Decoupling Point in Supply Chains

Question A1: Explain why a ‘de-coupling point’ is important in supply chain management?

De-coupling point is the position to examine materials pipeline and at this point the product flow changes to pull from push and it is also considered as demand penetration point. Through the product axes, the customer’s order penetration can be possible through order driven and forecast driven activities to meet the organisational objective the organisations in the recent years try to satisfy the customers by delivering quality products and services and in this regard, maintaining product stock and inventory as well as supply chain management process are mandatory for the organisations to meet the customer’s demands (Kharlamov, Ferreira and Godsell, 2017).

The diagram above explains two sides of materials flow. The strategic position of de-coupling point depends on product type, service efficiency of the firms, customer’s demand and supply chain approach and thus the de-coupling point analysis has important impacts on the supply chain management practice of the organisations where the firms can forecast the market trend and customers demand and restructure their supply chain to meet the demand. In order to minimise the inventory holding, there are two options which are BTO (Build to order) and trade off. High cost quick production cycle, delivery of the products and tome of production as well as quality of the products are mandatory to manage the trade of and meet the customer’s demand in long run (Madhani, 2017). If inventory is not necessary to manage, the cost of inventory and supply chain will be reduced and aggressive pricing is possible for Quaich market penetration and customer’s satisfaction. On the other hand, the second option is postponement, where the producers try to maintain de-coupling point to engage the customers and make the products push to pull successfully. Hence, the de-coupling point’ is effective for maintaining supply chain of the organisations and it is effective for the entrepreneurs to manage their inventory control and product stock to meet the customer’s demand (Madhani, 2017). The de-coupling point is managed by the organisational operation management team where the market trend and analysis of the customers demand are successful to handle the stock of the products. The inventory control system through ERP software and preaching the product towards final delivery are also managed in a systematic way through the de-coupling point analysis. At the de-coupling point, the suppliers try to arrange the product stock and maintain the inventory to meet the customer’s demand and after that it is distributed among the distributors of the company, who are efficiently in delivering the products to the customers (Haq, and Boddu, 2017). It is a forecast driven technique, where the order data and customer’s demand for that particular products are analysed efficiently to maintain product stock for meeting the changing market demand. It is also possible to manage the push pull strategy at the de-coupling point, where the suppliers try to push the product to the customers as well as pull the customers towards the product.

In the recent years, the organisations develop the de-coupling point where the push strategy is maximised to maintain product stock. In this regard, the suppliers try to conduct market research to acknowledge the customer’s demand and arrange the stock of the products successfully. In the other hand, the organisations also attract the customers through social media advertisement, marketing tactics, promotional activities and email marketing which further strengthen their customer’s base. Making the de-coupling point needs to have in depth research on the market trend and customer’s order in order to arrange the products and services for pushing it successfully in the market (Haq, and Boddu, 2017). For example, the retail firms like Morrison and Wal-Mart try to manage their push pull, strategy efficiently for developing de-coupling point. The suppliers of the retail organisations are efficient to conduct market research and they are proficient to understand the actual needs and preferences of the customers, which further helps them to restock the products in the store of the companies as well as ensure successful push strategy for the products. Restocking the products, utilising cloud computing database management system for managing inventory as well as representing the products in the stores are totally maintained by the suppliers where they try to peach the products to the customers. On the other hand, the pull strategy acts differently where the brands try to promote the products and retain the customers for long run (Haq, and Boddu, 2017). Hence, the de-coupling point is effective for the suppliers to manage their roles and restock the products efficiently as per the changing market demand.

Question A2: Critically evaluate the main stages in the management of capacity.

Capacity planning

Capacity planning is the process of determining the production capacity require by the organisation to meet the changing demand in the market as per the customer’s choice and preferences (Carvalho, Scavarda and Oliveira, 2017). The capacity of the firs can be measured through the volume of output produced in the workplace. The objectives of capacity planning in the multinational corporations are such as,

To maintain balance between the required capacity and available capacity.

To minimise discrepancy and maximise output of the organisations

To identify and solve the capacity problem in a timely manner to meet the customer’s needs and preferences in the market

Measuring capacity

The capacity can be measured in terms of input and output of the organisations and it also depends on the nature of the business where the leader tries to maximise their capability to satisfy the end customers. For example, for the organisations in the automobile manufacture inducts measures their capacity in terms of numbers of autos and on the other hand, the power company measures in terms of megawatts of electricity and steel producer measures the tones of steels (Carvalho, Scavarda and Oliveira, 2017). On the other hand, it can be measured through input, where the hospitals measures their number of beds, tax offices measure the numbers of accountant and airline also measures the number of seats for analysing their capacity (Carvalho, Menascé and Brasileiro, 2017).

