Sharif Omar

DW0957

Wednesday 6:00

Final Exam

1) I always say that without supply chain management, the world would not spin. Supply chain

management is required and used in almost every business around the world, small or large.

Supply chain management is the control of goods and /or services from when they start out as

materials to when they are completed and delivered from the origin. Supply chain management

uses different types of transportation corresponding to Trucks, Planes, Rail, Sea, and even

electronic delivery based on the product. The combinations they use may range in many

different ways. For example, a product may come by sea, be loaded on to a train, and then

delivered to a warehouse, be loaded on a truck, and then delivered to the customer. Another

way would be a truck actually gets loaded onto rail, delivered by rail to a location, and then the

truck is then driven where it needs to go (intermodal). There are many branches of supply chain

management, which are Purchasing/procurement, manufacturing, logistics, engineering,

quality, Information Technology and management. To have an efficient supply chain, you need

efficient decisions to be made in every one of those departments. Purchasing/procurement

department works with actually contacting the manufactures to purchase the supplies needed

for the product, or purchase the product itself. They plan the product purchase process from

beginning to the end. Manufactures actually make the product or send the product materials

when request buy the customer. Logistics department routes the product from the beginning of

the shipment to the end at the most efficient cost. Then engineering department designs the

product using the most efficient materials without waste. The quality department insures

quality of the product or materials to prevent returns, failures, and defective products that may

cause problems. The management department is what starts it all I believe the management is

KEY to guiding all these departments to complete their tasks in the most efficient way.

Good supply chain management objectives would include being cost effective on every

part of the transaction but also ensuring quality of the product. Choosing good suppliers and

having back up suppliers is a must to keep your product brand image safe and respected.

Having bad suppliers will cause damage to your brand, also may cause leakage of your product

for reproduction in different countries. Having a good purchasing/procurement team is a very

import role in this factor. Having optimized logistics routes is a must especially with repeated

deliveries because of added fuel cost and mileage costs. Choosing the best distribution channels

would have a huge role on being cost effective. If you are receiving materials internationally,

the amount in shipping may add up to be more than the amount of the materials being shipped

domestically. An example of a good supply chain that we learned about in class was in the

Corvette ZR1 Video we watched. Also huge companies like Wal-Mart and Sam’s club have

extremely efficient supply chain models.

Overall, supply chain management is a huge interconnected network that involves many

different hands from the beginning of the product, until it reaches the end-users final hand. So

may key factors play a role in every step and if one mistake is made, it can cause a domino

effect with pricing and quality.

2) The supply chain of a company has many different departments and steps that cost money

to operate, also cost money when mistakes are made within the supply chain if the

professionals are not doing their job efficiently. If GM would like to cut costs by 15%, I believe

they would need to start with the purchasing department and their suppliers. Constant

negotiations with the suppliers are a must because prices can always change daily for materials

and, which would lower the cost of your product from that supplier, especially with currency

exchanges. Also they could look for other qualified suppliers that would be more cost effective.

Disadvantages with this is you might run into a problem when the exchange rate is lower and

the part would actually cost more to make instead of less. Also if a supplier knows you are

looking for other suppliers, it may cause a tension between GM and the supplier, but also may

force them to drive down prices to keep GM as a customer. Advantages would include actually

finding better suppliers with higher quality at a lower cost. Manufactures are hard to keep up

with because when you go visit their plants, they may show you everything you want to see,

but then change back to normal after you leave. You would need to ensure that none of the

materials are going to waste, and that the manufacture is creating your product in the most

efficient way possible. Also, another problem with manufactures is their employees are not in

your control. You would need to make sure they hire good employees for because it would

affect your quality control portion of your item. If your item is bad quality, it may result in

returns, or the item being sent back to the manufacture, which would also rack up extra

logistics costs. Advantages to this would be saving money in materials, and producing a quality

product. Some disadvantages would be losing the supplier. You could lose the supplier if you

are not careful with the culture difference, going to different countries and telling your supplier

they are not doing a good job may cause you more harm than good because of cultural beliefs.

The engineering department could cut costs only if it doesn’t jeopardize quality of the product.

For example, if plastic is cheaper than metal, and could be used on a part, that would help with

costs. Advantages would be a huge savings in cost in the long run when millions of these parts

are produced. Disadvantages would be similar to GM case now where the engineer chose to

use a different part of lower quality, which caused deaths. Logistics is a major factor of cost. A

part might cost you 1$ but may cost you an additional 2$ to ship it. Taking a look at the logistics

of a company can save millions over time by saving money on fuel and mileage. Optimizing all

routes to make sure they are being traveled efficiently with no room for error or extra charges.

Cross docks and warehouses play a factor because of their location around the U.S. Making

sure these trucks are using the correct cross docks and warehouses when traveling in their

region can also save millions. Another way logistics costs could be cheaper is if the product is

made internationally and could be made domestically for a cheaper rate, or better quality. Also

taking a look at the third party rates and comparing it with other 3PLS to ensure you are getting

the best price. Disadvantages would be choosing the wrong 3PL because of lower costs and

never getting your shipments on-time or right. Advantages to this method would include a

huge cost savings over time.

I recommend every one of these methods with careful and precise decisions to achieve

the best price and the best savings over a long period of time. If GM was able to look at all

these factors and find a way to save money in every category, I believe that there is a way they

will be able to save 15% on their supply chain.

3) I believe we are going to start to see less international sourcing over the next few decades

along with companies starting to re-shore their business back to America. Many companies

moved their productions overseas because of cheap labor, and efficient work. Companies didn’t

have to pay medical, pensions, overtime or worry about labor laws. Workers would work long

hours to finish the goals of production. According to the article called “The Economist Re-

shoring”, this has all changed. Many changes in labor laws, pay and quality have amounted to

many companies re-shoring their products here. Labor laws have been put into place since 2008

which brought more protection to workers and made them aware of new rights. Huge pay

increases continue to go up and increase the cost of products. Another reason is public relations

issue, companies based out of America tend to get more recognition and support by the

American people. For example, Chrysler’s “Imported from Detroit” advertisement was created

after they were able to bring a lot of their work back to America. Following the ad, their car sales

soared and the company had recognition of an all American car. According to same article, 37%

of companies with annual sales over 1 billion will be shifting their production facilities to America.

This will create so many jobs and increase our economy! Look at the Chinese economy and how

well they have become. They are able to ask for pay raises because of their inflation and costs of

items going up, while America is going downhill little by little. These companies need to bring

back production because sooner or later people will not be able to afford to buy the product that

they are making in China. Why pay the Chinese works almost the same as American workers and

damage our economy? I believe many companies would not be able to move back to America

because of how much they are invested in China, but I believe that a lot of companies will start

moving. A problem they are running into is that the market is now over stretched in china, and

getting quality workers is a difficult task because of the increase in pay. You need to get workers

with lesser qualifications and that equal’s lower quality. It would make sense to hire American

workers, train them to perform the task that the company needs, and have full control over

factories and management without culture clashes.

Overall I do believe that these companies will start re-shoring because it will end up costing

them the same amount if not less to have business on American soil in the future. China rates will

only start going higher and quality will start dropping which would put American workers back

into the work place.