Most of the companies are under pressure to raise their level of profits while on the other side, customers demand lower prices. Hence, it becomes important for the companies to cut costs from all different areas. It has been identified that by making alterations in the supply chain cost can be minimized (Ellram & Billington, 2000). It also permits them to compete easily based upon the price. When there is cost cutting, it leads to rise in the net income of the company. Hence, it is clearly apparent that the performance of the supply chain tends to decide the overall success of the company. The companies that implement supply chain methods tends to be quite profitable than the companies that do not implement it (Croxton & Et. Al., 2001). It is quite complex to quantify the expected economic consequences related to enhanced supply chain management. Supply chain can be determined as the set of methods that are used by the companies in order to coordinate the suppliers, warehouses, manufacturers and stores with the view that merchandise is created and distributed in the right quantities, in right locations and right time for decreasing the system wide costs and thus satisfying the service level needs of the organisation. One main purpose of the supply chain management has been to minimize the total costs of the supply chain and thus enhance the quality as well as service to the end users. Therefore, SCM can be identified as one of the main activities that leads to success in the organisation. The overall design as well as management of supply chain is considered to be one of the significant factors that lead to success of any company. Quantification of the expected economic consequences of enhanced SCM tends to be quite complex. It is quite risky to claim the fact that company has become effective soon after optimization work that has been performed without assessing the economic results. Hence, it can be revealed that companies must possess methods for cost evaluations. For the company to attain cost evaluations, the companies are supposed to pay attention towards total supply chain so that they can have a view at the entire picture (Cooper & Et. Al., 1997). One of the main goals of the supply chain manager has been customer satisfaction and service while cost reduction must be the main focus. The supply chain s in the near future will pay attention towards attaining success by means of process enhancement and collaboration over strategic, tactical as well as operational level. Supply chain cost management models are found to be short term and focused on the functions. For optimising the supply chain costs, it becomes quite important for the companies to align their business value with effective supply chain operating outcomes. It has been noted that minimization of the supply chain costs is quite obscured by supplier substitution, supplier refinancing, outsourcing and inventory alterations. The best supply chain leaders tend to monitor the supply chain costs during disruptions such as pandemics, geopolitical shifts, and recessions. They also consider the association between diverse resources and networks. Rather than minimization of the targets, it is noted that supply chain leaders along with key stakeholders pay attention towards aligning and teaming up around the operating outcomes for the purpose of optimizing the supply chain costs (Elmuti, 2003). In order to optimize supply chain costs, it becomes significant to align the business values of the company with that of the efficient supply chain operating outcomes. It is quite significant for supply chain leaders to adjust the ways in which they involve with the stakeholders and propose different initiatives that would assist in attaining breakthrough cost enhancements.
The aim of the study has been to ascertain the optimum strategies that can be used for the purpose of cost minimization without hampering the effectiveness of End-to-End supply chain systems basically in the manufacturing industry.
The main objectives of the study have been demonstrated below:
To comprehend cost issues in the end-to-end supply chain
To comprehend regarding the strategies that can be minimized for cost reduction during end to end supply chain in manufacturing
To comprehend the ways in which cost reduction in supply chain can offer advantages to manufacturing organizations.
The manufacturing industry tends to be featured by increasing number of different small and medium based firms and by huge absorption of the manpower. With the decline in the custom barrier, it can be revealed that the sector would be facing rise in the level of competition. This particular study tries to orient itself towards such concerns. The work has been dedicated to locating a solution to the main issues, the huge role of supply chain costs in the price of the final product. For the purpose of remaining competitive in the market, it becomes quite imperative to locate ways to minimize the supply chain costs. This particular paper demonstrates the optimization tasks as a method of resolving the issues that has been linked with minimization of the supply chain costs. The study proves to be significant for all the manufacturers who prefer to optimize cost in the end to end supply chain.