Steps of capacity planning

There are proper steps in managing the capacity of the organisation and it is effective for the firms to maximise their capability to perform efficiently in the market and ensure high satisfaction for all the stakeholders, manly for the customers.

The steps are such as,

Analysing existing capacity of the firm

Forecasting the required capacity

Identifying the organisational resources

Analysing the alternative ways to improve organisational capacity

Evaluating the financial and technological capacity of the firms

Selecting alternative capacity maximisation option for fulfilling the strategic mission

Three steps of capacity planning

The organisations try to develop their capacity through there stages which are,

Determining the level of requirements:

This is the first stage, where the companies try to define their workloads, determine the units of work and identify the services efficiency for the cstomer4s.in this regard, the organisations try to analyse their required capacity to satisfy the customers. For example, Tesco as a famous retail firm in the UK and also across the globe finds that they need to increase their market share by serving millions of customers (Carvalho, Scavarda and Oliveira, 2017). Hence, they try to identify their workload requirements and working units to operate efficiently in the market.

Analysing the current capacity:

Analysing the current capacity of the firs are also mandatory for the organisations, where the firms try to measure the service levels compare to its objectives, measuring overall resources and the components of respond time. The major mission of the organisation Tesco is to deliver high quality of retail products at competitive price and for this the organisation must focus on cost leadership strategy through maintaining economies of scale (Carvalho, Menascé and Brasileiro, 2017). This is the major analysis for capacity building, where the organisation restructures the employees and hires experienced staff who can manage production and distribution efficiently at lower cost. Economies of scale can be maximised through spreading the fixed cost over large production volume, improve utilisation of several resources, and cost benefits in the procurement for increasing its volume, supervisory and quality management in the production sites of Tesco as well as managing the raw inputs and technology to product huge volume of products at lower cost.

Planning for future:

The third stage is planning for future, where the firm story to forecast future business and determine the process requirements. Planning for future system configuration is also effective for the international business for improving their capacity and maximising organisational excellence (Carvalho, Oliveira, and Scavarda, 2016).

Factors of capacity planning

There are internal and external factors that have crucial impacts on capacity planning of the organisations and on this regard the major internal factors are such as company structure and composition, resource reliability, timing and dependencies, organisational changes, turnover a, organisational culture, product and services of the firms and leadership commitment which are effective to maximise brand capacity to perform efficiently in the market (Carvalho, Oliveira, and Scavarda, 2016). On the other hand, there are external factors of building organisational capacity such as changing environmental factors including resource pricing, government subsidy and legislations, exchange rate and interest rate in the market as well as stakeholder’s commitment and contractual obligations.

Question B2: What is total quality management and how would it help an organisation manage its quality?

Total quality management

Total quality management is the principle of improving the operational system and activities in the organisation through improving employee’s performance and productivity such that all the staff members the company are committed towards their roles and job responsibilities in the workplace. The method is appropriate for continuous improvement where the organisations in the recent era of globalisation aim at developing the quality of the products and improving service efficiency (Mukhopadhyay, 2020). The production process can be improved continuously through proper analysis and evaluation which further influence the performance of the employees in long run.

Benefits total quality management

There are benefits of the total quality management which further enhances the firm’s ability to manage the workforce. The quality management helps to develop suitable leadership style at the organisational workplace as well as maximising the organisational excellence in long run. The commitment towards the employees as well as understanding among the employees can be improved through total quality management where the firm’s leader can review the performance and monitor the workforce for creating values for all the staff members. Additionally, it is effective to develop suitable organisational culture as well as maximise the performance of the organisation as a whole (Androniceanu, 2017). The organisational leader is able to maximise the quality of the products as well as improve innovation and creativity in long run. Through the continuous improvement process, technological innovation and employee’s creativity further provide a scope to the firms to establish the business uniquely and it further enhances the boosts the capability of the firms to run their business internationally. The operational efficiency and the employee’s performance can also be improved in long run which further provides an opportunity to the organisation to satisfy the customers by providing them high quality products and innovative services as per their choice and preferences (Honarpour, Jusoh and Long, 2017).

