Supply Chain Management Strategies

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In house Strategy vs. Outsourcing Strategy

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Before implementing one of those two strategies, The Pervious question should be asked as shown in  (Figure 1).

  Does in-house or outsourced supply in a certain set of conditions provide the suitable performance objectives that it requires to have a competitive edge in its markets?

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It is very unpractical for company or an organization to produce and manufacture everything from its supplies to its end products. Also, it is very unpractical that a company outsources every single process needed to produce an end product or service (Wee et al. 2009:2082-2083) (Schoenherr, 2009:344-346).

Nevertheless, The Supply chain department within any organization or company looks forward to put together and integrate processes between its partners in an effective and efficient way to improve consumer satisfaction and boost its competitive edge. The balance between both, In-house and Outsourcing strategies is very smart and intelligent approaches to accomplish all this (Narasimhan et al. 2009:380-384) (Slack and Lewis, 2008: 99-108).

As shown by recent studies on outsourcing, money saving and cost reduction are the most important incentives for outsourcing (Slack and Lewis, 2008: 99-108). For example, Some Multinational companies hire Human Resource agencies to carry out their HR activities for them. This is called outsourcing strategy and it is a very

important matter for most organizations nowadays (Wee et al. 2009:2082-2083) (Schoenherr, 2009:344-346).

In other words, a company can reconfigure their manufacturing scheme through proper outsourcing strategies (Slack and Lewis, 2008: 99-108). Thus, production management and outsourcing issues have become an important issue in many industries (Narasimhan et al. 2009:380-384). Another example of popular outsourced activities, are the everyday back-office processes. Outsourcing does not always shift the outsourced activity outside of the company; sometimes these activities are still physically located in the company but are provided by the outsourcing service (Narasimhan et al. 2009:380-384).

And since not all companies are similar to each other, companies in different situations, in different conditions and with different goals are to be expected to take diverse and unusual decisions. Thus, Outsourcing could be a very efficient and important strategy for one company and very terrible for another (Wee et al. 2009:2082-2083) (Schoenherr, 2009:344-346) (Wee et al. 2009:2082-2083) (Schoenherr, 2009:344-346).

A proper capacity strategy is always necessary as it helps the organization supply markets in a competitive way. In other words, a proper capacity strategy is the first step for having a competitive operation (Gupta, 2006:3419-3431).

Capacity management is more than just a strategic matter. It occurs every second of every hour of every month of every year (Gupta, 2006:3419-3431) (Slack and Lewis,

2008: 69-98). Each single point in time where a manager moves a company employee from one department to another, he or she intentionally or unintentionally takes part in configuring the capacity within the department. There are three main sub-strategies under Capacity strategy: Leading, Lagging and smoothing capacity strategy (Gupta, 2006:3419-3431) (Slack and Lewis, 2008: 69-98).

Capacity leading: timing the introduction of capacity in such a way that there is always enough capacity to meet forecast demand.

Capacity lagging: timing the introduction of capacity so that demand is always equal to or greater than capacity.

Capacity Smoothing: timing the introduction of capacity so that current capacity plus accumulated inventory can always supply demand.

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Therefore, even though capacity decisions are taken for different time-scales and spanning different areas of the operation as shown in (figure 2), each level of capacity decision is made with the constraints of a higher level (Slack and Lewis, 2008: 69-98).

to learn more about , the relationship between MBA and supply chain click here

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