The term ‘supply chain optimization’ refers to maximizing the efficiency of the supply chain so to ensure the highest level of profit and low-cost quality products to the customers. Supply chain cost optimization is dependent on two factors that are total operating expenses of the company and gross return on inventory invested. In order to achieve supply chain cost optimization, it is vital to efficiently balance the costs associated with the complete list, manufacturing of products, transportation, and meeting the customer service needs, among others (Veinott, 2005). In the era of competition, no industry can exist without reducing its overall expenditure. This fact is also valid for the healthcare industry experiencing a price rise in all the products and services. Additionally, the alarming increase in supply costs making it difficult for the industry to provide it to the mass. The supply chain of the healthcare industry is the main driving factor that is now gaining attention. The supply chain of the healthcare industry is different from the other sectors. In this industry, the patients are consumers, and products are responsible for improving their health (Mathew et al., 2013). Figure 1 presented below gives a detailed structure of the healthcare supply chain.
According to Mathew et al. (2013), it has been highlighted that healthcare organizations do not have any access to the supply chain data that influences their efficiency in offering timely service. The lack of an IT department thus can result in wasteful spending and so increasing costs for the company. Another problem faced by the healthcare industry is hidden costs associated with product costs. This hidden cost of the supply chain, such as holding inventory and distribution costs to the company. Apart from these, another major problem of the supply chain faced by the industry is drug shortage. In this case, the organization needs to purchase alternatives that add additional costs to the inventory management (Michigan State University, 2019; LaPointe, 2017). Like the healthcare sector, the food industry also faces problems of end to the supply chain. The food industry's supply chain involves the activities associated with the conversion of raw materials into finished products. The activities are sourcing, processing of the raw materials, handling, distribution of the products, and sales (Siemens, 2021). The food industry also faces cost problems in the supply chain. In the food industry, it is challenging to predict the demand, which impacts supply chain management. Secondly, managing the inventory efficiently is another problem that results in the spoilage of foods. It thus affects the supply chain management, sales, and the profit margin of the organization (Zhong et al., 2017). Apart from the healthcare industry, another industry that also faces supply chain cost problems is the automobile industry. In the past few years, the automobile industry is growing very fast. Thus, it becomes vital for the companies operating under the automobile industry to efficiently manage the supply chain to optimize costs (Lešková, 2012). Due to the current Covid-19 pandemic, most automobile companies have realized the value of local sourcing that allows quick pivots. The automobile industry is not only about the physical movement of products but also maintaining accurate business data about raw materials sources and other vital factors. Furthermore, another big problem is data transparency that is the lack of data bout product availability, infrastructures, and distribution of products creates confusion about the supply chain management (Bailey, 2020; Piparsania, 2020). The details about the cost problems in the supply chain of the automobile industry have been discussed in the second part of the literature review.
From the above section, it has been apparent that reducing supply chain costs in the healthcare sector is a difficult task due to the nature of the industry. Healthcare organizations spending over their budget are required to check the efficiency of the supply chain and make the necessary changes for minimizing the spending. In healthcare organizations, wasted supplies are the cost driving factor, and this can result in the inadequate supply chain management of the company (Green Light Medical, 2020). In this regard, it is vital for the organization to develop a proper tracking system for tracking the total supplies and used products so that there are no expired supplies adding costs to the inventory. This is an effective strategy for reducing supply chain expenses (Struebing, 2020). Another effective method to reduce costs is minimizing the chances of human errors. Errors in the supply chain process and other data collection process adds costs to the company. The best possible strategy for this issue is to make the manual process automated, such as by using supply chain software solutions. In this regard, the logistics partner of the healthcare organization can help in finding accurate software for the automation of the data collection process (Dittmann, 2020). Apart from the healthcare sector, the food industry also faces difficulties in reducing supply chain costs. In this regard, according to Infor (2013), monitoring the demand of the customers is one of the effective strategies for reduction in the end-to-end supply chain costs. Studying the customers would enable analyzing the pattern of products market by them. This information would be helpful for the food company to make efficient as well as accurate decisions about manufacturing and inventory that would help save cost to the company. Based on the report of Aberdeen Group (2007), another effective strategy for the food company to reduce the supply costs is ensuring proper packaging of the products. In this regard, it can be highlighted that the well-packed products are having fewer chances of being damaged, which helps in minimizing the additional supply chain costs associated with the damaged products (Aberdeen Group, 2007). In the automobile industry, Activity Based Costing (ABC) is one of the practical and new techniques for cost management. This is different from traditional costing as indirect costs are added to the processes that determine the overall costs. ABC is based on the process that the consumer purchases products and the products associated with the activities. The activities require resources, and resources require spending money (Koivula, 2015). Implementing ABC in the automobile industry requires understanding the business of the company, activities, and the roles performed by different departments and the personnel. One of the issues likely to be faced by the automobile industry due to the implementation of ABC is that it requires the development of a proper IT system and accurate data collection process. Furthermore, using a manual system in ABC can be another negative factor that can impact supply chain management (Koivula, 2015).
