Chopra and Sodhi (2004) propose the use of ‘stress testing’. Since each supply chain is unique, the risk mitigation strategies should be tailored accordingly to suit the entire supply chain. Even though they are not explicitly distinguished, the risk categories discussed by Chopra and Sodhi (2004) are established on the basis of supply chain flows. However, a clear definition of the fundamentals of risk seems to be lacking. In some of the risk categories, such as the forecast risk, where the authors highlight the issues of the bullwhip effect, one may argue whether this could be considered as operational uncertainty and could be managed with correctly operating supply chain.
In today’s competitive business settings, organisations cannot standalone and consequently, they are required to connect with certain other companies to build a network relationship regardless of organisational types such as business, government or non-proﬁt. According to Tang & Musa (2011), the supply chain is a conception of carefully synchronised, supportive networks, challenging with different networks. Moreover, the emphasis is on handling procedures that involve other organisations as associates in accomplished relations to execute the actions essential to fulﬁl the procedure. It can be said that global supply chain necessitates inaugurating relations with organisations working in entirely dissimilar administrative, financial, and physical
The supply chain network is an essential element in producing, distributing, and handling products. Supply chain encompasses all the steps that are included in getting the service from the supplier and delivering the service to the customers. For the organisations, supply chain management is the crucial task and therefore, many organisations strive hard to optimise their supply chain networks. An efficient supply chain network facilitates the company in lowering the overall cost. Supply chain network of Honda UK is striving hard to optimise its efficiency and effectiveness in order to improve the overall performance of the company (Bowersox, et al., 2002).
Since supply chain consists of very many stakeholders who may not necessarily be living in the same geographical area, a tool for collaboration and co-operation breaks the barrier of communication over distance. Ward and Zhou (2006) reveal that Information Technology electronically
Bullwhip effect could characterized as a distortion among the supply chain. Regardless of what sort of industry the firm is, or how hard the firm attempts by its own, the procedures within the firm for delivering plan to all sorts of stock must be all impacted by the bullwhip effect and it is difficult to maintain a strategic distance from it. The bullwhip impact is a standout amongst the most profound established impact elements. In order to minimize bullwhip effect companies first, have to find out the reasons why this phenomenon occurs. The most common reason is the system dynamics.
It effectively links supply chain partners to achieve breakthrough performance in satisfying end-customer needs and provide feedback regarding customers’ needs and the supply chain’s capabilities (Wisner, Tan & Leong, 2008).Indicators of supply chain performance have an important role to play in setting objectives, evaluating performance, and determining future courses of actions (Lee, Kwon & Severance, 2007). Despite the increasing amount of attention paid to Supply Chain Management(SCM) by many companies across the globe, failures in effectively implementing SCM practices still exist. One of the main reason organization fail to successfully implement SCM is because the organization fail to link between SCM dimension and the organization's performance.Sink and Tuttle (1989) claim that you cannot manage what you cannot measure. There are many performance measures given but to identify the appropriate performance measure for the analysis of supply chain might be a challenge for the organization (Anant Deshpande,
Logistic and supply chain managers in the current age have to deal with uncertainty, risk and volatility; they have to keep on preparing for the unexpected. The need for quality and effectiveness means that supply chain has become highly vulnerable to any simple interruptions. Uncertainty is a serious element that will affect the ability of the supply chain to meet the demand of the customers (Waters, 2007). This is the reason why close attention has to be paid to the supply chain management in terms of the standards, methodologies, and strategies. Risk mitigation has turned out to be a hot topic in supply chain management.
Supply chain management is critical to the company and very important part of it to keep the company healthy is free flow of finances in the company i.e. Financial Supply Chain Management. The ongoing practices in the companies clearly depicts a brighter future in the field of completely automated system, starting from order to replenishment to payments. Also the organizations should look out for the high potential opportunities for: 1) Reducing the processing costs 2) Reconciliation of invoice and accelerating payment process 3) Reducing the Days of Sales Outstanding (DSO) 4) Centralizing procurement process in order to have greater
Many companies respond to risks that have a low impact in supply chains and tend to overlook the high-impact and low-likelihood risks (Chopra & Sodhi, 2004). An understanding needs to be obtained by managers between the connection and variety of the supply chain risks to develop an effective risk response strategy. Hauser (2003) recommends that due to today’s complex environment, adjusting and understanding risk will result in an improvement in financial performance and competitive advantage for an organisation. Hise (1995) states that the objective of supply chains is profit maximisation by finding a balance between productivity (efficiency) and profitability (effectiveness) (Mentzer & Firman, 1994) to shift raw material and products between countries in a timely manner ( Bowersox & Calantone, 1998a) resulting in profitability of supply chains as a whole ( Manuj & Mentzer, 2008). Managers need to consider the different factors that create uncertainties and risks as a global supply chain have numerous delay points, greater uncertainties, and hence the need for greater coordination, communication and monitoring (Manuj & Mentzer,
Overview The Bullwhip Effect is a phenomenon in the distribution channel which forecasts the actual yield inefficiencies in a supply chain. It refers to the increasing fluctuations in the inventory as per response to shifts in consumer demand on moving further up in the supply chain. The bullwhip effect was named actually for the way the scale of a whip increases down its full length. The further we move away from the originating signal, the greater the distortion of the resulting wave pattern. Thus in a similar manner, we can conclude that forecast accuracy decreases as move further upstream along the supply chain.