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During the semester you will be working in a group of 3-5 (ideally 4) members. Each group will appoint a group leader who is responsible for organizing group meetings, setting meeting agendas, allocating tasks and submitting electronically group work. This assessment will be marked as a group mark, however a group contribution form and peer evaluation will be applied to assess individual group member’s contribution to the group assignment just in eventual case of contribution disputes, interpersonal conflicts and other group issues. If any of the group members leave the group, the remaining group members must complete the work without any concession and compensation.
The group will conduct a research about the two best practice Supply Chain Management companies in their business filed, designated by a teacher, that are easy to research, and that have been written about regularly in supply chain and logistics magazines. No direct contact is allowed with organisations unless you have a prior personal or professional relationship with them. All research should otherwise be desk research, observation and educated guesses.
You will be conducting the research by using the following research questions and guidelines:
1. Provide companies’ brief business background. Set the research context.
2. Outline, describe and explain companies’ overall supply chain model(s).
3. Compare and contrast the two models (similarities, differences, advantages, disadvantages) against the following elements of the supply chain:
a. Demand management
b. Order fulfilment and customer service
c. Procurement and sourcing
d. Production and operations management
e. Inventory management
f. Transportation and freight logistics
g. Warehousing and distribution channels
4. Which model is more effective and efficient? Why?
5. Senior management of both businesses have decided to merge two businesses. Your group has been appointed as a project team to design a new supply chain model for the merged company. Design the new supply chain model that will incluede all elements of the supply chain analysed under point 3. Justify your proposal.
You will be assessed in two separate stages – Assessment 2A Group research presentation and Assessment 2B Group research report..
Assessment 2A - Group Research Presentation
Each group will have strictly 20 minutes to present their findings. Each group member must contribute evenly to the group presentation. No script, either paper or electronic, is permitted during the presentation. Group is encouraged to use visual aids during the presentation such as: posters, power points, prezi, models, mock ups, paper handouts, flip charts, whiteboards, artefacts or props etc. Except the visual aid title no other text is allowed in their design, however, pictures, photos, graphs, charts, statistics, and other graphics are more than welcome. Each group will collect during the research process artefacts relevant to the research project including but not limited to: presentation visual aids, group charter, project action plan, group meeting minutes, magazine articles, and compile a portfolio that will post on the Blackboard in My Groups folder not later than the day of their group presentation.
Assessment 2B - Group Research Report
Groups are required to write up a formal report based on their research findings in Assessment 2A, that fully elaborates on supply chain processes and aspects of research findings. It must be evident from the report introduction what was contribution of each member of the group to the report. Executive summary, introduction and conclusion do not count as an individual contribution. ONLY a group leader has to submit electronically the group report to myRMIT Learning Hub’s system by the due date. A Turnitin account has been set up to enable you to check your assignments for academic integrity. You should be able to submit any number of times but will need to be mindful that after the first submission you will get an instant report but for any further attempt the system can be slow and take 2 to 3 days to generate a report so you are advised not to leave it until the last moment. This assessment will be marked as a group mark, however a group contribution form and peer evaluation will be applied to assess individual group member’s contribution to the group assignment just in eventual case of contribution disputes, interpersonal conflicts and other group issues.
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Supply chain management plays a pivotal role in the management practices of an organisation. It is an activity that denotes the management of flow of services and goods. It also involves the movement of raw material, storage of raw material, work-in-progress inventory and movement of finished products from point of origin to the point of consumption (Towill, 2012). Thus it simply refers to the activities of designing, planning, controlling, executing and monitoring the supply with an objective to create net value and leveraging worldwide logistics. Every organisation has a different model for supply chain and this model is governed by the objectives and activities of the business. In this case two companies are selected that are Sony and Samsung for supply chain analysis. The analysis will start with brief background of the companies and discussion of their supply chain models. After this the supply chain models of both the companies will be compared and contrasted. There will be various aspects of comparison and these aspects are demand management, procurement and sourcing, order fulfilment and customer service, production and operation management, inventory management and warehousing and distribution channels. Although both the companies are in the same field of operation but there will a number of differences in their supply chain models.