The supply chain management of the automobile industry involves all the business activities associated with analyzing customer demand, inventory management, and reducing wastage (Lešková, 2012). Figure 2 presented below is the model of the automotive supply chain.
From the above figure, it is apparent that the supply chain involves components, OEMs (car manufacturers), retailers, distributors, and dealers, among others. According to Piparsania (2020), the current Covid-19 pandemic situation has made the automobile industry understand how the industry's supply chain can be significantly impacted by the disruptions. In this regard, it can be highlighted that Covid-19 and the continuous lockdown have resulted in production centers stopping production in China. This has resulted in endless chaos in the industry in different parts of the world, such as India, the USA, and Europe. This turmoil was because many automobile companies offshore manufacturing business activities to countries that are charging lower value. Thus, during the pandemic, they faced problems in manufacturing and therefore searched for local suppliers who can supply in a shorter period (Piparsania, 2020). Bailey (2020) stated that the supply issues faced by the automobile companies during the pandemic have made them understood the importance of developing relations with the local supply chains that would enable quicker supply. It was more expensive on the part of the automobile companies to shut their global supply chains. In the automobile industry, most of the raw materials are imported from China. The Covid-19 thus impacted the import of raw materials drastically. The lack of a proper software system and fragility results in a shortage of data about the supply of raw materials that have caused more supply costs (Bailey, 2020). Therefore, based on the facts presented by Bailey (2020), it can be highlighted that the automobile industry was not prepared for this crisis, and having one of the most multifaceted supply chains has made it subject to disruptions.
The automobile industry is subject to continuous change and thus required to implement effective strategies for optimization of the supply chain costs. The optimization/reduction of supply chain costs ultimately results in the improved financial performance of the automobile companies. In this regard, it can be highlighted that the two most effective strategies for gaining maximum profit in the automobile industry are minimizing the production costs and maximizing the sales revenue. The production cost includes both expenses involved in the purchaser of materials and the materials' materials into final products. This strategy of cost reduction is known as lean manufacturing. This requires a gradual reduction of costs, such as eliminating the factors causing overproduction, minimizing the wait time, and making the necessary changes in the transportation system, among others (Knauf Industries, 2021). Proper management of expenditure also depends on the current state of the market. Bailey (2020), in this context, stated that the Covid-19 pandemic has made the automobile companies realized that flexibility and trust with the suppliers are most valuable for the management of costs. The suppliers should be reliable, trustworthy, and cooperative in order to handle any situation of the crisis faced by the automobile industry. Cost reduction is tough on the part of the automobile industry; in such cases implementing technology can be helpful for cost reduction. Lean manufacturing enables companies to develop plastic parts for vehicles. The plastic used is recyclable materials and environmentally friendly that helps in improving designs and a modern solution to the optimization of costs (Knauf Industries, 2021). In addition, Brady (2019) highlighted that the automobile manufacturers should work in collaboration with the suppliers that would help in effectively delivering the required products to the customers, respectively. This collaboration with the suppliers has a positive impact on the overall supply chain and allows the manufacturer to make accurate procurement decisions. Bailey (2020) highlighted the lack of software in the automobile industry that was faced during the pandemic situation. In this regard, Brady (2019) stated that using the remote vendor software that is wireless would have the potential to save the automobile industry during the period of crisis. The use of remote software is less expensive as compared to other software. This type of software is convenient to use, and manufacturers can easily maintain all their data. This will also help the automobile company to reduce its costs and add more value to its products. Additionally, the report of DHL (2020) highlighted that material cost is another cost-driving factor that has to be minimized in order to optimize cost. In this regard, it was suggested that raw materials should be taken from the local market rather than importing it from other countries that add costs to the supply chain of the company.
