Operation management deals with overseeing, designing, and controlling the production process. Supply chain management (SCM) is a main concept of operation management whose major aim is to oversight materials, information, and finances in the whole process of supply products from supplier of raw material to the end consumers. It is important concept that helps business enterprise in attaining operational efficiency (Vitoriano, 2011). The present report is going to discuss about specific lean management principles and roles of procurement and warehousing in supply chains. Furthermore, this report discusses about improvements in supply chain management and the application of one or more of the lean management principles with relevant real life examples (Overstreet, 2011). The major improvements into procurement and warehousing processes through lean management principles are going to be presented in the above report. At last, the potential difficulties or challenges are pointed out when implementing the improvements into lean management in the organizations.
Roles of procurement and warehousing in supply chains
From the view point of Mohan (2013) Supply chain management is described to be an essential element to operational efficiency. For number of organizations, supply chain management is known to be a tool which impact customer service as by making use of improved supply chain management the organizations can provide effective services in the form of providing right product to the customers at the right time and at right prices (Mohan, 2013). According to Zhen-shan (2011) there are two elements of supply chain management such as Warehousing and procurement. Warehousing plays a vital role in the process of supply chain process. This is a process of keeping raw material and finished goods into storage and to attain efficiency and effectiveness in supply chains however, suppliers face number of challenges in warehousing. To the view point of Zhen-shan (2011) manufacturers want to reduce the expenses of warehousing of products so they can provide low cost products to customers. From the investigations of Langat (2013) It has been identified that Supply Chain Management is used so as to attain sustainable competitive advantage. With the help of such tools the production company manufacturing firm can effectively manage their productions, warehouse, and stores, so that final product can be distributed to the end user at the right quantities, to the right locations, and at the right time. The proper supply chain management help business organization in overcoming problem of over stocking and under stocking that is usually faced by company (Zhen-shan, 2011).
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In the support of above statement, Langat (2013) has stated that with focusing on procurement and warehousing the business firm can attain better perspective towards diverse factors which can facilitate in overcoming various current and future challenges. These kinds of improvements are also beneficial for improving supply chain management. Moreover, it is evident that the business organizations can have continuous improvement in global factors by focusing on procurement and warehousing practice (Langat, 2013). Ioan (2013) has stated that number of globalization issues or challenges can be improved in context of reverse logistics, environmental sustainability, information technology and overall supply chain process. It also promotes the integration within supply chain process by emphasizing on strategies, roles, and responsibilities that relates with the warehouses.
Tools and frameworks
As per the view of Ioan (2013), another fact is that distribution center (DC) can also boost the operational and supply chain effectiveness. It provides an appropriate representation among wide range of activities that can modernize warehouse practice. It also facilitates in meeting needs and orders of customer and provides better value added services for better improvements (Ioan, 2013). Other than this, Ji (2013) has also contended that procurement is an activity that plays a key role in acquisition and purchase of goods so that services can be improved in a better way. Moreover, the effective use of external sources can also be taken into account for better services and improvements in supply chain process. Procurement process is considered as the most favorable activity that provides enhanced level of goods and services by providing appropriate assistance to supply chain process (Ji, 2013). Author has also said that it helps in attaining best possible outcome at very low cost so that needs can be met in terms of quality, quantity, time and location.
According to Gärtner (2011) the logistics activities also plays a key role in effective development of supply chain process as it helps in managing diverse factors. With an improved focus on logistics activities the balance between key components can be maintained so that quality of product and services can be improved (Gärtner, 2011). As per the structured study it can be said that there are various procurement and warehousing activities which can be taken into account by focusing on management principles, tools, concepts and frameworks. In the support of this, Duran (2013) has said that by focusing on key management principles the business firm can improve supply chain process. In this respect, management can focus on effective selection of communication tool so that message can be conveyed in the proper way. It will build better relationship with diverse external sources which is beneficial for improving supply chain process (Duran, 2013).
Other than this, proper selection of location and transportation is also one of critical aspect for supply chain process. Bangsow (2016) has asserted that with an appropriate selection of these two factors the business organisation can improve effectiveness of procurement and warehousing that impact directly on supply chain process. In the support of this, it can be said that management of Jaguar is using latest technological tools to have better transportation. It facilitates the firm to deliver final products in an appropriate time and improve effectiveness of supply chain process (Bangsow, 2016). Borghesi (2013) has also contended that improvement in procurement and warehousing activities has positive impact on supply chain process. Number of policies and standards can also adopted by business organisation to ensure about effective development of supply chain management (Borghesi, 2013). In support of this, it can be said that the framework application within procurement and warehousing practice will boost operational effectiveness and lead business to impressive success.
