Supply Chain Management in Application

Supply Chain Management in Application

1. Why, in the current modern trade, the integration of economic affairs from design to completion is an essential priority to every Manufacturing Companies?

Having read the article, “New Approaches to Supply Chain Management Concept. Logistics Integration of “Hub and Spoke” Model” by Minculete et al., I deduced why in the current modern trade, the integration of economic affairs from design to completion is an essential priority to every Manufacturing Companies. According to the author, the primary focus of supply chain being to satisfy demand, drive consumer value, enhance financial success while building an operational network. To achieve these goals, integration of economic affairs is vital from design to completion. Referring to Nike, a global footwear manufacturing company as a case study, it has a complex supply chain network in forty countries and an excellent integration of economic affairs (Jiang, 2019).

As Jiang (2019), and the author of the reference article rhymes, Nike derives numerous benefits from its integrated economic affairs approach. For instance, it reduces the cost of trade. The international company has 525 factories distributed in many countries around the world. This enables the company to outsource its manufacturing in these factories, resulting in products with globally competitive prices due to reduced trade costs.

Improving the availability of goods and services is another benefit of integrating economic affairs. From the article, a supply chain company sources from various suppliers through a hub and spoke approach. Nike, for instance, outsources its raw materials from for the host manufacturing country through a network similar to the hub and spoke model approach. This lowers the cost of production while increasing revenue.

Consumers’ purchasing power gets boosted. Through the internet, a virtual space is created where consumers place their orders and adequately honored online though distribution management. Although Nike is based in the United States, its consumers are located worldwide. Using an active network, consumers can place orders online and receive their goods from the nearest distributor. Through these distributed manufacturing factories, their markets are expansively resulting in more employment opportunities.

2. Define the parties involved directly and indirectly in the supply chain and their role for the smooth running of businesses

There are various parties involved either directly or indirectly in running a supply chain operation tasked with different purposes indicated in the article. First, there are suppliers whose primary role is to transport raw materials to producers. Nike, for instance, outsources raw materials for its host country producers’ independent suppliers. The management of the materials department oversees this part of the process.

Another critical party are the producers. These companies develop new products from raw materials. Market trends and demand dynamics guide the process. Marketing managers are responsible for overseeing the producers to ensure they produce updated products in line with ever-changing market trends.

Once the goods are produced, they are handed to storehouses by transporters, the hub from which distribution is managed. In the hub and spoke model, the storehouses are strategically located to ensure proximity to consumers and distributors.

Distributors, too, play a crucial role in the supply chain. These companies are responsible for transporting products from the stores either to direct consumer or the wholesalers or retailers. They are coordinated by the management of stores, demand, and distribution. Nike, for instance, distributes its products through three different channels. Either direct to their customers, to the international wholesalers, or through their online platforms like their website.

The end consumers culminate in the supply chain management process. The continuous demand for goods and services maintains the operation of the supply chain. Changes in preferences by consumers challenge the producer and marketers to keep their ears on the ground.

References

Jiang, W. (2019). Sustainable Development of Supply Chain in Footwear Industry–Take Nike as the Case. Asian Business Research, 4(3), 86.

Minculete, G., & Olar, P. (2014). New Approaches to Supply Chain Management Concept. Logistics Integration of” Hub and Spoke” Model. Valahian Journal of Economic Studies, 5(2).