The Reading for This Week Focused on Supply Chain Management

The reading for this week focused on supply chain management, and it was an interesting read for me, since I haven’t worked in an industry that experiences and utilizes it.  I do see where it applies to the simulation we’re working on though. The past 2 quarters, I’ve had to manage leftover stock and estimate orders for manufacturing based on market demand.  The game is challenging because we aren’t dealing with customers first hand so we are not really able to experience customer relationship management, which the chapter talks about as being an integral part of the SCM process.  Also missing from the simulation is outside factors, such as production delays or weather or dealing with logistics.

I found it interesting that even large companies like Apple experience supply chain issues.  Carnette, in the article below attributes the issues to the fact that Apple’s products are revolutionary and that no one else in the industry has combined products as Apple has, so raw materials and work in progress inventory processes have to be updated.  For example, Apple’s iPad Mini Retina combined a new, smaller form factor for its IPad line with the improved and updated Retina display.  This pushed back supply of the product in the market.  The article assures readers that these issues are not of concern for investors since Apple has other products that are on track to be released and as prior years have dictated, the product will sell well during the holiday season.  The product delay in this case fares well for a long-term investor, as they are able to sit on their investment.

Apple’s competitor, Samsung on the other hand, has had successful supply chain management systems.  In fact, Samsung has been named the best Asia Pacific supply chain by Gartner, which is a leading technology research and advisory company.  According to the Endeavour Partners report below, Samsung’s supply chain is mostly in house and they only use subcontractors for low cost commoditized components that are replaceable.  Another key to Samsung’s success is their strong bargaining power with subcontractors, allowing them to decrease or increase orders, ability to control inventory costs and increasing profitability.  They achieve this by paying manufacturing employees well above the industry average.  This is something I am going to try with the simulation, to see if it will impact my results!