Case Study : Supply Chain Management

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Supply chain management is currently an important aspect in Management Information System. So much technology and brainpower have been used to improve the performance. In this decade electronic data interchange has made the process flexible, automatic warehousing and rapid logistics. Every organizations are trying to make their supply chain management more accurate using quick response, efficient customer response, mass customization, lean and agile manufacturing. (Fisher, 1997)
Value and rate of selling top products are adding wealth to the manufacturing industry. Therefore it is very much required to control the flow of material from suppliers, through the value adding processes and then distribute channels helps to deliver the product
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Supplier then orders 20 units from the manufacturer because they want to have bulk storage so to guarantee timely shipment of goods to the retailer. The manufacturer then receives the order and started producing in bulk ordering 40 units to ensure economy of scale in production to meet demand. Now 40 units have been produced for a demand of only 8 units which means the retailer now have to increase demand by dropping prices or finding more customers by marketing and advertising. This is how the demand gets distorted in the manufacturing unit.
The bullwhip effect is mainly caused by lack of information, the structure of the supply chain and lack of collaboration. To minimize the bullwhip effect first we have to understand the demand; what drives customer demand, and why are they demanding for the products. Lack of demand visibility can cause the main trouble to the people in the supply chain who have access to point of sale (POS) data. Suppliers and customers must collaborate properly to improve both the quality and frequency of information. Information sharing can also be done through vendor-managed inventory (VMI) management. The higher order cost with smaller or frequent orders can be done with Electronic Data Interchange (EDI) and computer aided ordering (CAO). Developing of pricing strategies can also help reduce the bullwhip

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