Importance of supplier satisfaction

Words: 900

 

Solution

Supply Chain Management
A supply chain defines the entire process of producing, selling and delivering a good or a
service to a consumer. It includes all the processes of production such as the activities at each
stage, how information gets communicated and the process raw materials get transformed to
useful products. Supply chain management is the process of overseeing all supply chain
activities. It involves managing the business and people that work in the chain through a clear
line of communication. The management process is broken down to physical and information
flow. Physical flow involves the process of transformation, movement and storage of goods
while information flow allows an organization's partners to control the daily flow of goods from
production to purchases and deliveries.
2. Bottleneck and its determination
A bottleneck can be defined as a point of congestion in production a system which gets more
work requests that it can handle. This creates a setback by slowing down the ongoing production.
They have serious implications in productions as they increases the amount of time needed for
production to take place. When bottleneck occur in the production process, there is a delay or
stopping of the flow of the production operation or a backup of operations behind. Bottlenecks
can be classified either as a short-term bottleneck or a long-term bottleneck. Short-term
bottlenecks are as a result of temporary issues like a delay in receiving materials or absence of an
operator. On the other hand, long-term bottlenecks are as a result of recurring issues that have
substantial impacts in the production processes. In determination of a bottleneck in the
production process, the following methods can be applied:-
Accumulation

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Normally during production, the process which that takes the largest amount of time is a
bottleneck. This is especially useful in a manufacturing line where it is easy to spot the

accumulation or the device that often breaks down.

Throughput

In a production line throughput is always connected to an output. If there is a bottleneck, then

throughput will be limited.
Full capacity

Machines that usually run at their full capacity at the expense of other production lines are the
bottlenecks.

Wait time

An increase in wait time means that the there is a bottleneck in the machine causing the hold up
in activities.
Order Winners & Order Qualifiers
In order winners, these are termed as competitive advantages that make customers to go for
a particular company's products or services. This may include attributes such as the quality of the
product or service, speed of delivery, product design, flexibility, and the image appeal. On the
other hand, order qualifiers entail the competitive advantages demonstrated by a company or
organization for it to remain a viable competitor in the business field. It entails the minimum
standards that must be met for a company to remain competitive in the market.
3. Process Lead Time and its Effectiveness

SUPPLY CHAIN AND SUPPLY CHAIN MANAGEMENT4
Process lead time refers to the collective amount of time from the start of a task through to
an end. It consists of waiting time, setup time, real operation time and post processing time.
Waiting time refers to the period work is not allocated to a machine. Setup time refers to a
condition whereby a machine is being prepared for use. Real operation time is the period where
performance is in process and post processing time is the setup time for the next time; it
normally involves removal and cleaning of the machine inorder to accommodate another task.
Typically, most customers want goods and services to be provided to them as soon as
possible. Lead time is therefore an important factor to an organization's success. It is important
that organizations reduce their average lead times to keep costs down while maintaining fast
deliveries.
4. Artificial Intelligence approval process and work flow
AI works continuously without delay with a company's approval workflow. It is efficient as it
routes invoices to the correct people.

Reduce email risks

In today's world, most approval processes happen through the email. AI is able to address
management problems e.g. when emails are overlooked or cyber security issues.

Mobile app on the front-end

As a client approves an invoice from the mobile app, each invoice and comments are sent to the
following individual in the approval work flow.

Learning from clients approvals

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It is important to seek a technology which interprets invoices and starts the approval process
when considering AI platforms. According to Gil, Y. et al. (2004), firms may benefit greatly
financially when using artificial intelligence to interpret invoices.
5. Automating Processes and Sub processes
The supply chain management is a complex process involving many individuals and high
volume goods. Manual handling of these processes is likely to yield errors resulting in loss of
revenue for a business. Supply chain processes are therefore automated to increase productivity,
efficiency, and accuracy while at the same time reducing human effort. Many processes in
production are time-consuming and prone to human errors. Activities such as inventory
management and order processing could be improved through automation. Organizations that
have automated such tasks no longer require to hire exerts thereby reducing their cost of
production.
When an organization decides to automate, it must first select a disciplined framework to
analyze its supply chain. The Supply-Chain Operations Reference (SCOR) model provides a step
to step details that identify, evaluate, and optimize a supply chain. It helps organizations identify
their current state in order to map a desired future state (Gansler and Ruby, 2004). This model is
used to understand how information supports existing logistics and explains how processes in
one organization affect processes in next organization.
6. Artificial Intelligence In Supply Chain Information Flow
Inventory control and planning