The major aim of entire analysis of supply chain modes of both the companies is to find out the most effective model of the two. After this it is required to design a new supply chain model for a company that will be made up of merger of the companies Sony and Samsung. In this manner the ultimate objective is to design a supply chain management model for the company that will be result of merger of the companies Sony and Samsung.
Samsung is a Korean multinational company with headquarter in Seoul. Samsung is a conglomerate company and thus comprises of numerous affiliated businesses and subsidiaries. This is the largest business conglomerate of South Korea. The company was founded in the year 1983 by Lee Byung-Chul as a trading company. Over the years of development the company changed its form and now it has a much diversified portfolio (Samsung, 2016). The group operated in areas like textiles, food processing, insurance, retail and securities for three decades and after that it entered into electronic business. In the year 1987 the Samsung group has been separated into four business groups that are Shinsegae group, Samsun group, Hansol group and CJ group. After 1990 Samsung has globalised its business activities and started exporting mobile phones, electronics and semiconductors and this is the most important source of income for the group since then. The smart phones of the Samsung gained so much popularity globally. The phones are popular for their unique features, durability and affordability. Samsung is the world’s largest information technology company. Along with that Samsun has also a very vital role to play in media, culture and economic development of South Korea. The group has acquired a number of companies over these years in South Korea as well as in the world. The company is very renowned and popular for its Smart phones and televisions.
Sony Corporation is a Japanese conglomerate with headquarter in Tokyo. The company is a multinational company with diversified business areas such as gaming, electronics, financial services and entertainment. The company is a leading manufacturer of electronic products for professional as well as consumer markets (Sony, 2016). Sony is also ranked 116th in Fortune 500 Global list of 2105. Sony Corporation is the electronic business unit of the group and is engaged into business through four components that are network services, video games, motion pictures and music. Due to these components Sony is the most comprehensive entertainment company in the entire world. Sony is the fourth largest Televisions manufacturer in the world. The principle operating business units are Sony interactive entertainment, Sony Pictures Entertainment, Sony Mobile and Sony Music entertainment. The company has been running its business globally on a very huge scale and has undergone various mergers and acquisitions during these years. In this manner the major business of Sony is electronic products. Sony also launched smart phones. Initially the company had launched phones in collaboration with Ericson the series was Sony Ericson. After that the company launched smart phones just under its own brand that is Sony. The television, smart phones and video games gained so much popularity globally. Thus the company contributes in economic development of the Japan to a very great extent.
Supply chain management of Sony Corporation is justified by Seiichi Kawasaki (President & CEO) by saying that “The group is determined to establish a model for supply chain that could provide the best to the group by using logistics knowhow and global network.” The only logistics operator in the Sony group is SSCS that also serves as headquarter of the group for its operations worldwide. The aim of supply chain management model of Sony Group is to provide One-Stop Solution from Procurement to distribution. The unique feature of Sony’s supply chain management model is that it integrates EDI (Electronic Data Interchange), internet based transactions and SAP R/3 that took on a single host network and it manages global operations (Andrews & Kenneth, 2012). The supply chain management model of Sony Corporation is majorly comprised of four parts that are that are procurement of raw material, procurement of parts, infrastructural process and retailing. These four parts are further divided into major parts. There are four major business domains in logistics operations of Sony. These domains are IPO, domestic operations, repairing parts operation and international operations. The company is dependent on two methods for planning and forecasting and these methods are Seihan and Korogashi. Seihan is a Japanese word that means sales meets manufacturing (Taticchi, 2013). Korogashi means controlling inventory through collection of documents. Seihan book plays a vital role in supply chain management of the company. The inventory is managed in Sony using FIFO method (First In First out method) and it also integrates SAP. Along with that the supply chain model of the company utilises both Vendor Management Inventory (VMI) and Demand Planning (DP). The most significant feature of Sony’s supply chain management is that it uses RFID (Radio Frequency identification system) technology and this technology helps in deployment of goods from factory to shelf. It uses logistics management to identify serialized cases and pallets across multiple organisations in supply chain. In this manner supply chain management model of Sony Corporation is effectively able to integrate the internal applications and the support for both batch oriented B2B activities and real time activities (Back, Parabotteh, & Nam, 2014). The company focuses on integrating business practices externally as well as internally. They change their model as per the market needs. Fulfilment management and integrated logistic has helped Sony in increasing the customer service and maximizing the utilization of assets by reducing the expenditure on transportation and inventory across their supply network globally.
