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The impact of supply chain management on financial performance

Song, Shangxia (2008) The impact of supply chain management on financial performance.

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Abstract:“Logistics today is as important for success in the digital economy as it was for Roman Empire world dominance.” By Leif Enarsson (2006) “Successful supply chain management requires cross-functional integration within the firm and across the network of firms that comprise the supply chain.” ByDouglas M. Lambert (2006) Many companies initially focus on supply chain management as a way to improve customer satisfaction and reduce operational inefficiencies. While doing this, the company improves visibility and control over its supply chain, which also leads to better financial performance. Supply chain management is essential to the company’s competitive capacity. Nowadays, especially with the globalization and IT industry development, companies are not competing as individuals but as part of the supply chain in the global environment. How to cut cost, improve quality and also operate effectively is every company’s principle through the supply chain management. With substantially cheaper labor and cost, many companies in the developed countries have started sourcing in the booming economics in China and some other countries. This is also the trend of global supply chain. However, low product price in emerging economics comes together with more communication efforts, longer delivery time, bigger purchase quantities and high inventory level. A minor company therefore finds it rather difficult sometimes to optimize their strategies, and resolve the quality problems. Benefit and cost are closely linked with supplier performance. Velda B.V. has half of its products sourced in China, and they want to have good quality with low price. But this combines with the quality and delivery problem. This paper will analyze the supplier situation of Velda BV. Beginning with a review of literatures and in order to make the comparison visible, the paper discusses the approach for the supply chain map and analyzes the supply chain map for different ways of purchasing in Velda BV. Then it looks at the SCM functions that impact the financial performance, identify the business processes in the SCM, and determines what can be done to improve those business processes that will improve both SCM and Financial performance for Velda BV. The main research question is “What to improve in the Supply Chain Management process to get premium financial performance for Velda BV?” In order to get this question answered, started from the basic information of Velda B.V., together with the literature review, the thesis mainly analyzed from SCM process of Velda B.V. and the financial performance 3 mainly from the control aspect. The main conclusions of the thesis are that not so satisfactory quality and delivery time issue requires Velda B.V. involves strongly in the supplier development and improvement. The strategic product purchase strategy is OK for Velda B.V. according to the Kraljic portfolio Matrix. While the main problem in the SCM is regarding the OEM production section in China, in the operational and tactical level. Some of SCM functions need improving. Following the analysis in chapter four, the main problems can be clarified in the following table: The SCM problems in Velda B.V. are shown as follow table: SCM function Main situation or problems Production (Material Flow Management) Monitor the quality and delivery time. Supplier Relationship Management Strengthen partnership with the key suppliers. Aware the Chinese business culture and relationship. Strict the contract and details. Inventory (Demand) Management Have a good forecast of demand Design (Development and commercialization) Specify the requirement and time planning. Involve the customer and supplier side in the new product development. Transportation (Order Fulfillment) OK Customer relationship management: OK. Limited analysis in this paper. Table 1: SCM analysis in Velda B.V. The paper also emphasized the analysis about the situation with some key suppliers in China. Corresponding to each problem, there are suggestions and recommendations for Velda B.V. in the last chapter.
Item Type:Essay (Master)
Clients:
Velda B.V
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/59307
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