A company's success often depends on its ability to control and plan an inventory at the lowest
cost while making inventory available for customers when the need arises. This ability is

SUPPLY CHAIN AND SUPPLY CHAIN MANAGEMENT6
significantly enhanced by reliable information about customer demands. However, this
information is difficult to predict hence an expert system is used to make decisions.

Transportation network design

An important application of the AI technique in the supply chain has been to handle
transformational design problems like vehicle routing, TSP, and scheduling problems. The ant
colony optimization algorithm has also been used with success to handle known network
problems such as the minimum spanning tree problem, the TSP, and also vehicle routing.

Purchasing and supplies management

In an organization a make or buy decision should factor various decisions like the volume of
goods to produce or the capital investment needed. These scenarios are at times very difficult
hence the need for systematic decision aid tools.

Demand planning and forecasting

An organization relies on information about the future for its planning and management. It is
therefore important to develop a technique that can predict with a high degree of accuracy.
Unlike traditional methods which totally rely on historical data, AI techniques have been
introduced for demand planning and forecasting.

Order picking problems

Order picking uses a lot of labor hence it takes a huge part in warehousing operation expenditure.
Warehouse managers have improvised ways of increasing the efficiency of this process by
computerization and automation of subsequent sequencing and filling the orders. Other methods
include using an intelligence system that assigns workers orders and adjusts conveyor speed.

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Customer relationship management

Firms always try to keep their customers by making them believe they can deliver exactly what
they order. This can only be achieved by communication and creating a relation with the
customer. Customer relationship management aims to improve service delivery and build
customer relationships with the firm. According to Hockey min, an agent-based model has been
proposed to consider customer experiences between members of a social network.

E-synchronized supply chain management

Supply chain partners normally share information about demand forecasting on the internet. The
internet thus contains a lot of information which can help firms make predictions like pricing and
identify future customer bases. Symeonidis et al. (2008) used data mining methods to enhance
the output of intelligent trading agents and maximize revenue potential.
7. Request Approval Process
Most organizations utilize the approval process where one member of the organization
(requester) submits a request that has to be approved by other members of the organization. For
example, a company submits a contract request to supply an organization with raw materials.
The request is received by the organization and the system selects who should handle this based
on the value attached to the request. Assuming the manager in this scenario approves the request,
the request is sent to the supply department and they are notified on its approval. The supply
department may re-approve the request if the system requires them to. Assuming the request is
still approved at this level, the contracting department finally formalizes the request and the
company is allowed to supply.

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8. Key Performance Indicator
Key Performance Indicators (KPIs) are customizable business tools that managers use to
present the organization's current status and trends in an easily readable format. Once an
organization declares its mission and vision statements, KPIs are employed to measure progress
towards these objectives. A KPI can have a targeted and actual value; a targeted value represents
a qualitative goal that is deemed key to the success of a business, while an actual value often
describes the fluctuations that are based on the day to day activities of an organization. Different
organizations have different targeted values, for example, a manufacturing organization will
have a KPI gearing towards net profits and customer satisfaction whereas a university would
concern themselves with graduation rates.
KPIs are advantageous to an organization in a variety of ways. They provide a clear and
distinctive opportunity for an organization to compare its actual values against the targeted
values. This allows for constant monitoring of business processes while ensuring that all decision
making is driving to achieve the business objectives. KPIs breakdown vast amounts of data into
single values that give the managers an 'in a glance' view of the business in a manner that is still
coherent and could easily identify hotspots that need attention. The current market is competitive
and requires businesses to adapt to constantly changing market conditions. To remain relevant, a
business needs to incorporate these navigation tools that help measure progress in real-time. By
demonstrating to an organization their current levels of performance compared to where they
need to be, managers can shift their concerns and actions to adapt to what the KPIs are directing.

