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Effective Supply Chains Depend upon the Close Integration of Companies Within the Supply Chain. Discuss How This Has Been Achieved

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Effective supply chains depend upon the close integration of companies within the supply chain. Discuss how this has been achieved, making use of examples in your answer.

The Supply chain management has gaining its importance in serving business operations and being part of the strategic management of the business. Its role has been shifted from being a support department to being a core department of the business and play an importance role in the overall operations of the business. The emphasis on the integrated supply chain management emerged at the end of 90s. the integrated supply chain model is different from the previous concepts. The traditional view of the supply chain considers the individual companies and elements within a firm as separate units that represent functional entities. Because of that, there was often some gaps between the supply and demand. Modern concept of supply chain is more progressive than traditional. Companies have improved the level of integration across whole the supply chain. Make, Move and sell between supplier, manufacturer, distributor, retailer and shopper have become closer. The modern concept of supply chain became a tool for creation of value, not just money saving robot. In the modern business world no organization can sustain without having a well established, effective and efficient supply chain management. Now with increase of strategic importance of supply chain management the service provide is now becoming a partner to the organization, rather just being a vendor.

Nestle has been consistently ranked among top 25 in the Gartner supply chain report for the past three years. We shall look at how Nestle operates in Pakistan. Since Pakistan is the part of their global supply chain operation but for their milk products they have to rely on the local milk suppliers who are not very much educated and well equipped. The success of the organization is because of their vendor management and the intelligent distribution system. They have implied the just in time management concept in their raw material procurement and vendors are very well synced with the procurement and procurement is synced with the production and other support department. Just In time strategic also save the cost of the raw material and able to maintain a very low level of inventory. Their distribution network makes sure that every product is distributed in the required areas at the required time and the demand and supply does not have any gap. Their distribution setup is synced with their production system therefore they do not have to manage the inventory of the product for the longer period of time. However, Nestle need to concentrate on two dimensions, being the concentrate on making the vendors partners of the organization, and being increasing the use of information technology tools to manage their vendor relationship.



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