In this report will focus on the foremost factor of the management issue which Hydromech corporations’ supply chain department is facing. All the factors of it are critically analysed in these reports which somehow affect the company goodwill. Recommendations given in view of the literature after highlighting some problems faced by Supply chain department.
Keywords: Supply Chain management(SEM), Delivery issues, vendor’s development, Inventory management, Quality control, Forecasting in supply chain,
Supply Chain management in Hydromech Corporation
Hydromech corporation is a sole proprietor company that is growing with each passing day.
It has many departments and supply chain is one of them. Business manager work as a supply chain manager to arrange transport for delivering goods to the customer. Other employees can arrange transport without the manager. The company takes transport services from other local companies, their delivery process is not good. They only take responsibility of boxes and cartons and not of what is inside those boxes. When they deliver the consignment, they give challan and goods to the customers who are mostly farmers and are unfamiliar with this stuff.
Therefore, they also count the boxes only. The problem is that they cannot find the goods mentioned on the challan, in those cartons.
Company has two vendors for major purchases. If we purchase from them on credit than it is expensive and on cash, we can bargain for low prices. As company’s major investment is stuck in HEIS project therefore they purchase from their vendors on credit and hence pay more.
As company purchase from local vendors therefore sometimes receive cracked or broken items. Mostly the technician finds the fault in the product at the site or after the installation of that product. So the company bear the additional cost of new material and transport expenses of this product. There is no experienced quality supervisor.
Even in the imported items company received products not in a good condition. In most of the cases, claims are reported after the expiry date of claims. Company has less storing space and less store rooms for storing the material. So it disturbs the arrangement of material in store. It also has a problem of inventory management. When I joined the comp, nobody was keeping and maintaining record of inventory.
In order to keep your customers satisfied, you need to provide them with the products when they need it. But this company does not forecast the demand of its customers and when they get some order, they do not have that product in store beforehand. In some cases, the customers need pumps urgently but they do not have pumps in store therefore, they inform the manufacturer to make those pumps. But sometimes due to working load the manufacturers postponed the request and this result into customer’s dissatisfaction. The company also do not forecast the price according to the economic condition for example recent increase in dollar prices resulted increase in prices from vendors. If the company had forecasted the rise in price, then they would have bought the products at lower prices.
Customers’ satisfactions are becoming important because only when the customer’s needs are met than the company’s revenues be maximized. Supply chain manager’s in a company should not only consider trade-offs among facility cost, inventory coast and transportation cost, but must also focus on customer service issues. There are also many factors influencing customer satisfaction, e.g., product variety, product availability, customer experience response time, order visibility and return ability. Customers not only expect low price, but also demand a high quality service in terms of speed, reliability and flexibility. Consequently, how to balance operating costs with service performance issues is one of the major concerns for the companies. (Yang, 2013 ) “The vendor makes only one setup per cycle and runs his/her production facility over a period necessary to satisfy all buyers’ demands during this cycle.” (Hariga, Gumus, Ben-Daya, & hassini, 2013). Companies should build strategic relationship to form a logistics alliance with other companies. To achieve this long-term win win relationship, the dominant company should play an important part to encourage cooperative agreements to jointly optimize the entire supply chain. Companies have been taking a variety of approaches to reduce distribution costs in order to reduce overall logistics and supply chain costs. The Quality products and price are important factors for customers, logistics and supply chain performance is key to a company’s success. The type of distribution network use distribution of inventory from an intermediate DC or warehouses is good for the high demand goods. Transportation costs are lower and response time is shorter in this type. (Yang, 2013 )
Vendor development is an evolution in the supply chain management. There is a growing interest in generating approaches for meaningful development of suppliers so that business could snatch long-term strategic initiative by developing effective partnerships with supplier. “The right goods and services of the right quality and in the right quantity at the right time and the right place with the right services and support at the right price” is a service perspective that the traditional supply function is expected to meet. Only few people in the organisation cared how purchases were made as long as they received what they wanted and from whom they wanted it. The service prospective of purchasing has, however, been useful in the past, but has become secondary importance in supporting the organisation’s goals and strategies. Changing the relationship with suppliers require different type of internal and external relationship between supply and other functional area. Vendor development focuses on mutual dependence of buyer-supplier with the objective of achieving long-term economic
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