Supply Chain Management and Competitive Advantage

Introduction Managing the public hospitals is currently a tricky undertaking. This is due to the fact that the management is under constant scrutiny by the general public. Therefore, all funds from the public coffers must be effectively managed. The public resources on disposal is ever insufficient to meet all the needs for running a facility like a hospital and the meager resources that are available must not be wasted. That is why the concept of supply chain management is important in improving the performance of the organization (Davis, 1993, para. 4).Advertising We will write a custom assessment sample on Supply Chain Management and Competitive Advantage specifically for you for only $16.05 $11/page Learn More Supply chain management will eventually help in service delivery to the patients’ satisfaction while drastically cutting down the costs. In broad terms, supply chain management is a concept involving overseeing the finance, materials and also the information while it is moving from the supplier to producer and finally to the consumer. The idea of supply chain management is to minimize the need of holding stock in the organization. Supply chain management has three flows. Finance flow which entails financial arrangements of the organization with the third parties, that is, the suppliers and the customers. Information flow deals with processing the orders and being updated with the status of delivery. Finally, product flow entails how products move from supplier to the customers. To better understand supply chain management, it is important to identify its components. These include planning, sourcing and manufacturing, making, delivering and returning (Wailgum, 2007, p. 6). Background of the study The Children, Youth and Women’s Health Organization (CYWH) is a health facility which was established in 2004 by the Australian government. The primary objective of this organization is to promote the health of child ren, youth and the women. The hospital which based in Adelaide provides maternity services and specialist care for children who are suffering from chronic conditions. CYWH has a mission for delivering quality services for women, children and the young people by working hand in hand with clients and the partners to achieve the main goal of maintaining health of South Australians. The hospitals strategic plan covers a period of five years in which it hopes to establish the foundations for healthy nation. Analysis of the existing situation The current health care system existing in South Australia cannot be sustained and required to be overhauled. This is the main reason why the government established CYWH hospital to meet health needs of her people.Advertising Looking for assessment on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The health and patterns of diseases are constantly changing in the southern part of Australi a. This is similar to other struggling nations. It is important to note that majority of the diseases can be treated and prevented. However it is not always possible to treat such diseases due to the fact that the people do not have sufficient finances that enables them access quality medical attention. Diseases such as obesity associated with unhealthy lifestyle are becoming common and a challenge to the authorities. Since it is expensive to manage the diseases, it is important to utilize supply chain management to help the hospital manage these diseases. The concept of supply chain management applies in this situation such that the drugs required to effectively treat the diseases need to move from the manufacturer, in this case the pharmaceuticals, to the government stores, then to the patients. This is a long chain consisting of many players and the impact of delaying or breaking any part of this chain can be immense. The prime objective of supply chain management is to drastical ly cut the cost and maintaining minimal inventories (Simchi-Levi, Kaminsky Simchi-Levi, 2003, p. 24). In CYWH hospital, there are incidences where accident victims are brought into the hospital but succumb to diseases due to host of factors such as shortage of doctors to attend the patients and shortage of medicine. Medicine for treating diseases may not be available when required due to logistic problems. For example, if the manufacturer is located out of Australia, the procedure for acquiring the medicine may not be as simple as it should be. Supply chain management will ensure that period between procuring the medicine from the pharmaceuticals and receiving them at the hospital is short. This will reduce the fatalities. It is common in the hospital that there are huge stocks of medicine not useful to the patients (Msimangira, 2009, p.3). These drugs are either slow moving or are expired. Such stock was bought at a cost. Therefore inventory costs such a patient dying or lose of m orale can be high. Unsatisfied patients will have to look other facilities for treatment if there hospital cannot accord them one. However, to implement such a system is not easy because the health industry is full of uncertainty (Simchi-Levi et al., 2003, p. 30). It is not sure when the patients will show up or when the medical suppliers will be obsolete. Such shortcomings drove the hospitals to buying huge quantity of medicines and causing unnecessary stock piles (Dong Xu, 2002, p.75).Advertising We will write a