Implementation of supply chain management essay

Knowing these steps in the process and recognizing when they are being applied, will help you to best position yourself to profitably sell into large corporations and to effectively compete for and win lucrative contract awards. What is the 7-Step Strategic Sourcing Process? It is a widely applied procurement methodology that helps buyers in large corporations make effective and cost efficient procurement decisions. Supply chain managers are professionally trained on how to apply the strategic sourcing methodology to get the most value at the lowest total cost of ownership.

Implementation of supply chain management essay

Questions you absolutely must consider include: Implementation of supply chain management essay Considerations when outsourcing to reduce cost The decision to outsource a part or assembly is often based on lack of internal resources, refocus of core competencies, or cost reduction.

The focus of this article is on outsourcing with the objective of lower cost. If you are attempting to outsource a part or assembly that is produced in-house based on lower cost, you must perform a thorough analysis.

In many cases, cost can only be reduced if the supplier is going to use a more efficient process or significantly less expensive labor. You must be careful in comparing costs.

Unless you are going to eliminate some fixed costs, the only real cost reduction is the variable cost. If the supplier cannot produce the part for a price lower than your variable cost, you are not saving your company money.

If you are in the process of outsourcing a part or assembly in an effort to reduce cost, you should be searching for a supplier that can produce the part using a more efficient method than you or a much lower labor rate are currently using.

Supply Chain and Demand Model Essay Sample

Even after they add in their overhead and profit, it is possible that the supplier can produce the part for less cost than you can in house. Total revenue received from sales of the product is N12, If we bought the entire N10, worth of the product on January 1st, at the end of the year we would have made a N2, gross profit on an investment of N10, But do we have to buy the entire N10, worth of the product at one time?

What if we bought N5, worth of the product on January 1st. Then, just before running out of stock, we bought an additional N5, worth of the product with part of the revenues received from selling the first shipment.

Could we make the same gross profit on an even smaller investment?

Implementation of supply chain management essay

What if we were to buy N2, dollars worth of material. Sell most of it. Buy another N2, dollars worth of the product. Sell most of that shipment and then repeat the process two more times before the end of the year.

The annual gross profit of N2, is now generated with an investment of about N2, Which investment option is better? Selling N10, worth of a product and making N2, gross profit with an investment of N10, N5, or N2,?

The best option is N2, Investing N2, rather than N10, frees up N7, that can be used for other purposes… such as stocking other products that have the potential of generating additional profits.

Capital goods include factories, machinery, tools, equipment, and various buildings which are used to produce other products for consumption.

Capital goods also refer to any material used or consumed to manufacture other goods and services. Capital goods are important to businesses, because they use capital goods to help their business make functional goods for the buying public or to provide consumers with a valuable service.

The significant exception to this is depreciation allowance, which like intermediate goods, is treated as a business expense. Buy The major factors that must be taken into consideration when you are deciding to lease or buy a piece of capital equipment.

What are the major factors that must be taken into consideration when you are deciding to lease or buy a piece of capital equipment? A minimal down payment consisting of a first and last payment is usually required in advance, and the monthly payments remain the same for the duration of the lease.

Implementation of supply chain management essay

Plus, electronic documents can be generated the same day as the approval so you can watch a machine demo, apply for credit, have documents signed and receive a purchase order all in the same day. The use of a piece of machinery to make a product is what makes a company income.

Leasing provides an easy, affordable method of using equipment that allows a monthly payment without obtaining a bank loan or worrying about budget justification.Supply Chain Management & IT - Supply Chain Management & IT Introduction Supply Chain Management (SCM) has become such an integral and essential part of every day business that entire fields of major are dedicated solely to it.

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