Principles of Good Supply Chain

A business model is vital to any organization, whether commercial or not. This business model consists of a plan, which the business uses as a means of attaining profits and breaking even.  Business models communicate a positive rapport with current investors, investors seeking to join the company, and the internal business environment (Daidj, 2015). For example, a pizza shop offering online order and payments to customers as a new marketing strategy. The company then alters an already existing business model to incorporate the new marketing strategy. This model incorporates placing online orders, payment of the same order online, maintaining time and cost efficiency for the customer, while the business is making profits in return. This model is advantageous as it gives the pizza shop a competitive advantage over their competitors. Business models help the business in planning for growth and expansion, through profit maximization brought about by the successful business model. This, as a result, boosts the overall financial position of the company, leads to new investment opportunities, and maintains a competitive advantage.

According to Sheth & Shainesh, (2001), buyer-supplier relationships in Supply Chain Management (SCM) is a vital aspect of SCM integration. Effective buyer-supplier relationship leads to successful business management. Customer demands, retail markets instability, and erratic market trends make it hard for both suppliers and buyers to predict the market. Because of these trends, buyers and suppliers tend to incorporate strategies that best suits themselves. There are various motivators to buyer-supplier bullying. By this, it means that there are instances whereby both the supplier and the seller bullies the other. The first challenge is compliance. Compliance is very costly to both the buyer and the supplier. It is in this case that either can opt to accrue these extra costs by reducing their purchasing power or increasing their selling price without having to change anything else.  Consideration–The buyer needs a win, but is willing to give you something for your flexibility. This is a negotiation where both sides are willing to provide concessions in the discussion.

Second, the buyer or supplier can be seeking to terminate the other. It is normal for suppliers to terminate some of their customers and vice versa. At times, a supplier can be delivering products or services of poor quality than expected, and the buyer uses bullying as a way of driving out the suppliers from the company.  This termination can be because of unreasonable demands, cost efficiency, time efficiency, etc.  It is in this case bullying of prices occur. The last reason is domination. Most business entities tend to focus more on their image as a brand, and as a result, they set targets and goals that intimidate their competitors (Sheth & Shainesh, 2001). Suppliers, on the other hand, can also seek to establish their position in the market. For example, Wal-Mart, a small company bullied Rubbermaid, a multimillion-dollar company into bankruptcy. Wal-Mart was establishing its position in the market, and it was getting back at Rubbermaid, who had increased the prices of their products without consulting Walmart. Ultimately, Rubbermaid Company closed its shops and was to be bought later by other investors. These investors incorporated Wal-Mart in their business strategy.

Customer segmentation involves accumulating and segmenting consumer data, which allows the business to engage with the consumer using appropriate communication tools/ strategies and create models for the consumer’s buying journey (mostly online) based on this data.   This results in delivery of an increasing Supply Chain Management value. Database marketing is very efficient and effective as data is it identifies and attends to what the consumer exactly wants, but at certain instances, the buyer might find it uncomfortable and weird when they find similar advertisements in different online platforms (Ladd, 2015). For example, a buyer can view a specific product on ebay.com using a mobile device, then days later, will log in to Facebook using a computer then find the exact same advert on their Facebook page. This is very scary, and companies that incorporate customer segmentation through database marketing should constantly educate their consumers through communication, value-added incentives, and accountability. Collecting and using consumer data must be done in a consumer respectable, and to the knowledge of the consumer, and confidential to every specific consumer, failure to which, the business can accrue significant legal consequences.  

When it comes to Quantitative Performance Criteria, performance standards are key as they monitor and evaluate performance within the company/ business entity. These standards are set in a clear and concise manner, where every stakeholder, employee, and management can understand without doubt. These standards are quantifiable where possible. The use of vague phrases such as ‘high returns’ or  ‘low production’ to describe the standards is difficult to measure, thus leads to conflict. Therefore, Quantitative Performance criteria avoid all these discrepancies. For example, the main goal of a cyber café attendant is to serve twenty customers every day. With this, the attendant can monitor and evaluate his or her daily performance. Such quantitative standards are beneficial to both the employer and the employee as they help in an easier communication of the overall picture of the current business position, as well as finding organizational mistakes and rectifying them (Sheth & Shainesh, 2001).

In conclusion, the Supply Chain Management, strategic plans, and consumer segmentation are all interdependent in a successful Supply Chain. Incorporating these together leads to better decision-making, cost efficiency, time management, improved product or service quality, and objectively leads to profit maximization.

References

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Daidj, N. (2015). Developing strategic business models and competitive advantage in the digital sector.

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Ladd, D. (2015). Marketing Foundations: Customer Segmentation. Carpinteria, Calif.: Lynda.com.

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Sheth, J. N., Parvatiyar, A., & Shainesh, G. (2001). Customer relationship management: Emerging concepts, tools, and applications. New Delhi: Tata McGraw-Hill Pub. Co.

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