custom assessment sample on Supply Chain Management and Competitive Advantage specifically for you for only $16.05 $11/page Learn More The activities within the hospital are not organized. For instance, medical records of the patients are stored in a location which is far and retrieving them is not be easy. Therefore, installing the supplies chains management system in the hospital will bring various benefits such as inter-departmental coordi nation of the activities which makes it easy to run the hospital. The organization needs to integrate Information Technology (IT) in its operations (Poirier, 1998, p.100). This is because Information Technology is a vital component of supply chain management. According to Byrd and Davidson (2003, pp. 243-255), IT will bring various benefits such as the ability to track and monitor the drug movement along the supply chain. Tracing the assets of the hospital has been a tricky issue because of the physical locations (IBM, 2009, p. 3). With the introduction of supplies chain management, it will be easy to monitor and track the assets and other critical equipments owned by the hospital. There are activities which do not add value to the hospital and are not core operations of the hospital and therefore causes unnecessary spending (OECD, 2007, p.3). With the supply chain management system, there will be efficiency in the processes and will eliminate non value adding activities. Use of Pic k conveyors and order retrieval systems are some of the ways of eliminating such activities. Standardization of product.Purchasing of equipments haphazardly has led to unwarranted costs, hence there is need to standardize all equipments and the products so as to reduce careless spending of hard earned funds (Dyckhoff, Lackes Reese, 2002, p. 1). Standardization of products and equipments ensures that few products are procured in increased volumes from small number of suppliers (Anderson, 2010, para. 1-3). There is heavy discontent amongst the hospital staff as a result of the following findings. Key findings The activities of the hospital are not well coordinated, and as a result, there are high inefficiencies in the processes. Purchasing of machines and equipments that are not very important or are of marginal importance has led to the hospital incurring high costs. There is need of the hospital to embrace information technology. The future or current needs of the customers are no t being adequately met. The pharmaceuticals supplying the drugs to the hospital are not being paid on time The hospital staff is very discontented as a result of heavy workload. The processes within the organization are not consistent hence the organization is not efficient as a result. The patients are not well attended to and this has brought a lot of complaints from them. Conclusion Supply chain management can be of great importance in attaining operational efficiencies and effectiveness in the health sector (Deloitte, 2006, para. 4). This is because it will lead to drastic savings of costs and improved care of the patients. The importance of supply chain management is evident from the other sectors such as retail, hospitality, automotive, technology and space industries which have adopted and successfully integrated supply chain management in their systems (Christopher, 1999, p. 65). Healthcare industry has given a wide berth the supply chain management although it promises to bring radical improvements to this sector (Spens Bask, 2002, pp.73-88).If supply chain management is entrenched into the operations of the hospital, it can generate economies that permit the organizations to reallocate money and other resources to patients leading to ultimate satisfaction (McGullog, Wadsley, 1999, p.220).Advertising Looking for assessment on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Reference List Anderson, D. Part standardization. 2010. Web. http://www.build-to-order-consulting.com/Standardization.htm Byrd, T. Davidson, N. 2003. Examining possible antecedents of IT impact on the supply chain and its effect on firm performance. Information Management. Vol. 41, Issue 2, pp. 243-255. Christopher, M.1999. Logistics and supply chain management: strategies for  reducing cost and improving service. London: Pitmann Publishing. Davis, T.2010. Effective supply chain management. 1993. Web. Available at: http://www.ie.bilkent.edu.tr/~ie571/davis%201993.pdf. Deloitte.2006. Healthcare, health, services, supply chain, management, service  delivery. Web. Available at: http://www.deloitte.com/view/en_CA/ca/services/consulting/strategyandoperations/supplychainmanagement/3d6f483cc320e110VgnVCM100000ba42f00aRCRD.htm. Dong, Y., Xu, K. 2002.A supply chain model of vendor managed inventory. Logistics  and Transportation Review.Vol.38, issue 2, pp.75-95. Dyckhoff, H., Lackes , R. Reese, J.2004. Supply chain management and reverse  logistics. New York: Springer. IBM.2007. IBM RFID for Supply Chain and Logistics: Reusable asset tracking solution.  Web. Available at: http://webcache.googleusercontent.com/search?q=cache:_RCWxOac7YEJ:www.ibm.com/common/ssi/cgi-bin/ssialias%3Finfotype%3DPM%26subtype%3DSP%26htmlfid%3DSAS03009USEN%26attachment%3DSAS03009USEN.PDF%26appname%3DSNDE_SA_SA_USEN_SB+.