For the automobile companies having a global supply chain, it has become vital in the present scenario to have a data-driven supply chain management system. The data-driven approach is practical for the automobile industry to track the flow of information, products, procurement of materials, along with the delivery of finished products to the customers. Apart from data, other factors that impact supply chain management are suitable suppliers, relation with the suppliers, cost control, and adoption of innovative technology in manufacturing, among others. In this regard, it can be highlighted that supply chain optimization would bring a number of benefits for automobile companies. The optimization of the supply chain would result in improved quality control. The automobile companies having control over the suppliers have the highest possibility of improved quality control. Based on the above analysis, it has been apparent that information flow is one of the challenges in the automobile industry. In this case, lack of information flow in the supply chain would impact the overall performance of the company. The improved data system would be helpful for the leaders of the supply chain to effectively manage the supply chain and gain accuracy. The availability of precise data helps the automobile industry in cost optimization (Pettersson & Segerstedt, 2013). Another advantage of supply chain optimization is cost reduction. For instance, optimizing various supply chain activities costs such as warehousing, delivery, and logistics costs helps in controlling and management of the overall costs of the company. Besides, supply chain optimization helps the company to maintain an optimum inventory level for meeting the needs of the customers. In addition, another benefit of supply chain optimization is it increases revenue and overall profitability of the company. Optimization of the supply chain management helps the automobile company deliver the products to the customers within the correct period. This, in turn, has a positive impact on customer satisfaction and maximizes the chances of re-ordering among the customers. Besides, optimizing the supply chain also assists in improving the performance of suppliers. In this regard, digitalization of the supply chain is an effective strategy that has the potential of improving the performance of the suppliers. Additionally, a digital supply chain enables maintaining real-time data. This is further effective in tracking the performance of the suppliers and taking the necessary steps required (Pettersson, 2015; Pettersson, 2000). Another advantage of cost optimization is improving the chances of any risk in the supply chain. In this regard, it can be highlighted that accurate supply chain data enable identifying the potential risks and helping the automobile companies to plan for unexpected situations. By taking the necessary actions, the company can control the quality of products and other issues that arise in business activities. All the above benefits of supply chain cost optimization would help automobile companies in making more intelligent decisions. This is also helpful in understanding the demand for the products and minimizing any other disruptions associated with the supply chain. Furthermore, working with efficient suppliers also improves the cash flow by eliminating the waste expenditure of the company and thus contributing to the company's cash flow (Gomez, 2021; Pettersson & Segerstedt, 2013).
According to the views of Rasin (2021) for any types of small businesses, a commitment towards creating a supply chain management system cannot be considered as small undertakings. It comprises of commitment of major financial resources in order to acquire adequate software. There is need of alteration in the policies and procedures with the requirement of new systems. As per (Pettersson, 2015; Pettersson, 2000) personnel are required to be trained for not only making use of the new software but for implementing new methods of performing the business. Most of the small businesses tends to accept such challenges of implementing supply chain management systems as such systems tends to be contemplated as being significant for the long term survival and because of the fact that businesses tends to forecast adequate management and economic advantages. Some of the management advantages of supply chain management are demonstrated below: Silo busting: it is by its nature that the supply chain management tends to enhance communication in all functions of business. It leads to employees to possess a proper understanding of the entire operation and the manner in which their work tends to be linked with the overall benefits of the business.