Strategies of total quality management

Through managing the elements of the total quality, it is possible for the organisations to maximise their operational excellence and ensure high quality organisational activities successfully. One of the approaches of total quality management is customer focus and in this regard the organisation must focus on the customer’s needs and preferences in order to satisfy them (Androniceanu, 2017). In this regard, the organisations conduct market research, develop suitable process to develop customer relationship and satisfy them by delivering high quality products and services in long run. In the recent years, the organisations try to digitalise the business and engage the customers with the organisational activities, where customer data management, online cloud computing system as well as customer portals are effective to handle the customer’s queries and manage them by delivering high quality products and services. The organisations also develop strong bonding with the organisational stakeholders such as sales managers, sales executives, technical team members and suppliers to distribute the products as per the customer’s requirements and satisfy them in long run (Honarpour, Jusoh and Md Nor, 2018). The benefits of customer focussed services are such as high retention of the consumers in long run, increasing revenue and sales, maximising market share, maximising profitability of the firms and strong customer loyalty which further helps the organisations to expand their business internationally. On the other hand communication plays a crucial role in managing total quality and in this context, implementing Information and Communication Technology (ICT) as well as establishing internal collaboration for partnership working practice, sharing opinion and each other’s knowledge and technical skill at the workplace are effective strategies where the firms can improve their performance and boost the morale and motivation at the workplace. Interdepartmental coordination and cooperation among the staff members are effective for the organisations to sustain in the market and operate efficiently (Honarpour, Jusoh and Long, 2017). Fact based decision making behaviour is another major strategy for managing total quality of the organisations and in this regard, analysing the gathered data, maintaining reliability and accuracy, utilising experience and empowerment of the staff member for more creativity and innovation are the major strategy to develop innovative decision for the benefits of the customers. It further boosts the ability of the firms, informed decision making practice and reviews the data for making fruitful decision for satisfying all the stakeholders engaged with the business (Honarpour, Jusoh and Long, 2017). Integrated system development is another major strategy of the organisation to improve quality in long run. Understanding the policies, standard and objectives as well as process are the major activities of the organisations through which it is possible to develop integrated system. The organisations try to promote working culture with cultural diversity management, managing transparency and accountability, arranging training for the employees, internal collaboration for partnership working practice as well as enhancing self learning process. These are important for managing the organisational working culture and developing integrated working practice for improving the performance (Honarpour, Jusoh and Md Nor, 2018). For example, the multinational corporations such as Apple, Tesco and Wal-Mart try to develop integrated system by proper empowerment of the employees in the organisation as well as develop corporate relationship to have strong stakeholder base so that the organisations can run their business across the global markets by strengthening their customer’s base.

The International Organisation for Standardisation (ISO) describes that identifying, understanding and managing interrelated process as a system contributes organisational effectiveness and efficiency in long run for successful improvement (Honarpour, Jusoh and Long, 2017). In this regard, the organisations also prefer to develop strong teamwork by engaging all the employees and it is another attribute of total quality management, where employee commitment is maximised through arranging training and development program for them, enhancing communication and internal collaboration, encouraging people’s creativity and empowering them in the organisational decision making behaviour (Honarpour, Jusoh and Md Nor, 2018). The organisations are also efficient to develop innovative process for better management where computer based process, innovation in IT and faster development of production cycle, managing consistency of the organisational manufacturing and operational activities through ERP system development through which it is possible for the multinational corporations to manage their quality for running the business operations internationally.

Reference List

Androniceanu, A., 2017. The three-dimensional approach of Total Quality Management, an essential strategic option for business excellence. Amfiteatru Economic, 19(44), pp.61-78.

Carvalho, A.N., Oliveira, F. and Scavarda, L.F., 2016. Tactical capacity planning in a real-world ETO industry case: A robust optimization approach. International Journal of Production Economics, 180, pp.158-171.

Carvalho, A.N., Scavarda, L.F. and Oliveira, F., 2017. An optimisation approach for capacity planning: modelling insights and empirical findings from a tactical perspective. Production, 27.

Carvalho, M., Menascé, D.A. and Brasileiro, F., 2017. Capacity planning for IaaS cloud providers offering multiple service classes. Future Generation Computer Systems, 77, pp.97-111.

Haq, A.N. and Boddu, V., 2017. Analysis of enablers for the implementation of leagile supply chain management using an integrated fuzzy QFD approach. Journal of Intelligent Manufacturing, 28(1), pp.1-12.

Honarpour, A., Jusoh, A. and Long, C.S., 2017. Knowledge management and total quality management: a reciprocal relationship. International Journal of Quality & Reliability Management.

Honarpour, A., Jusoh, A. and Md Nor, K., 2018. Total quality management, knowledge management, and innovation: an empirical study in R&D units. Total Quality Management & Business Excellence, 29(7-8), pp.798-816.

Kharlamov, A., Ferreira, L.M.D. and Godsell, J., 2017. Data-Driven SKU Differentiation Framework for Supply Chain Management. In Engineering Systems and Networks (pp. 127-138). Springer, Cham.

Madhani, P.M., 2017. Leagile Supply Chain Strategy: Benefits of Both Lean and Agile Approach. Leagile Supply Chain Strategy: Benefits of both Lean and Agile Approach Materials Management Review, 13(9), pp.9-11.

Mukhopadhyay, M., 2020. Total quality management in education. London: SAGE Publications Pvt. Limited.