Why Supply Chain Fails?

www.scm-re-engineering.
com
Why Supply Chain Fails?
Every Organization exists due to the customers who trust them, buy the
products and promote the products. If customer is not taken care off,
customer will not care for the product and will switch to other
products. First of all Customers choice is to be considered and then
taken care of all other components of the process. When an
organization is unable to produce the right product of right quality, at
right price and unable to deliver the product at the right place and
right time, take it is for sure there is some problem in the Supply chain,
which has to be rectified immediately. Here we will discuss various
areas of supply chain which impact the entire supply chain.
Every supply chain is driven by flow of three parameters from source to
destination and vice-a-versa Flow of information
Flow of Money
Flow of Material
www.scm-re-engineering.com

Any disruption in any of these three, impacts the efficiency of the
Supply Chain. Here, we will discuss the various aspects of Supply Chain 1) Selection of Product Every Supply chain is initiated with the
selection of the product for marketing. Once the selection is
wrong, entire process will get affected adversely, therefore, it is
very crucial to select the product organization wants to launch in
the market. Few parameters to be looked into during the process
of product selection
a) Market Size of the proposed product.
b) Suitability of market for Product placement.
c) Whether to produce or outsource.
d) Costing of the product.
e) Associated Marketing activities.
f) Manpower required for sales or definition of sales channel.
2) Vendor Selection In case of Outsourcing of the final product,
organization have to find the vendors who can supply the final
product as per your specifications laid down for the product.
Setup the clear cut parameters and share the same with the
vendor and if needed give technical training to the vendors
workers/staff. Wrong selection of vendor, sometimes drags the
company in a very critical position. Following aspects of the
vendors should be considered while selection of vendors
a) Financial Status of the vendor.
b) Manufacturing capacity.
3

c) Vicinity to the market.
d) Logistics support from the vendor facility.
e) Present clientele, if any and their satisfaction level with the
vendor.
f) Lead time.
g) Agreement of supply of quality products as per the
specification, at the agreed rate, at the agreed time period and
agreed place.
Same applies to the raw material vendors, logistics service
providers.
3) Manufacturing of the Product In the throat-cut competition,
neither organization can efforts to lose an order of a single unit of
the product nor can enjoy the luxury of over stocking of
inventories. Once organization has launched the product, it is its
duty and responsibility to supply the product as per the demand.
Therefore, the production should be ready to manufacture
minimum level of the units and should be capable of producing
the bulk requirements at an optimum costing.
4) Packing of the Material Packaging of the product ensure the
following
Protection of the product from damage and leakages,
Beauty of the product,
Defines Specification and definition of the product,
Defines Manufacturers information,
4

Defines functionality of the product,
Defines opening and usage of the product in some cases.
Product without package is naked and orphan. Therefore,
packaging of the product should ensure the above. Many
times even single information may lands up in the failure of
the product. All the Government statuary requirements
should be full-filled.
5) Quality of Product - The quality of the product matters. Every
customer pays for the quality of the product. Neither organization
can play with the quality nor does customer accept bad quality of
the product. Quality of raw material impacts the manufacturing
process and the final product quality. While procurement of the
raw material quality parameters has to be adhered to.
6) Delay in delivery When a customer has paid for the product and
had been confirmed delivery schedule, it has to be followed
religiously. Many times delay in delivery is not accepted by the
customer and the customers may insist on the refund of the
money. Acquiring a customer is very easy, but retention is
tougher.
Delay in delivery of the raw material at the
manufacturing facility delays the production of the final product.
7) Price of the product - Price of the product should match the
market price of the products launched by the competitors.
Customers search the market and then take decision on purchase
of the product based on Brand, Quality of product, Price and
5

delivery. Price matters most. Frequent fluctuation in the price of
the raw material impacts the price of the final product.
8) Brand Matters Brand perception matters most. Brand image
guarantee quality, availability, after sales service of the product.
For improving and maintaining the brand image, organization has
to do marketing activities. In case of garment, the quality of
garments of an unpopular brand may be superior to Nike, Adidas,
UCB, but customer like to buy T of Nike or UCB. Likewise Dell
is famous for lean manufacturing and tailor-made products. Why?
Because a brand become a status symbol and the end usher feel
proud to be associated with that brand. So brand matters and
effect the purchasing decision of the end customer. In market
many organizations have tried to introduce shoe polish, but still
Cherry Blossom rules the market. Brand matters.
9) Communication - A Bad or delayed communication at any part of
supply chain can break down the total operations chain,
ultimately loss of customers.
10) Transportation Cost Manufacturing facilities remoteness affects

the costing and price of the product. Remote location incurs extra
freight loading on the product. Even transportation rates are not
negotiated with the transports and hefty freight rates are
charged. In India, in many locations where there are transporters
unions charging un-reasonable freights. Even many organizations
have to close down the operations.
These are not only factors effecting Supply Chain of any product
and organization. Supply chain Management is an Ocean. Keep
going inside deep, lot many micro tuning will improve the
performance of the supply chain.
For more articles on Customer service, Customer Care, Improving

productivity, Capacity Utilization, 5-S, Kaizen, 6-Sigma and other
Re-Engineering Articles and Tools, visit us on
About author
Rajinder Singh Mann, B.Sc., PGDCS, MBA, MPhil. Having Experience of 25 years
in S&OP, Education, Logistics, SCM. Has worked in diverse industries like
Publishing, Fasteners, Paints and Varnishes, Food Processing, Education and
Training, Steel wares and Table-wares. Presently associated with Ceramics
Industry heading Supply Chain Department.
Notice of Rights:
All rights reserved. No part of this article may be reproduced in any form without the written
permission of the copyright owner. For getting permission for reprints and excerpts, contact
online to www.scm-re-engineering.com to send a message via the website.
Notice of Liability:
The information contained in this Article and on the accompanying website is distributed on an
as is basis, without warranty. Every precaution has been taken in writing this article, the
author shall not have any liability to any person or entity if any damage or loss has been caused
directly or indirectly by any contacts of this article.
For additional information contact:

Online: www.scm-re-engineering.com Supply Chain, Inventory Management,
Logistics, Vendor Management, Quality Circles, etc.,
Visit Online: www.posititude.com For articles on Communication Skills, Positive
Working environment, parenting, learning Body language, etc.,

Why Supply Chain Fails?

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Why Supply Chain Fails?

Uploaded by

Copyright:

Available Formats

www.scm-re-engineering.