Disruption and variation in quality of commodities supplied disrupts production by adding resultant costs and losing revenue opportunities. In highly specialized manufacturing, the cost of constant modification of supplies presents inhibitive financial and technical barriers.
TESCO Company is currently faced with this situation though the intention of tailoring their products was meant to boost financial returns. Therefore, modification of supply management system has serious affected the company’s creativity in a bid to tailor service delivery that meet demands of each customer.
Supply management system problem
Supply management system coordinates functions purchasing. This mechanism identifies the need for commodities, appropriate suppliers, quantity and quality of the commodities. It also evaluates effectiveness of supply practices already in place (Park, Shin, Chang, and Park, 2010).
Expansion of capacity and mechanization of production demands that the supply system matches production efficiency while assuring quality of supplied goods. Information technology delivers on both efficiency and quality. With computer software to automate supply chain management, decisions can be made reliably and in timely manner (Park, Shin, Chang, and Park, 2010).
Input from the production section is processed to chart a supplier’s trend in adherence to quality, quantity, and timeliness of deliveries. Communication of the quality guidelines minimizes the risks of product rejection/return. In absence of a guide, variance is more probable. In such a case, the delay before replacement may slow or halt production; consequently, potential revenue from processed products is missed.
Solution to supply management problem
Therefore, I would recommend automated supply software that will group similar customer demands together. To realize the benefit of automated supply, both buying and supplying enterprises are to have an integration of their local processes so that data is funneled to a common framework.
Then, the two systems are interconnected so that exchange of information is directly linked through website portal and email options. Sharing supply sub-system facilitates direct transactions and generation of reports that rate a supplier’s performance. Due to its dynamic reporting, anomalies in supply quality are communicated instantaneously to the supplier to initiate corrective action (Burnett, 2004).
With a supplier audit, non-conformance to specifications in supplied commodities and modes of supply are identified. A report of the audit is then discussed with the supplier to implement corrective remedy. As a balanced assessment of a supplier’s performance, the scorecard is thus an objective tool to guide quality in supply.
Reasons for the recommendations
An improved approach to supply management through automation in TESCO Company will establish a broader partnership with its customers. The buyer will make an effort to learn the supplier’s values, vision, challenges, and operating environment. A spirit of collaboration established will offer positive contribution to the partnering businesses (Burnett, 2004).
Such cooperation will turn supply into a competitive advantage instead of sole cost. This should be backed by a legal contract. It further provides for explicit conditions in executing the contractual partnership. Due to their explicit nature and legal enforcement, a contract assures quality of supply to the agreed specification.
Supply management system plays a critical role in business process. A modern approach to its management proposes building stronger relationship with a customer to minimize variance on quality. Important tools in safeguarding quality are the supply management system, supplier manual, supplier’s scorecard, and supply contract.
However, breach of contract may occur that requires legal solution. The process is cumbersome before an award for claimed damages are granted and mistrust between these parties is often irreversible (Hill, Eckerd, Wilson and Greer, 2009).
Burnett, K. (2004). Business briefing: Global purchasing & Supply chain Strategies. New York: Wiley.
Hill, J., Stephanie, E., Darryl, W., and Bertie, G. (2009). The effect of unethical behavior on trust in a buyer–supplier relationship: The mediating role of psychological contract violation. Journal of Operations Management, 27, 281-293.
Park, J., Kitae S., Tai-Woo C., Jinwoo P. (2010). An integrative framework for supplier relationship management. Industrial Management & Data Systems, 110(4), 495-515.