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Unit 26 Supply Chain Management Assignment - Kelvin Hughes
Diploma in Business
Unit Number and Title
Unit 26 Supply Chain Management
Supply chain management signifies the flow of processes that have been conducted to deliver the goods and services to the end consumers. Supply chain management system involves supplier, manufacturers, wholesalers, retailers, intermediaries and the end users. This report argues about the supply chain management of Kelvin Hughes Limited. The Supply chain management focuses on the role of supply chain management in the company and the strategies that the company is using for efficient working. It also explains about the weakness of the supply chain network of the company. Further, an appropriate practice of supply chain management is discussed that would be beneficial for the company.
Kelvin Hughes Limited is one f the world’s leading company in manufacturing and supply of navigation, surveillance and security radar system. Company has 350 employees working within its manufacturing site in UK and has 12 offices in eight other companies. The company was established in 1947 in UK. It always remains the market innovator for radar sensors and systems. ("Kelvin Hughes Registered Office and Company Info." 2016)
Flow of supply chain at Kelvin Hughes:Flow of information from the company to the customer takes place by different mediums. Some of the mediums are invoices, confirmation of order, dispatch confirmation, information regarding equipments, quality review etc. The information also flows from customers to company by request of quotation, order note, complaint form etc.
The delivery of goods to end consumers and delivery of raw materials from suppliers comes under flow of material. Kelvin Hughes has its own distributers and deals for managing the flow of material. It also uses JIT (just in time) technique to control and manage the flow of material from supplier. It is a technique of cost cutting that helps in reducing the amount of material and goods in stock. Kelvin Hughes maintains this balance of stock by ordering the sufficient amount of raw material from the supplier that is required to complete the order of the customer. (Aiek, 2012)
Importance of supply chain management at Kelvin Hughes: Improves customer service: Customers expects to get their product on the conditions they keep in front of the supplier. Supply chain management system helps in delivering of right product on right time to right customer. This aids the company to satisfy their customers efficiently. Customer not only expects to get their product but also wants to have after sales services. SCM supports the after sales services of the company also.
Enhance profitability growth: The appropriate flow of material and information aids the company to enhance its business processes at new locations. This in turn helps in enhancing the profitability growth. Kelvin Hughes is positioning itself in Middle East. They want to provide border security and facility protection in the Middle East. (Albaum & Duerr, 2011)
Increase competitive advantage: Supply chain management plays an important role in the functioning of the organisation, especially those in manufacturing industries. A proper supply chain management system proves to be a competitive advantage for a company as it helps in maintaining the relationship with the customers. It is very important for a customer-oriented company like Kelvin Hughes to make its supply chain management system, a competitive advantage.
Vertical distribution: Kelvin Hughes uses its own dealers and distributors to deliver products to the end consumers. There is no role of wholesalers and retailers in the vertical distribution system of Kelvin Hughes. This helps the company to keep the price of the product low as there in less number of intermediaries. Kelvin Hughes also outsources some of the products from other companies that have more experience and knowledge regarding that particular product. The key external partner of Kelvin Hughes is the organisation “Freshfield”. This organisation has expertise in manufacturing and supply of transceiver for the sharpeye product family. Some of the competitors like TRANSAS; Raytheon etc outsource products from Kelvin Hughes. The contracted work is the key element to the product Kelvin Hughes offers.
Kelvin Hughes current model: Lean manufacturing: Lean manufacturing means reducing waste. It is the technique by which non-value added activities have been eliminated in order to make the process cost and time effective. This type of manufacturing concentrates on reducing the wasteful activities without compromising in the quality of the product. There are various elements of lean manufacturing. Some of them are discussed below:
- JIT- JIT refers to just in time. JIT helps in maintaining the inventory level by ordering the sufficient amount of material that is required to complete the order of the customer at that time. This reduces the cost of keeping the stock or raw material. (Carreira, 2005)
- Kaizan- Kaizan means continuous improvement. This is the strategy in which employees work together in order to attain incremental improvement in the processes. Collective talent of the organisation combines and works for a single goal.
Kanban system-It is a pull system that works on signals. This system suggests that order should be placed only when signal has been observed. Signal cards indicate the need of goods and materials. This helps in reduction of inventory cost and makes the inventory management process easy.
MUDA- Muda refers to elimination of waste. It is a primary focus of the lean manufacturing strategy. There are 7 elements that need to be monitored to reduce the waste.