Figure 1: Supply Chain management model of Sony Corporation
Source: (Sony, 2016)
Supply chain management model of Samsung is very popular and is also named as Asia’s best supply chain model. The supply chain model of the company is based on Six Sigma and due to that it is very helpful in managing supply chain activities. The supply chain management activities in Samsung are basically divided into five parts. These five parts are raw material procurement, processing at premises, movement of finished goods, suppliers and distributors (Sigala, 2014). With this simple yet powerful supply chain model the company has been able to expand its network all over the world. The company has adopted Six Sigma and due to that its supply chain model is very efficient. There are a number of key features of the supply chain model of Samsung. These key features are SCC, SMM, APS, SRM,ASM, CPFR,SPM and SIM. The company has SCM command centre (SCC) from where all the instructions with respect to supply chain management comes. In this model there is a sales and marketing management (SMM) where demand and supply are taken into consideration and on the basis of that the supply cycle runs. Advance planning and scheduling (APS) where the concerned managers plan and schedule the activities well in advance (Liu, 2012). Due to that any unforeseen event does not affect the supply chain model adversely. This also helps in anticipating any problem in advance and addressing it. There is also a very strong aspect that is Supplier Relationship Management (SRM). In this a strong relationship is maintained with suppliers so as to prevent any miscommunication and misunderstanding. The model also has provision to provide proper support to the suppliers. Collaborative Planning, forecasting and Replenishment (CPFR) is also a specification on supply chain model of the Samsung. The supply chain model of Samsung is very flexible and it changes as per the dynamics of external environment. Recently there have been a number of changes took place in the company. These transformations are the response of change in the market condition and also show that supply chain model is very adaptive (Hakansson & Gadde, 2011). Along with that the supply chain model places high values towards customers and thus there is a provision to listen to the voice of the customers. With its unique feature of quality deployment function the company gets to know about the customer behaviour and transform the company as per that. The company has adopted APS system as well. The most significant thing is that the company has streamlined its performance evaluation system and due to that any problem regarding supply chain management can easily be traced and addressed to prevent malfunctioning of the model (Govindan, 2014).
Figure 2: Supply Chain Management Model of Samsung
Source: (Samsung, 2016)
It can be observed from above analysis that the supply chain models of both the companies have various similarities as well as differences. There are various aspects that can be helpful in comparing and contrasting the two models and these aspects are demand management, procurement and sourcing, order fulfilment and customer service, production and operation management, inventory management and warehousing and distribution channels (Fung, 2010). Following is an analysis of similarities and differences of the two business models:
In Sony Corporation demand is managed using MOD (Manufacturing On Demand) feature. The company analyses the orders received and on the basis of that manufactures the products and meets the demand. Due to that minimal wastage is assured but at the same time it makes supply chain move slower. In Samsung there is distinct department for this known as CDM (Channel& Demand Management) with the help of this the track the demand and fulfil it. It makes the supply chain very speedy in the company as they do not wait for order rather anticipates the manufacturing (Ellram, Tate, & Petersen, 2013).
This is the aspect that is same in both the companies. In both the companies the order is fulfilled by suppliers in respective sales zones and customer services are also provided by regional customer care centres (Sony, 2016). The suppliers place order to the companies and the orders are then fulfilled. In case of after sales services the companies have established their regional centres where the customers can register their complaints. From these centres all kinds of services are provided to the customers. This is a common feature between both the models of supply chain.
The procurement and sourcing are a part of basic philosophy of the company. The policy of Sony Corporation is to procure materials and parts that are of high quality, stable supply and competitive prices. They procure from numerous suppliers from the world. Along with that Sony also empathises on green channels while procuring and sourcing. Samsung is also open for worldwide procurement policies. The company has a model for procurement and this model is based on three aspects that are openness, fairness and win-win (Samsung, 2016). The procurement in Samsung is based on these three philosophies. The looks for taking projects that create new opportunities.
