Supply Chain management Essay Example | Topics and Well Written Essays - 1500 words

Supply Chain management - Essay Example The company has since been operating as an automotive giant in the industry. On the other hand, General Motors continued expanding its business by acquiring other companies like Chevrolet and new companies, such as Lincoln Continental, Volkswagen, etc., began entering the market and thus began the competition between the automakers (Aherne, 2007). By this time, General Motors began introducing a variety of vehicles, giving it an edge over over Ford. The present automotive market is much more complex than it used to be a century back as the customers have become more educated, increasing the buyer power. The rivalry in the global automotive market is intense, the threat of substitution is high, there are many barriers faced by new companies trying to enter the market, and it’s mostly in favor of the buyers due to the available options, lower cost of switching brands, and the standardization of the commodity associated with the product (Bradley, et al., 2005). In order to get a competitive advantage in the industry, the companies have no choice but to bring down the manufacturing cost, especially since players from Asia have entered the global market (BERA, 2004). This is where the supply chain management comes in. Supply chain management is defined as â€Å"management of material and information flow in a supply chain to provide the highest degree of customer satisfaction at the lowest possible cost† (Business Dictionary, 2013). The companies in the automotive industry are much dependent on external suppliers for their materials before the vehicle can be assembled together (Helper, 1990). One supplier may be supplying to multiple companies at the same time and may have multiple suppliers themselves. It is estimated that that there are a minimum of six stages in the supply chain from supplying the raw material to assembling the final product (Olhager, 2002). It is thus crucial to ensure a smooth flow in the supply chain to ensure efficient manufactu ring. Some of the popular theories in the supply chain management include the following: Just in time (JIT) theory refers to the efforts and strategies applied by the management in order to increase revenue by reducing the cost of manufacturing within the company (Bongiorni, 2004). The theory suggests that improvement in the manufacturing process is continuous. By being in a continuous process of improvement, a company can increase its return on investment as the manufacturing process keeps getting more and more efficient (Alternburg, et al., 2003). The theory advocates that all unwanted inventory present in the company is a hidden cost and not an asset (Bongiorni, 2004). It is thus suggested that the company must get rid of the unwanted inventory and continuously improve its process of manufacturing by adopting methods that require lesser amount of inventory (Slack, et al., 2012). Material Requirement Planning (MRP) is another theory that can be applied to the supply chain and it i mplies that the best way to improve efficiency of the manufacturing process is through planning and control of the inventory system (Wuttipornpun & Yenradee, 2006). The theory focuses on the availability of the materials required to manufacture a product and the availability of the product to the customers. However, the materials and products must not be present in an excessive amount and must be controlled according to the demand. Finally, there must be a