+IBM+RFID+for+Supply+Chain+and+Logistics:+Reusable+asset+tracking+solutioncd=1hl=enct=clnkgl=ke . Msimangira, K.2009. Supply chain integration, supplier commercial relationships,  and order fulfillment practices in public hospitals. Web. Available at: http://www.pomsmeetings.org/ConfProceedings/011/FullPapers/011-0826.pdf . McGullog, T. Wadsley, T. 1999. The general principles of value chain management. Supply Chain Management. An International Journal. Vol. 4,issue 5, pp.218 – 225. OECD. 2007. Moving Up the Value Chain: Staying Competitive in the Global Ec onomy. Web. Available at: http://www.oecd.org/dataoecd/24/35/38558080.pdf . Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E. 2003. Designing and managing the  supply chain: concepts, strategies, and case studies. New York: McGraw Hill. Solis, L. 2002. The management of successful strategic alliances in supply chain  management networks: An empirical study of successful factors in Spain. Web. Available at: http://latienda.ie.edu/working_papers_economia/WP02-09.pdf . Spens, K., Bask, A. 2002. Developing a framework for supply chain management. International Journal of Logistics Management. Vol. 13, issue 1, pp.73 – 88. Wailgum, T.2010. Supply Chain Management Definition and Solutions. Web. Available at: http://www.cio.com/article/40940/Supply_Chain_Management_Definition_and_Solutions . This assessment on Supply Chain Management and Competitive Advantage was written and submitted by user Sidney Frederick to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here. Supply Chain Management and Competitive Advantage Introduction It is the aim of every firm to maximize its profits and reduce costs while at the same time gaining higher market possession for its good or services. Most of the firms have traditionally concentrated on profit maximization concept and have therefore put a lot of effort on cost of raw materials and other inputs that are seen to be more important than anything else.Advertising We will write a custom essay sample on Supply Chain Management and Competitive Advantage specifically for you for only $16.05 $11/page Learn More But recently other aspects have been emerging as being also important in increasing efficiency in operations thus, reducing costs in a firm. Firms have realized that supply chain management play a key role in reducing costs as well as improving relationships with other players in the market, consequently increasing a firm’s competitive advantage. Definition Supply chain is the interconnection of organizations involving the flow of raw materials, finished products, finances and information that helps in facilitating production marketing and selling of goods and products. It can either be downstream where it starts from the supplier of raw materials and flows through the manufacturer to the retailer and lastly to the customer, or upstream where the point of emanation is at the customer then it passes through the retailer, manufacturer and finally at the supplier. Supply chain management is therefore, the management of the supply chain system to ensure smooth running and efficiency in the system hence benefiting from it (Horch 2009). Additionally, supply chain management involves inclusion of important factors that help in value addition to the customer as well as the involved organization. Importance of supply chains Manufacturers expect to get the raw materials at the right time, to ensure continuity in production process as interruption interferes with the availability of the commodity for deliver y to buyers. On top of that, producers want to maintain as minimal inventory as possible to reduce storage costs, while the suppliers expect payment in good time to help them continue supplying. On the other hand, retailers and wholesalers want a stead supply of goods to ensure that they do not run short of any commodity, while the level of inventories is relatively low since huge inventory increases storage cost but bring no income (Bolstorff Rosenbaum 2012). In conjunction to that, availability of the commodity within the customer’s reach at all times is very important not only in maintaining customers, but also in attracting new ones. All these expectations can only be achieved through proper and efficient management of the supply chain to ensure that the flow either downstream or upstream is uninterrupted timely and cost effective (Horch 2009).Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Supply chain and competitive advantage Ability of the firm to secure competitive advantage over its competitors enables the firm to emerge the winner during competition, and this can be achieved through proper management of the supply chain of the firm. Supply chain management requires that a firm carries out it’s competencies but outsource what requires specialization (Bolstorff Rosenbaum 2012). Since Kellogg’s is not specialized in transportation issues, it hires TDG a logistics firm which has a lot of experience in this line of specialization. In addition, supply chain management facilitates turnover expansion through value addition where producers get involved in assisting the retailers to reduce their operation costs mostly through delivering commodities just when they are needed reducing the retailers’ cost of holding inventory. Kellogg’s has achieved this through its joint efforts with Tesco in the Ready Shelf Unit strategy which oth er than reducing the staff cost for Tesco it increases its turnover as well as that of Kellogg’s. When an organization in the supply chain realizes that there is value increase by being in the system, it becomes more willing to be part of the