Enhanced communication with the customers is found to improve the values that are offered to the customers. It is the enhancements in customer satisfaction level that leads to long term associations that actually leads to economic advantages. Improved communication taking place between the suppliers tries to improve overall operational efficiency of the participants, minimises the costs and thus enhances the level of profits.
Supplier selection: It is the supplier change management system that shall assist business in assessing prospective suppliers and thus control the performance of the present suppliers. Such capabilities would lead to strategic sourcing (Rasin, 2021). It might further lead to adequate cost savings plus enhancements of when-and-where required variables.
Improvements in purchasing: it is the automation of purchasing that tends to minimise the errors and also enhances the economic efficiency associated to the buying functions.
Minimisation of inventory costs: It is the supply chain management systems that would generate cost savings in different levels of the inventory. It is the enhanced forecasting along with scheduling that shall lead to rises in inventory turns and minimisation of costs.
Enhancements in operations: It is the enhanced quality control that minimises the scrap rate that actually leads to cost savings. According to Rasin (2021) when the production tends to be scheduled in a proper manner then it translates into generating what is required when it is required. The business needs not spend extra money in trying to accelerate the generation of orders for the customers. In such ways the cost of the goods sold tends to be minimised. One additional advantage that the supply chain management tends to offer has been that it leads to proper use of plants and equipments.
Error minimisation: through automating methods, billing errors as well as errors that are linked with purchasing quantities might be minimised to a great extent. This would save money and enhance the satisfaction level between the customers and the suppliers (Rasin, 2021).
The purpose of this study is to determine the optimum strategies that can be utilized for cost reduction without hampering the efficiency, of End-to-End supply chain systems in the manufacturing industry. To achieve this aim of the study efficiently and in a structured manner, it is vital for the researcher to select the proper research methodology. Accordingly, research methodology is a philosophy, process, and procedures that aid the researcher in conducting the research study in a structured manner and achieve the aim and objectives of the task more efficiently. However, there are no fundamental research methodologies that can be applied to all research studies. The selection of the research methodology is based on the researcher's intuition and the research purpose (Brown, 2006; Kothari, 2004). Correspondingly, the subsequent section explains the research methodology that has been applied in this study to determine the optimum strategies that can be utilized for cost reduction without hampering the efficiency; of End-to-End supply chain systems in the manufacturing industry.
The research study is underpinned by the beliefs and assumptions that the researcher possesses about the research subject before the commencement of the research. These beliefs and assumptions are broadly referred to as the research philosophy. Defining research philosophy at the early stage of selecting the research methodology is argued to be critical because the personal beliefs and assumptions of the researcher usually have a considerable impact on their choice of data collection and analysis method. Hence, selecting the most appropriate research method and data collection tools to successfully determine the optimum strategies that can be utilized for cost reduction without hampering the efficiency; of End-to-End supply chain systems in the manufacturing industry, it is ideal for defining the research philosophy. Notably, research philosophy in a research study is generally classified into two main categories that include positivism and interpretivism (Bajpai, 2011). Accordingly, this research study is based on the interpretivism research paradigm. The interpretivism research paradigm involves the use of data collected from multiple sources, which provides the researcher with different views and perspectives about the research issue, thereby facilitating a more comprehensive understanding of the research issue. In addition, the interpretivism research philosophy provides greater flexibility to the researcher compared to the positivism research paradigm, which is highly structured and rigid (Bryman & Bell, 2015; Saunders et al., 2009). Hence, the greater flexibility that the interpretivism research philosophy offers to the researcher allows in developing an in-depth and robust knowledge and understanding regarding the End-to-End supply chain systems in the manufacturing industry, which use this knowledge to explore optimum strategies that can be utilized for cost reduction, without hampering its efficiency.