SUPPLY CHAIN AND SUPPLY CHAIN MANAGEMENT9
9. Importance of supplier satisfaction
Suppliers have to be satisfied with the running of an organization so that they can perform to
the best of their abilities. Organizations therefore have to create a meaningful and beneficial
relationship with their suppliers so that they can be satisfied. According to Wong, A. (2000),
Companies should be open to ideas from their supplies for their goals to be mutually accepted.
Supplier satisfaction goes hand in hand with customer satisfaction hence the goals and
aspirations of any company should include the satisfaction of their suppliers. A company that is
committed to involve the needs of its suppliers in its goals is more likely to reach a higher
customer satisfaction. Therefore supplier satisfaction is just as important as customer satisfaction
in any business. Supplier satisfaction can be defined as the satisfactory feeling a supplier has
towards a firm. According to Wong (2000), partnering with suppliers is the best possible way of
attaining an excellent result from a supply chain. Customer satisfaction has a positive effect on a
firm therefore addition of value to output is needed to achieve it.
Tendering is a procurement procedure where suppliers are invited to an offer on the price
and terms of goods and services which when accepted will become basis of the contract.
Tendering involves fairness, accountability and openness. Tendering therefore is a valuable tool
for buyers to determine the price of goods and services. The history of the company is critical in
the popularity of a product. A happy and motivated supplier contributes to the upward growth of
a business entity. Therefore, a mature company is a company which regards the feelings of
suppliers in its objectives. By having an interest in supplier satisfaction, an organization is able
to get trust, and respect from its suppliers. The suppliers in turn are more devoted and ready to
sacrifice everything they have for the betterment of the business. Hence this becomes a
beneficial relationship where both sides profit from each other.

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Supplier Satisfaction relating to KPIs
Supplier performance measures are tools, e.g., the KPIs which a company implements to
assess whether their suppliers are abiding by what they subscribed to in their work contract.
Considering how vital a buyer-supplier relationship is to an organization, these navigation tools
ought to be implemented in order to monitor business practices and align any misdirections.
Suppliers' satisfaction remains among the top priorities in any organization; it ascertains the
availability of quality and adequate products throughout the year and, by correlation, ensures
customer satisfaction. Satisfied suppliers and customers have a great impact to organizations'
success.

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References

Gansler, S. J.& Luby, E.R. (Eds) (2004). Transforming Government Supply Chain
Management.Rowman & Littlefield.
https://books.google.com/books?id=02Q2k6qZeYQC&pg=PA58&dq=automation+in+suppl
y+chain+management&hl=en&sa=X&ved=2ahUKEwjx98Kv8vHrAhVmDGMBHfLQDj4
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0chain%20management&f=false
Gil, Y., Deelman, E., Blythe, J., Kesselman, C., & Tangmunarunkit, H. (2004). Artifial
intelligence and grids: Workflow planning and beyond. IEEE Intelligent Systems, 19(1),
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Netz, A., Zare, R. B., Pasumansky, M., Gorbach, I. G., Petculescu, C., & D'hers, T. (2010). U.S.
Patent No. 7,716,253. Washington, DC: U.S. Patent and Trademark Office.
https://patents.google.com/patent/US7716253B2/en
Symeonidis, A.L., Nikolaidou, V. and Mitkas, P.A. 2008. Sketching a methodology for efficient
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Wong, A. (2000). Integrating supplier satisfaction with customer satisfaction. Total Quality
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https://www.tandfonline.com/doi/abs/10.1080/09544120050007733?journalCode=ctqm19

 

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