SUPPLY CHAIN MANAGEMENT Essay Example | Topics and Well Written Essays - 2250 words

SUPPLY CHAIN MANAGEMENT - Essay Example Customers were able to ask for technical help – online – anytime, a fact, which has been an important criterion for the improvement of the firm’s image in the market (Simchi-Levi, David, Kaminsky, Philip, Simchi-Levi, Edith, 2003). At the same time, the specific system supported the increase of the company’s profits; since the orders of customers could be processed quite rapidly the level of the company’s sales has been significantly increased, a fact which is reflected in the firm’s financial statements in the years that followed the establishment of the Networked Supply Chain strategy. Indeed, in 1995, i.e. before the introduction of the particular strategy, the firm’s profits were estimated to $2 billion. In 1998, i.e. in just three years from the above system’s implementation, the firm’s profits reached the $9 billion, which is a significant increase. Apart from the financial benefits of the particular framework, its ability to create a dynamic relationship between customers and suppliers should be also highlighted. More specifically, through the particular system, suppliers were notified of each new order, a fact that allowed the suppliers to start building the product ordered immediately after the order was placed. In this way, the delivery of the order to the customer on time, one of the firm’s main targets, was ensured. In addition, customers could choose the exact form/ material of their product; also, they could monitor the progress of their order at any time. The products ordered through the particular scheme were of high quality, having been chosen by the customers and be available for testing online. The ‘direct fulfillment’ scheme that the company used, focusing on the issues discussed above, led to the limitation of the operational costs of the organization at about ‘$12 million annually’ (page 2, case study). In other words, the firm’s Networke d Strategy offered the chance for improving the quality of customer service, for reducing the time for handling orders and for controlling the organizational costs. Despite its benefits, as analyzed above, the Networked Strategy of Cisco had also a series of problems to face. At a first level, the forecast of demand was not always easy – referring to the firm’s partners. Because of the lack of effective communication between the firm’s suppliers and manufacturers, the process and the delivery of orders often had to face significant delays. Networking offered the chance for direct control over existing orders, but because of the system’s inefficiency this control often required a lot of time – at least much more time than that estimated from the system’s developers. In this context, the time between the delivery of the order and its payment was significant, leading to the delay in paying suppliers. Due to this problem, the response of supplie rs to the orders of the firm’s customers became problematic. In this context, in 2000 the firm had to face the following problem: the shortage many of the components used for the manufacturing of its products (case study, p.3). As a result, the time required for the delivery of ordered products was increased. Delays that reached the 15 days became a common phenomenon. The specific fact severely affected the firm’s image, a firm which was known for the high level of its customer