Monday, February 10, 2014

Cost of Weak Relationships in a Supply Chain Network

Supply chain networks describe the flow and movement of materials and information, by linking organizations together to serve the end-customer.
A configuration for a supply chain network is below:

Supply chain network enables organizations to see the value in creating partnerships; and the value in working together to ensure the best possible value is provided to the end-customer.[1]
It is of great importance to develop strong partnerships within the company’s supply network which has a flow on effect to your end customers whether you are a manufacturer, distributor or retailer. By doing so, company can better serve for the end-customers. Better communication will increase efficiency and productivity. Trust is core to developing better communication and relationships.[2]

Sometimes there might occur unprecedented boost in demand such as UPS experienced recently. In order to make up for the Christmas holiday rush, UPS utilized 85,000 temporary employees, 30,000 more than planned.[3] This caused UPS deliver lower profit forecast after holiday rush. UPS said it delivered 31 million packages on Dec. 23, the most ever and 13% more than the prior-year peak day.

UPS and rival FedEx faced difficulty on Christmas when consumers complained of delivery delays for packages that retailers had promised would reach their destination in time for the Dec. 25 holiday.
In order to overcome such unexpected increases in demand, businesses should maintain strong relations with the organizations in their networks. If not, how would it be possible for a company to overcome unexpected booms in demand without cost of losing customers or without cost of hiring temporary employers?

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.