Supply Chain Management
Table of Contents
Abstract
Introduction
The Board Member Suggestion #1: The Concept of Total Cost of Ownership Should Be Applied for all Strategic Sourcing Decisions
The Board Member Suggestion #2: Smart Pricing Should Be Introduced to Reduce the Cost of Obsolete Inventory
The Board Member Suggestion #3: Supplier-Managed Inventory Should Be Introduced Throughout the Supply Chain
Conclusion
References
Abstract
The supply chain management is complicated by the problem of uncertain demand, which is often caused by various macroeconomic factors. If the high-tech manufacturer has long supply chains and ineffectively managed inventory it cannot be flexible in adapting to the challenges of the external environment, which leads to significant losses and even declines of business organizations. Such approaches as total cost of ownership, smart pricing, and supplier-managed inventory can be used to optimize the supply chain management in a high-tech company. The usage of these techniques should be conducted with consideration of peculiarities of the organizational activities and products. For the high-tech manufacturing company the peculiarities are connected with low margins and rapidly depreciating goods.
Introduction
The industry of high-tech companies is complicated by the problem of rapidly depreciating goods due to the technological development and other macroeconomic factors. As argued by Cohen and Roussel (2004), the primary task of the supply chain management is to never miss a sale and the secondary task is to keep the inventory low. However, the evidence of the high-tech industry shows that effective management of inventory is critical for sustainable development of a company.
As inventory carry various types of costs, starting from capital costs, associated with effectiveness of investments in the inventory, to warehouse costs and various types of risks (Ballou, 1999). Neglecting inventory management leads to the dramatic downfall of the company in the high-tech industry due to the macroeconomic disasters as evidenced in the case study (Teach, 2001). In order to omit the effects of the traumatic effects in the industry, the companies have to adopt sophisticated practices of supply chain management to remain flexible in the changeable environment to meet the demand more efficiently and keep the effectiveness of the capital investments on a high level. Such approaches as the concept of total cost of ownership philosophy, smart pricing, and supplier-managed inventory can be used to optimize the supply chain management in a high-tech company. These approaches have to be used in accordance with the specific characteristics of the organization, its market and its inventory range to achieve beneficial outcomes.
The Board Member Suggestion #1: The Concept of Total Cost of Ownership Should Be Applied for all Strategic Sourcing Decisions
I agree with this suggestion that the concept of total cost of ownership should be adopted for all decision making in concern of strategic sourcing. Strategic sourcing decisions in the high tech industry has to provide the company with the most significant flexibility in order to adjust to the dynamic in the market. All the materials of …
