also help them to speed up their transactions by using the different system that will lessen the human interaction, therefore, making the transactions error-free.
Adapted from (, 2006, )
Appendix B: Schematic Classifications of Supply Chain Risk
Adapted from: (cited from & 2007, )