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Without an effective supply chain, goods can’t be reached to the customer on time. So, supply chain means a lot. In context of organization, supply chain provides raw goods from the supplier to the production area for their conversion into finished goods. Thus, with this start, it is portraying that every report is formed by taking some aim and objective in mind. In the same way, this report is also formed with the aim of maintaining and managing the relationship between members of supply chain and another focus is on describing the importance of trust in the relation of supply chain and organization. Before heading towards the objectives of this report, concept of supply chain will be discussed. Supply chain is the only tool which provides goods from the manufacturing area to the retail or selling area (Anghileri, 2011).
As the organization is heading towards the international market, so it is necessary for the organization to maintain smooth flow of supply of goods and services to the organization. Then only organization will sustain in the international market. Therefore, the challenges that an organization face in the supply chain in international market will be discussed in this report (Castaldo, 2007).
Later on, conversation will be adhered on the relationship that has to be maintaining with supply chain. It is as much important as raw material important for an organization. It is needed to say that organization has to maintain a healthy relation with their supply chain members. These results in delay, cost reduction etc. if maintains a good relation with supplier. At last role of trust in their relationship will be discussed. It is also considered as one of the important part in developing a healthy relation and then a conclusion will be drawn at the last (Crocker and Emmett, 2012).
There is infinite definition on supply chain management. As this topic is so vast and can’t be explained in few lines, still researcher has defined supply chain management, as it is the management of material and the flow of information being supplied to the organization and to the customer to provide a high degree of customer satisfaction at the lowest price. Supply chain management works with the support of whole team and that’s why it requires the commitment from their supply chain members to work closely and to co-ordinate order that has been placed, accepting or taking order and fulfilling at the given time with full effectiveness (Delfmann, 2007).
According to La Londe (2000) proposed that supply chain is a set of firm that passes material forward. In the words of La Londe, it’s quite obvious that not a single supplier is only involved in supply chain producers, transporter, inventory manager, retailer, whole seller and customer are involved in the concept of supply chain (Fawcett, 2008).
To gain the competitive edge in the world of competition, organization has to think beyond tier limits. One of the fields that organization has to concentrate carefully is on the field of Supply Chain. Organization plays a vital role in the field of supply chain. Many organizations are seeking new approaches to compete through a competitive supply chain strategy (Machuca and et. al, 2010). Recent research validates the fact that supply chain improvements are achieved when organizations recognize the importance of SCM. The five area where decision has to be taken in context of supply chain are:
The fundamental approach towards the supply chain by the management is to how to sort out the trade-off between responsiveness and the efficiency. In order to speed up the supply chain process organization should built to accommodate two approaches to manufacture are product and functional focus. Another action relating to supply chain by organization is that they can use any of the three approaches i.e. stock keeping unit, job lot storage and cross-docking. In this area an organization should take care to make effective the supply chain (Mentzer, 2001).
Another important field where decision can be taken regarding supply chain is inventory. Inventory is widespread throughout the supply chain and includes everything from raw material to work I progress to final products which is called as finished goods. In respect of inventory organization are liable to take three decision regarding holding of inventory they are cycle inventory, safety inventory and seasonal inventory (Modi, 2006).
Location defines the geographical area from where the supply chain performs their operation. It defines all the responsibility area and their facility location from where activity should be performed. An organization to gain economies of scale and efficiency must decentralize their activity close to customers and suppliers. It is given so much importance because location decision has strong impact on the cost and performance of supply chain (Peng, 2011).
It refers to the movement of everything i.e. from raw material to finished goods from different location, area and facilities in a supply chain. Transportation is also a matter of concern that which source should be chosen, whether land, air or water. It also aid to the cost of product. If fails to decide the effective mode of transportation may results in heavy loss (Zuckerman, 2002).
In supply chain not only tangible goods are transferred to production or manufacturing department but information also supplied to manufacturer, producers, retailers, whole seller and customer. This information are then used for taking future decision and used for co-coordinating daily activities. With the help of information future demands can be anticipated by the organization. So supply chain is also works in this area (Zuckerman, 2002).