system hence increasing competitive advantage (Bolstorff Rosenbaum 2012). Furthermore, through proper supply chain management a firm is able to know areas of weakness of the partner. The firm can then rectify by helping in these areas and in turn the partner will be forced to stick with the firm hence, gaining competitive advantage over the competitors. On top of that, supply chain management also helps in the reduction of costs of operation for example maintaining high inventories of either raw materials or finished products or the transportation costs which mostly increases because of sending low quantities several times (Horch 2009). Through proper supply management, transportation is well coordinated such that goods are sent when th ey are required and this is always harmonized such that retailers in the same area can be supplied at the same time thus, reducing the chances of vehicles wasting space on their supply trips. Kellogg’s achieves this by incorporating Kimberley Clark, another manufacturer, therefore sharing transportation expenses which help in reduction of costs and consequently commodity price hence attracting more customers. Having the products at the retailers’ shelves all the time is also a key factor in ensuring that demand for the firm’s goods is high. When customers receive advertisement of certain products and they are able to get them from the retailers when they want them, the probability of them sticking to the product increases.Advertising We will write a custom essay sample on Supply Chain Management and Competitive Advantage specifically for you for only $16.05 $11/page Learn More In addition to that, the firm can use the retailers for promotion reasons when they have ensured constant supply of their commodities (Horch 2009). Kellogg’s has achieved this by liaising with the retailers to ensure its products are on the shelves always while ensuring that the retailers help in promoting the products. Its prices are also competitive because of the cost effective means of distribution due to efficient supply chain management. Process Integration The level of integration in the supply chain system highly depends on the number of components that are involved as well as the complexity of each component. It should be noted that, every aspect of the supply chain should be taken care of properly for the benefits of the firm. Information needs to be incorporated in the system as it helps in collection of feedback from the customers so that effective action can be taken in time to avoid any losses that might be imminent. Products must reach the consumer who is the final person in the chain and therefore anybody or firm t hat can help in delivering the product to the final consumer efficiently should be integrated in the system (Bolstorff Rosenbaum 2012). The process should also take into consideration the risk and reward issue to ensure that there is encouragement for the partners to remain in the chain thus, reducing the risk of chain breakdown. The culture and attitude of the partners also need to be managed for they will highly interfere with the normal flow within the chain. Proper management of this will ensure that partner differences are resolved and they do not affect the supply chain. On top of that, it is also important to look beyond the delivery of the commodity to the customer and take care of the environment which also increases the level of integration. Globalization and Emerging issues The concept of globalization has introduced new challenges into supply chain management hence, compelling the bodies involved to devise new ways of dealing with them. Firstly, globalization has made f irms to venture into foreign markets which have different tax structures than their home countries. This has led to the emerging of a method of managing the supply chain while taking into consideration the difference in tax structures (Bolstorff Rosenbaum 2012). Tax efficient supply chain management ensures that global firms take advantage of the difference in tax structures to increase their profits.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The importance of going beyond the delivery of the commodity to the customer and look at the disposal of waste materials and the environmental sustainability has also posed a new challenge. This has led to the emergence of the concept of reverse logistics which also should be taken into consideration. Besides, availability of many substitutes due to globalization has increased competition and the linear supply chain management is no longer feasible, therefore firms have to look for a new mode of management (Horch 2009). Conclusion Supply chain management plays an important role in increasing competitive advantage of any firm thus increasing its profit margin, hence its importance in today’s management. Unfortunately, globalization has caused the business environment to changing every now and again compelling firms to be on their toes and come up with more effective methods of supply chain management to remain competitive. References Bolstorff, P. Rosenbaum, G. R. (2012). Sup ply Chain Excellence. New York: AMACOM Div American Mgmt Assn. Horch, N. (2009). Management Control of Global Supply Chains. Norderstedt: BoD-Books on Demand. This essay on Supply Chain Management and Competitive Advantage was written and submitted by user Alondra Henderson to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.