MURA- Mura refers to elimination of variability. It is the waste that creates due to unevenness in the process or may be because of non-uniformity in the work processes. (Chylinski, 2010)
MURI- Muri is the elimination of difficulty. This difficulty is related to the overburdening. It is created when the organisation gives over stress on the employees and processes. 5 S- The 5S helps in organizing the work process that reduces the time that employees spend in non-value added activities. The 5S are:
- Set in order
Weak aspects of supply chain network at Kelvin Hughes: As the company is using lean manufacturing process, it orders the expensive material only at the time of requirement. This may results in late delivery of product in the case of defective outsourced material. The lean production technique does not work for production of bespoke equipments as its production required time and proper assistance. Another weakness of the company is the transactional relationship between the parties. This transactional relationship between the company, supplier and the end users restricts the commitment of business. (Banarjee, 2012)
The recommended supply chain management system: Kelvin Hughes is using suitable supply chain management practices according to its business but they have some of the drawbacks that may modify to make the supply chain system more apt.
Supply chain management today: Earlier supply chain management system consists of the activities that were related to physical distribution and material management only. Some of the functions of supply chain management at that time involve:
- Inventory management
- Transportation service procurement
- Materials handling
- Inbound transportation
- Transportation operations management
- Warehousing management
After that, supply chain management department is expected to pay attention towards some other activities that involve: (Paolucci & Sacile, 2005)
- Customer service performance monitoring
- Order processing/customer service
- Supply Chain Management budget forecasting
Supply chain management today concentrates on all the activities that have been mentioned above. Now the companies are focusing not only on the flow of materials but also paying attention towards the aspect of contract service. Supply chain management system has undergone so many modifications until now. (Harrison & Hoek, 2011)
Future of supply chain management: The future for supply chain management is very vivid. There is lot more opportunities for the organisations to make improvement in the supply chain management for better results. The new functions that will be focusing upon in the new era of supply chain management are:
- Customer service
- Information technology
- Successful organisations must be exceptional in both the fields to make expansion in the supply chain management system by including new tools. (Hobbs, 2004)
Opportunity areas: Supply chain management not only affects the activities related to flow of information and material but also has its effects on other activities of the organisation. Therefore, there are many activities and functions in the organisation that can be monitored to create an opportunity for the supply chain management system to improve. Below are some of the opportunity areas that need to be monitored by Kelvin Hughes:
Distribution network optimization:Distribution network results in determining the location for the facilities, setting the configuration system and carrier selection. If the organisation put efforts to monitor this network then it facilitates the organisation with best locality and carrier selection. It has been observed that optimization of distribution network brings the cost advantage of around 20 to 30% for the company.
Shipment consolidation: Shipment consolidation refers to combining of different orders from different vendors for delivery. In this type of shipment, number of smaller shipments has been combined to make it in one loading. Kelvin Hughes should focus on this area of shipment operations. (Lambert, 2008)
Cross docking: Cross-docking means supplying the material without storage of products in the warehouse. It helps in easy handling of material as well as eliminates the cost of inventory storage.
Supply chain integration:Supply chain integration refers to coordination between all the activities under supply chain management. Supply chain activities can be integrated by making agreements from the selected vendors or suppliers. This makes the flow of information process easier. This is most important aspect that must be monitored by Kelvin Hughes as the company is lacking in making commitment relationship with the suppliers. To improve the supply chain management system, Kelvin Hughes has to work upon all the above stated activities. The modification in these activities helps the organisation to attain better results.
Agile manufacturing: Agility means flexibility. Agile manufacturing is the technique that focuses on quick response to the customer needs. It is the method of supply chain system that is flexible in nature and is very beneficial for the manufacturing firms to survive in this dynamic and volatile market. It is the most suitable strategy for the companies to deliver the correct product on correct time to the customers. It is the strategy in which the management comes up with the new competencies to respond speedily to the demands of the customers that drive this volatile market of today’s era. This strategy uses information technology for communication and manufacturing purpose. The development of agile manufacturing became the competitive advantage for the organisations. It uses the computer-based system that helps the management to take decision over manufacturing processes by using different analytical techniques. (Lester & Lester, 2007)Decision support system is one of those systems that help the decision makers to analyze the data and to prepare the model to solve unstructured problems. This concept aims at simultaneous development of manufacturing processes as well as supply chain system of the organisation. Agility in supply chain system determines the competitiveness prevailing in the dynamic market.
Four elements that supports agile manufacturing:
The companies that want to opt agile manufacturing as the technique for supply chain management than they have to incorporate four elements in the organisational functioning that supports the agile manufacturing process
Integrated telecommunication networks: This means that company needs to improve the communication between the departments of the company internally. It has to invest in creating and developing computer networks within the departments so that they can communicate easily with each other. This helps in alignment of the activities to be done in the manufacturing process. Managing Information system can also be introduced to improve the flow of information within the company as well as from the outside world.
Multimodal transportation system: As the company is opting for agile manufacturing, technique that means its focus is to make quick response to the customers. This can only be done if the company has a multimodal transportation system. The company has to use highways, airways, rail systems, seaports etc to deliver their products to the customers on time.
Knowledge centres: The manufacturing firm like Kelvin Hughes has to draw its attention towards opening of research and development department because agile manufacturing technique use detailed analysis of data and information regarding the manufacturing process.
