Supply Chain Management and Modern Technologies

Supply Chain Management and Modern Technologies

Introduction

The requirements of the marketplace when conducting supply chain

management is largely dependent on whether an organisation is in need of

pursuing either the lean or agile paradigms. The two supply chain parameters

are distinctively different. For instance, in terms of the market winner, the agile

paradigm is tagged on availability while the lean one is pegged on cost.

In other words, nimbleness in a market that is overly sensitive works well in an

agile supply chain contrary to the lean supply chain where waste definition is

example, efficiency will be visible in a lean system while the agile supply chain

will encourage an effective supply downstream.

There are quite a number of supply chain management technologies that have

been adopted in the contemporary business spheres. One such technology is the

use of RFID to track down materials or products from the point of production or

sale to the end user.

The only loophole in the application of RFID in supply chain management

seems to be emanating from outside such as lack of specified standards, security

and privacy considerations, false promises as well as marketing problems. This

business report offers a succinct critique of Naylor et al article on the

application of lean and agile (leagile) supply chain management.

Additionally, the paper discusses how RFID and other modern supply chain

technologies such as e-commerce, CPER and VMI can be used to mitigate

against the bull-whip effect in supply chain performance.

Critique / Literature Review

Perhaps, it is pertinent to begin this literature review and critique by defining

each of the supply chain paradigms. Although Naylor et al (1999) attempt to

through automation. This idea did not last for long since it was later extended to

incorporate other important factors in business that would influence rapid

Hence, the concept of agility in supply chain management has taken a sharp turn

especially in regard to its composition and functionality. Hence, Naylor et al

(1999) ought to have incorporated all the supply chain elements that affect the

in supply chain management, the two paradigms have a visible difference both

in terms of application and effect in supply chain management.

When referring to leanness, a supply chain management focuses more to do

with producing more using fewer resources. In fact, Naylor et al (1999) reiterate

that the “just-in-time” approach or zero inventories is usually associated with

leanness, especially in manufacturing. Although the latter terms are precise to

use, a more relevant philosophy to use is Minimum Reasonable Inventory

(MRI) since it is rather practical bearing in mind that “leanness” refers to the

most minimal use of available resources to produce more.

On the other hand, it is quite impossible to separate the two paradigms, not to

mention the fact that the agile supply chain is very common in business

hence manufacturing in its manufacturing portfolio. It is highly likely that the

article by Naylor et al (1999) has laid much emphasis on the positive returns of

In any case, it is worth to note that manufacturing practices among several

business organizations across the globe have been improved due to the lessons

gained from TPS guidelines. Thus, restricting the benefits to factories per se

situation whereby less working hours is spent against higher output in the

production and supply of vehicles in a factory whereas the stock of finished

vehicles may take up until three months to clear in terms of sale.

Again, this is another paradox in the supply chain management when

deliberating on both lean and agile paradigms at the same time. Therefore,

leanness, as much as it is unique from agility, can still be integrated in a

scenario whereby an organization wants to attain both efficiency and

effectiveness simultaneously.

The strategy used in supply chin and of course manufacturing should be that

which fall between market winners and market qualifiers (Heinrich, 2005). The

two concepts are well covered by Naylor et al (1999). In other descriptions, the

two parameters have also been highlighted as order qualifiers and order

appropriate manufacturing strategy can only be met when both the order

winners and order qualifiers is brought into light.

Unfortunately, Naylor et al (1999) does not explicitly underscore the two

concepts that would prepare a ground for vibrant supply chain management. In

real sense, companies do not compete; rather, it is the supply chains. Thus, it is

quite tricky to elude the connection between agile and lean as well as winners

day if the element of cost is factored in the process.

been illustrated in terms of their terse differences. Such a “compare and

approach” approach is necessary in creating a clear cut difference as well as

similarity between the supply chain paradigms.

Product quality level is an equal requirement in both lean and agile supply

chains contrary to what Naylor et al (1999) propose. Whilst leanness is overly

concerned with reducing or alleviating the level of waste in course of supply,

the quality of either goods or services produced cannot be compromised. This

also applies to lead times especially between the times when a client places an

order and when the delivery is finally effected.

Agility too, demands that the total lead time be lowered to what may be referred

to as the “irreducible minimum”. The only challenge when this requirement has

to be applied in an agile supply chain is the difficulty in forecasting and the high

level of volatile associated with predicting the total lead time. Naylor et al

(1999) also confirm that marketplace demand will be cumbersome to exploit if

the end-to-end lead-time is extremely long and possibly wasteful in the supply

process.

The lead-time is usually specified by the company representative although in

practice, it takes a much shorter time to deliver the product than earlier specified

specifications. In order to satisfy the orders placed by customers, the company

makes use of an agile supply chain paradigm.

Additionally, the inventory is not finished while the entire business platform

lowest level possible as one way of beating the competition in terms of prices.

Indeed, this is a clear cut example on how both the lean and agile supply chains

can be incorporated in an organization in order to simultaneously boost

efficiency and effectiveness.

The lean approach at Dell is also evident when the company applies vertical

integration in its supply chain management (Heinrich, 2005). Subsequently, the

company has facilitated cost reduction as a way of reducing wastes. For

instance, an agile supplier has been mandated to build relatively standard

monitors. As such, the company may require as much as 9,547 pieces of

monitors today from its agile supplier while in few days time, demand as low as

RFID for Supply Chain Performance Improvements

In particular, the use of the Radio Frequency Identification Devices (RFID) has

created real world awareness in the managing supply chain. This technology is

point of production throughout the supply chain. Additionally, RFID is capable

of either actively or passively transmitting the product information regardless of

space and time.

avoiding improper shipment sizes. By using RFID technology, it is possible to

ensure that the products will arrive at their point of destination with minimum

hitch in addition to giving a better forecast, especially of the delivery time to

consumers. An organization can also use this device for impose restrictions to

entering certain points within a building.

It can also be useful in assessing the exit and entry times for employees.

Modern business indeed requires the implementation of RFID technology and

especially in regard to improving product awareness throughout the supply

chain management. When variability in the demand order are overly increased

or amplified as they progress through the chain of supply, it results into the

bullwhip effect (Heinrich, 2005).

To this end, can RFID technologies assist in reducing the bullwhip effect in any

way? Currently, industry leaders are in the forefront of implementing strategies

smooth and unrestricted flow of information. This has been covered under the

integration of new information systems (Heinrich, 2005).

Moreover, new measurement and incentive systems in addition to giving a

bullwhip effect. In respect to new information systems, RFID has played an

integral role in supply chain management. The RFID passive tags contain vital

information of the product.

As part and parcel of reducing the bullwhip effect in its supply chain, Dell Inc.

has embraced the use of RFID technology. Today, the company stands out as

one of the well established computer and electronics manufacturers worldwide

(Dell & Fedman, 1999). The six manufacturing plants of the company employ

over 50,000 employees spread across different locations in the world.

As already mentioned, the company makes use of the idea on supply and

demand depending on the orders placed by customers to drive sales. As the

chairman and founder of Dell, Michael Dell confessed, the ability to obtain real-

time data courtesy of RFID technology has indeed improved the working

being used at Dell has enabled customers to keep a close vigil of their purchases

and how everything is progress from the assembly time, shipment and

In all of these processes, human beings are minimally involved thereby reducing

the possible additional workforce that the company would require as part of

customer support. Realistically speaking, such an arrangement would

Furthermore, congestion in warehouses has been a thing of the past bearing in

mind that Dell has fully engaged itself in the manufacture of most computer

hardware and software being sold.