As per the view of McFarlan (2014), it can be said that there are various procurement strategies that can be used by organisation to develop supply chain management. In this support, management can motivate morale of its suppliers to bring innovative resources and methods that can enhance effectiveness of supply chain management. It is also necessary for the management of organisation to create trust among all members and improve coordination so that supply chain process can have better developed (McFarlan, 2014). Moreover, Wu (2015) has contended that risk factor can also be reduced with an assistance of procurement method that is beneficial for better business opportunities. In the support of this, it can be asserted that employing of active approach will also increase the morale of staff members and boost effectiveness of procurement and warehousing practice. It is also necessary for management to focus on wide range of factors that relates with management operations (Wu, 2015). For example, Tesco Plc focuses on various operations in context of procurement and warehousing. Management of Tesco Plc ensures that the manufacturing, transportation and distribution channel is properly maintained so that business can improve supply chain management. Hedman (2003) has said that to manage and operate warehouse environmental factors the approved product lines is required. In this respect, the management of Coca-Cola has customized its supply contract which provides integrated delivery system as per customers’ needs.
As per the view of Hedman (2003), in order to have effective supply chain and better procurement or warehousing operations the management of business firm can also focus on lean six sigma process. It is considered as a procedure that assist in improving business efficiency as well as effectiveness. Prasanta (2013) has also asserted that the key principles of lean six sigma also plays a key role in transformation of operational activities. In the support of this, it can be said that the lean six sigma is a methodology that relies on diverse collective operations in order to enhance overall performance of organisation (Prasanta, 2013). It also plays a key role in cut down of wastage so that business can have impressive level of success.
Moreover, Sirgy (2008) has also asserted that six sigma are classified as sort, set in order, shine, standardize and sustain. With an improved focus on these factors the management of business firm can attain better opportunities in context of supply chain process. It is also beneficial for improvement in procurement and warehousing approach (Sirgy, 2008). Warhurst (2005) has contended that the sort means the management can have elimination of uncertain or unnecessary factors from the procurement and warehousing process in order to have improvement in effectiveness. Set in order means proper arrangement of factors can also boost the operational process in context of supply chain. In the support of this, company must focus on proper establishment of warehouses in context of temperature and cleanliness so that resources can be stored in effective manner. Other than this, Warhurst (2005) has also critically said that number of standards can set out in order to meet the goals and maintain the sustainability in context of procurement and warehousing.
Problematic issues in Procurement and Warehousing processes
In support of this, it can be said that there are number of issues that business organisation can face in procurement and warehousing process. It has been spotted that mostly manufacturing organisations does not meet visibility to inventory which may lead business to some critical problems. One of the key issues is shortage in inventory and it impacts the overall operational activities of the manufacturing firm (Hedman, 2003). Moreover, the company can also face number of warehouse inventory issues. Inaccuracy remains one of the biggest problems which are faced by all the warehouses. It has been identified that inaccuracy can be occurred in diverse manner such as improper quantity, improper location, pricing, etc. These kinds of factors also impact the application of procurement and warehousing practice.
It has been identified that the Tesco Plc faces various issues in supply chain process due to inaccurate quantity of product in their warehouse (Prasanta, 2013). It is one of key issues for retail sector business organisations which impacts development process in a negative manner. Wrong location of warehouse also increases the cost of operations such as transportation, etc. The issues regarding capacity of warehouse is also one of the key inventory issue which affects supply chain management (Sirgy, 2008). For example, Jaguar warehouses are not located near manufacturing plant which will increase the cost of transportation and impact the supply chain process in a negative manner. It may also possible that delivery time of goods or resources may also increase which can influence the operational activities.
Other than this, it can be said that the manufacturing firms mostly faces issues in procurement process due to multiple handling of activities. In support of this, it can be said that the manufacturing industry focuses on premium production but at the same time they desire to provide products at the low cost. These kinds of multiple actions affect the operational activities in a negative manner (Warhurst, 2005). Further, it can be said that the space utilization and warehouse layout is also one of the critical issue for business organisation. If business organisation is not having proper space to store resources and final goods then it may be possible that its supply chain process may get affected in a diverse manner. In these kinds of conditions the business firm requires high speed transportation so that goods can be delivered in desired time period (Tiwari, 2013). It may increase the cost of transportation and influence the business in a negative manner.
Ways to overcome issues (Framework, tools and lean principle)
It has been identified that there are number of ways that can be used by organisation to overcome issues in context of procurement and warehousing. In support of this, it can be said that there are few steps which can be followed by business. This includes identification of problem, fixing the problem, looking forward (Wang, 2007). In this respect, it is necessary for management of the firm to understand and identify key issues that is impacting overall application in a negative manner. With an effective identification of issues the business firm can gather information about diverse factors that can improve the effectiveness of supply chain management.