Commercial and service supports:Agile manufacturing also focuses on after sales services. The company like Kelvin Hughes is already very much focused towards the approach of providing after sales services to the customers. (Paolucci & Sacile, 2005)
Agility a popular paradigm with manufacturing: To deal with high demands, organisations move to lean manufacturing that facilitates them to for mass production. With the change in demands of the customers, organisations have to make a shift from lean to agile manufacturing. Agile manufacturing is the advanced step of lean manufacturing. After attaining the competitive advantage of mass production, the organisations need to focus on their survival in the dynamic environment with changing customer demands. Agile manufacturing is the best technique that can be used to solve this purpose. It helps in gaining customer by production of customized products without compromising on lead-time and cost benefits. (Musgrave, 2013)
The main requirement of agile manufacturing is:
- Skilled worker
- Learning in agile organisation
- Flexible manufacturing technology
- Steps towards agile manufacturing plan:
- Execution of agile manufacturing in the organisation needs a proper planning. The following steps should be taken for implementation of agile manufacturing in the organisation:
Research:Proper research has to be done regarding different aspects to implement the agile manufacturing practices. It involves the research on the cost of agile manufacturing, the processes required in the manufacturing process and the tasks involved in the process. Research can be done on the similar business organisation that is already using the agile manufacturing practice. The benefits and drawbacks can be studied so that the organisation can implement the agile manufacturing in error free manner. (Ruffa, 2008)
Task force: Agile manufacturing process cannot be implemented in one go. It takes time to incorporate a new technique in the existing environment. A task force should be appointed for smooth running of the processes. Task force is the group of people that focuses on the task during the changing process of manufacturing technique. This group also acts as a knowledge provider that provides knowledge to the employees regarding the change. It is not necessary that circumstances always remains in the support of change, so the task force needs to be appointed for creating the knowledge culture in the organisation.
Examine current supplier relation:The relationship of the company with the supplier plays a very important role in implementation of agile manufacturing. The organisation needs to analyze the relationship strength with the suppliers and categorise them accordingly. The suppliers that are beneficial during the change process should be focused and the organisation should try to establish a secured and long-term partnership with those suppliers.
Draw a long-term plan: To make the implementation of agile manufacturing successful, it is necessary for the organisation to make a long-term plan. The plan should include the key objectives that should be attained through agile manufacturing implementation process. The benchmark should be set to compare the actual results with the expected ones. It is also important to map out the problems and obstacles that can restrict the process of agile manufacturing so that the early solutions can be made regarding the problems. (Wang, 2011)
Advantages of agile manufacturing: Agile manufacturing is the further process of lean manufacturing. It is the process that integrates technology with the manufacturing techniques and allows the firm to deal with the customers very quickly without compromising in the coat benefits and lead-time.
Customer loyalty:Customer preferred faster delivery of products. Agile manufacturing is the technique that allows the organisation to respond speedily to the customers by delivering them right products on right time. (Tokay, 2015)
Customization: Agile manufacturing is the process that supports the production of customized products for the customers. This helps in building strong relationship with the customers that result in enhancing business. Customers appreciate the ability of the company to provide personalized products to the customers.
Survival in dynamic environment: Agile manufacturing helps the organisation to survive in the dynamic market environment driven by changing demands of customers.
Difference between lean and agile manufacturing: Lean manufacturing is the technique that concentrates on reducing cost by eliminating the non-value added activities in the processes while agile manufacturing concentrates on dealing with the volatile dynamic business environment by focusing on the changing demands of the customers. Production in agile manufacturing relies on fewer people as this technique is mainly based on automation and modular designs while the production in lean manufacturing requires a talented pool of employees working together to enhance the results. (Wang & Koh, 2010)
Kelvin Hughes Limited uses lean manufacturing technique in the supply chain management system. This technique supports the company to reduce cost by eliminating the non-value added activities from the processes. Lean manufacturing technique helps in serving the large number of people by mass production. However, Kelvin Hughes Limited was is only focusing on reduction of cost without paying attention towards the dynamic environment and changing needs of customers. There are many weak aspects of the supply chain management in Kelvin Hughes Limited. They are lacking in maintaining relations with the suppliers and this leads to late delivery of products to the customers. After analyzing all the weaknesses, it has been observed that the company should use agile manufacturing as the technique to improve its supply chain system. This is because it supports the customization of products and helps the organisation to respond the customers quickly. Agile manufacturing helps in the survival of organisation in this dynamic market. It is very necessary for Kelvin Hughes Limited to introduce technological advancement in its process. According to the overall analysis, it has been identified that agile manufacturing is the most suitable supply chain technique for Kelvin Hughes to overcome its weaknesses.
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Kelvin Hughes Registered Office and Company Info.. (2016). Kelvinhughes.com. Retrieved 2 September 2016, from https://www.kelvinhughes.com/about