The goal of production and operations management at Samsung is to provide products that are flexible to use, that have high quality and provides satisfaction to customers. Thus the major production and operations management aims at becoming leading providers in the field of digital media. The company uses various research and development techniques to enhance their production management. The production and operations management in Sony is not only done at headquarter but also as domestic facilities overseas. This is why its production and operations management are very effective in fulfilling the goals of supply chain management.
The inventory management in Sony Corporation is done using FIFO method. This means that the inventory that comes first goes out for production first. With the help of this method of inventory management the company is able to clear its old stock first so as to prevent the usage of outdated products. The company also uses software to manage the inventory. This helps in proper management and optimum utilisation of resources. The inventory management of Samsung is very effective and it manages the inventory in three ways (Chikweche, 2014). The company tends to reduce the cycle time with the help of SLIM model. To address the demand Samsung produces most of its inventory in the third quarter of the year. Along with this the company makes almost all the inventory in house and due to that they can easily regulate the amount.
The approach that Sony uses for its transportation and logistics is multi-country consolidation approach. The transportation and logistics process is divided into two parts that are inbound modes and outbound modes. In Inbound mode the company receives data through ASN, validates it, transport unit arrives and unload transport unit. In outbound transportation the company deploys order, determine route and send them to warehouse. On the other hand the Samsung has partnered with 300 logistic service providers and 2,000 global experts. This helps the company in transporting goods very easily and reasonably (Chang & Tsai, 2013).
Sony Corporation has its warehouses all across the world where they store finished goods. From these warehouses the goods move out for the purpose of distribution. The distribution channel comprises of suppliers and retailers. The company has retail brand stores across major cities in the world. Samsung also has warehouses all across the world where they store finished goods. The finished goods move to suppliers from warehouses and then to retailers (Brindley, 2014).Thus warehousing and distribution channels of both the companies are same.
After careful analysis of models of both the companies a number of unique features as well as the drawbacks of both the models have come into front. Even after all the drawbacks there is one model that is more effective than other and this is undoubtedly Samsung’s supply chain model. The most significant aspect of supply chain model of Samsung is that it is using Six Sigma concept and at the same time the model works in such a manner that the customer’s convenience is at the top of it. Besides that the model is flexible and changes as per the market dynamics (Best, 2014). The inventory management system and production and operation system of Samsung are very strong and these are the two aspects that make the supply chain of the company very strong and effective. Along with that the supply chain model of Samsung is very detailed and there are a number of unique features in it. These key features are SCC, SMM, APS, SRM, ASM, CPFR, SPM and SIM and due to these features the company is able to achieve competitive advantage and fulfil the demands of the customers.
If both the companies get merged then there will be a need to design a new supply chain model. On the basis of locations of both the companies and present supply chain models the new supply chain model is proposed as below:
Figure 3: Proposed Supply Chain Model for new company
The new model will be very simple with five steps that are sourcing, manufacturing, warehousing, distribution and return. The sourcing points will be US, China, Japan and other Asian countries since these will be the biggest markets for the company. The manufacturing will take place in China because raw material cost and cost of manufacturing is very low here and warehousing will be done at South Korea because Samsung was very successful here and Japan, Korea and China will also make a loop. The new distribution policy will comprise of retail stores, online stores, wholesalers, retailers, direct sales force and network carriers (Back, Parabotteh, & Nam, 2014). The new model will also have a return option that is a part of after sales services.
In this manner supply chain management can be said as the life blood of an organisation. Every company needs a different model for supply chain management and it depends upon the objectives of the company that which model is suitable for it. Sony and Samsung both are in same products lines even though one company is very successful while other is not so successful. It is because of the supply chain model of the company. Samsung is very successful because of its strong supply chain network. The new model that is proposed is mixture of good aspects of both the models so that it can effectively manage the supply chain network. Thus, it is very necessary to work effectively on supply chain model to gain competitive advantage and provide satisfaction to the customers.
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