In support of above statement, it can be said that fixing of key issues is also essential and in this respect, management of business focuses on diverse alternative methods that can overcome the issue. In this, management consider various alternative methods such as training, resource allocation, etc (Storey, 2005). It is necessary for the management to select method as per needs of organisation and issue identification. It will boost supply chain effectiveness and facilitate in overcoming various issues. Various standards and frameworks can also be established in order to increase effectiveness of supply chain process.
Other than this, application of methods also requires proper monitoring so that issues can overcome in better way. In this respect, number of monitoring tools can be used such as total quality management, feedback, etc (Sehgal, 2009). These kinds of tools will provide better information about improvements and assist the management to select best ways for better future.
Moreover, in order to solve issues and improve supply chain process the management of business firm can also focus on training and development programs. It will improve the knowledge and skills of staff members in context of procurement and warehousing practice. With an improved level of knowledge regarding procurement and warehousing practice the employees can perform activities in an effective manner (Petersen, 2011).Further, it can be said that various case study activities can also be conducted for employees in order to enhance skills and provide effective allocation of resources. Improved of resource allocation is also beneficial for improving supply chain process.
In support of above statement, it can be recommended that the rearrangement of warehouse activities and location is also beneficial for improving supply chain process. It has been spotted that companies could save large sums of money by making a few changes in its inventory and warehouse locations (Sehgal, 2009). These kinds of changes are also beneficial for the improvement in supply chain process and application of procurement and warehousing. Company can also focus on technology up-gradation in order to improve communication system and transportation facilities. Further, more features that company uses in the software the more effective you can be in managing your inventory (Storey, 2005).
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Other than this, Sehgal (2009) has also stated that the lean principle of six sigma can be applied in operational activities of procurement and warehousing so that business firm can attain better opportunities (Sehgal, 2009). In the support of this, it can be said that the number of activities can be designed by management of business firm to eliminate the factors that are not essential for business and impacts operations in negative manner. Moreover, in order to have proper arrangement of diverse activities the business firm can focus on various standards that can allocate activities in effective manner. Storey (2005) has also asserted that the warehouse must have proper installation of diverse tools so that temperature aspects can be maintained in order to fulfil the motive of shine. It will also protect resources from wastage aspects and boost the effectiveness in context of procurement and warehousing (Storey, 2005). Furthermore, the total quality management frameworks and other standards are also beneficial for business firm as it facilitates in attaining better sustainability.
As per the above study, it can be concluded that managing operation and maintaining balance in supply chain process is one of the critical aspects for every business organisation. It has been spotted that the procurement and warehousing strategies plays a key role in effective development of supply chain process. It can be said that the procurement and warehousing practice application can face number of issues which may impact the business in negative manner. Moreover, in order to overcome the issues the management of business firm can focus on various management principles and frameworks that can improve effectiveness of supply chain and lead business to impressive success.
Books and Journals
- Bangsow, S., 2016. Warehousing and Procurement. In Tecnomatix Plant Simulation.
- Borghesi, A., 2013. Operational Risk and Supply Chain Risk Management. In Risk Management.
- Duran, S., 2013. Humanitarian logistics: advanced purchasing and pre-positioning of relief items. In Handbook of Global Logistics.
- Gärtner, H., 2011. Stockout Costs in Logistics Unconsidered: Stockout Costs do Affect Service Level. In Dynamics in Logistics.
- Hedman, J. and Kalling, T., 2003. The business model concept: theoretical underpinnings and empirical illustrations. European Journal of Information Systems.
- Ioan, P., 2013. Global Logistics, Competitiveness And The New Incoterms. THE ANNALS OF THE UNIVERSITY OF ORADEA.
- Ji, S.W., 2013. Research on the FMCG supply chain quality control tower system and operation mechanism. Advanced Materials Research.
- McFarlan, C., 2014. The Challenges of Operations Management. [Pdf]. Available Through <http://oaji.net/articles/351-1393621192.pdf>.
- Supplier Quality Requirements Manual. n.d. [Pdf]. Available through: <http://www.magna.com/docs/default-source/suppliers/magna_supplier_quality_requirements_manual_rev2.pdf?sfvrsn=2>.
- Tiwari, A., 2013. Analysis of Supply Chain Management in Cloud Computing. [Pdf]. Available through: <http://www.ijitee.org/attachments/File/v3i5/E1286103513.pdf>.
- Wu, J., 2015. The Linkage between Business Functions and Business Processes. [Blog]. http://www.information-management.com/issues/20050801/1033570-1.html>.