Aim of every company is now to get their footprints in the international market, in which many of them succeeded to do so. But the major problem now they are facing is to manage and maintain the supply chain internationally. It seems so typical and tedious work in view of an organization. This part of this report will provide discussion on the challenges of supply chain that organization facing internationally, they are performing globally:
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Supply chain management largely depends on the kind of relation that an organization developed with them. In every field of organization has to maintain healthy relation the can be like stakeholder, investors, customers, society and one of the important field with which they have to maintain their relationship is with supply chain members. They are the same who provide goods, services and information into the organization, not only in organization but also to customers, producers, retailer and wholesalers. The main essence that comes out with this conversation is that relationship plays an important role in an organization for their smooth flow of operation and for their efficient performance (Bergh and et. al., 2011). Coming back to main topic of this report, we are talking about supply chain and kind of relation that has to be developed is:
These two are most basics types of supply chain relationship that are operated in an organization. Brief discussion of this relation is as under:
Horizontal Relationship: In supply chain relationship, this relationship is developed between other firms in the same industry. This relationship is also known as parallel relationship or coordination relationship. In this an agreement is made between two firms in respect of supplying material, in respect of support, in respect of flow of information etc. in this relationship involves two people, group, department, or firm. In horizontal relationship it includes both formal and informal components (Carter and et. al., 2011). Formal aspects in horizontal relationship include discussion on work, floating of information and encouraging communication. In supply chain these all are very necessary in respect of communication that what kind of order is required, what type of information required and what work has to be perform to get goods, services and information? By maintaining these aspects a healthy relation can be formed with supply chain members (Carter and et. al., 2011).
In context of informal aspect in horizontal relationship, it involves peer to peer relationship by providing social opportunity and also to encourage team building activities. These let them feel so relaxed that organization is interested in them other than work also. This informal aspect is done outside of organization environment. Let’s take this in supply chain, if members of that department are encouraged in social activity along with organization and create informal relationship with them will definitely strengthen their relationship (Fedorowicz and Ghosh, 2008).
Vertical Relationship: Vertical relationship is also known as buyer and seller relationship. These refer to traditional linkage between firms in supply chain such as relationship with firms, retailers, wholesalers, distributor, and manufacture and material supplier. These relationship takes place when two people interacts that are on differential position i.e. when a production department puts an order to supply chain members for material required for production. These are two different departments in an organization and two members or a group is involved in this process (Hingley, 2001). Vertical type of relationship develops through upwards and downward internal communication. Upward communication takes place when organization puts an order for material to supplier for their production. On contrary, downward communication takes place when supplier passes information or goods or services to an organization against their order. That becomes downward communication (Kotzab and et. al, 2011).
Importance of Relationship
If organization able to develop a healthy relationship with their supply chain members, they will definitely enjoy some advantage for that. Building a healthy relation may leads to following benefits:
Trust is the sense of mutuality and loyalty between two parties. Inculcating trust between two parties led to strong bonding. Trust is considered as one of the most critical factors in a committed and collaborative relationship between supply chain partners. By showing trust in supply chain relationship, it can improve the chances of developing successful relationship with supply chain members. Fails to develop healthy relationship then organization will bear their cost in the form of rise in cost of material and in poor performance by their supply chain members (Delfmann, 2007).
For every organization it is necessary to bring trust in their every relationship, especially with supply chain, in order to be flexible and agile. It is said that maintaining trust in relationship is so harder as both parties vary in context of culture, mind set, level etc. this led them difficult to maintain trust in their relationship. Role of trust in supply chain relationship based upon commonalities among partners. To maintain trust in relationship high amount of patience is require and this can take time to develop it properly. The role that trust plays in relationship is that it let other members to think that their fellow members are not exploiting them in any way though it also involves risk and interdependence in a supply chain relationship but they are working together so they have to mould tier mind in a positive side. With such thinking gives sound results i.e. a development of honesty and openness to be successful (Crocker and Emmett, 2012).
The main role that trust plays in supply chain relationships is they develop honesty, loyalty, fairness, openness and competency. To create a trust organization should carefully take their step i.e. to create a trust they should not invest more or low. Trust is basically created with honesty and loyalty not with money. It is apparent that trust only exist when both parties thinks same that they exist. This gives sense that supply chain members thinks that they are important for an organization and this led them to share information freely and supply goods on time. This is the role that trust plays in relationship with supply chain members (Castaldo, 2007).
From the above report it is concluded that without a supply chain management organization does not exist anywhere. In above report it is explained that what supply chain management is and what is their importance in organization and what are their impacts? It is concluded that without an effective supply chain management organization will not able to maintain their flow of production on a regular basis. Supply chain is the only source through which goods, services and information flows from supplier to manufacture, producers, retailers and customers. From the research it is understood that organization are switching their path from domestic market to international market to enjoy higher amount of profit and customers. But to gain such position supply chain plays an important role. There exist some challenges that have to be faced in international market by an organization. Challenges are discussed in above report i.e. complex procedure of supply chain, difficult to maintain equilibrium between stocking and consumer demands, differences in language, time and culture etc. these has to be sort out intelligently to dominate international market.
These challenges can be sort out by developing healthy relation with supply chain members. Relationship is the whole and soul in supply chain. Better will be the relation with supplier smoother will be the flow of goods and services and if trust is there in this relationship than for sure organization will overcome all challenges in international market. so overall to maintain smooth flow of goods and information from supplier healthy relationship and trust has to be bring between organization and supplier.
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