Once the research philosophy for the research study has been selected, the next step is to determine the suitable research approach. The selection of the right research approach is claimed to aid the researcher in choosing the most appropriate data for the undertaken research study. There are two broad types of research approaches commonly applied by the researcher when conducting a research study. These two approaches are the deductive research approach and inductive research approach. The reasoned research approach is used in conjunction with the quantitative research method. This research approach is applied in research that deals with the formulation of the research hypotheses and testing the ideas for their acceptance and rejection. This approach, in general, involves deducting conclusions grounded on the propositions (Easterby-Smith et al., 2008). On the contrary, the inductive research approach is commonly used together with the qualitative research method. Accordingly, the inductive research approach “involves the search for patterns from observation and the development of explanations – theories – for those patterns through a series of hypotheses” (Bernard, 2011). The inductive research approach deals with the observation of particular events or research issues and then explaining this issue to develop a robust understanding. Based on the explanation of the two research approaches, it can be argued that the current research study is grounded on the inductive research approach. The inductive research approach has been considered a suitable choice for the undertaken research because it allows flexibility as researchers are not required to follow any predefined information. Moreover, this research approach supports the formulation of a new theory based on the research aim and objectives. The purpose of this study is to determine the optimum strategies that can be utilized for cost reduction without hampering the efficiency; of End-to-End supply chain systems in the manufacturing industry, which requires observation of a wide variety of data to develop a detailed understanding. Hence inductive research approach is considered suitable for the undertaken research study.
The research method is at the centre of any research study. It deals with the systematic process that the researcher applies to h achieve the research aim and objectives. There are two common types of research methodology that are quantitative and qualitative research methods. The quantitative research method relates to the collection of numerical data and formulation of the hypotheses, which are analyzed using statistical tools and techniques. Data in the quantitative research method are collected using questionnaires and experiments. Even though the findings obtained from the quantitative research study are generalizable and objective, this research method is not considered suitable for investigating the research issue that demands more detailed and in-depth analysis data (Dewberry, 2004; Neuman, 2004). On the other hand, a qualitative research method deals with the use of textual and non-numerical data. The qualitative research method is considered suitable for a research study that explores the research issue in a detailed manner and develops a comprehensive understanding (Berg & Howard, 2012). Moreover, the qualitative research method in a research study provides much data on the subject being investigated in the research study. However, the findings obtained from the qualitative research are argued to be subjective and thus are claimed to lack generalizability (Christensen & Johnson, 2012). Considering both the quantitative and qualitative research methods, it can be argued that the current research study is based on the qualitative research method. This is because the present research study is mainly concerned with developing a rich and holistic understanding regarding the optimum strategies that can be utilized for cost reduction without hampering the efficiency; of End-to-End supply chain systems in the manufacturing industry rather than testing hypotheses for generalizable findings.
Research design provides the general plan of the research study. It allows the researcher to bring together the various components of the research study, including literature review and research method, to achieve the research aim and objectives. The selection of the research design is determined by the purpose of the research study. Accordingly, ground on the meaning of the research study, there are three types of research designs. These research designs are exploratory, explanatory, and descriptive research designs (Andrew et al., 2011). The superior research design is mainly concerned with establishing a cause-effect relationship. This research design is applied in the quantitative research study. On the other hand, the descriptive research study is associated with the description of the research issue or the population considered in the study. There is no exclusivity with respect to the use of descriptive m research design, which implies that the descriptive research is applied both in a quantitative and qualitative research study. However, descriptive study is argued to increase the risk of research bias. The findings obtained from the descriptive research are not repeatable as it is primarily derived based on observations (Andrew et al., 2011; Saunders et al., 2009). On the other hand, an exploratory research design is applied together with the qualitative research method. This research design is used to analyze and evaluate the research issue for discovering new knowledge and understanding for which there is limited literature and studies (Saunders et al., 2009). Accordingly, the current research can be argued to be based on the experimental research design. The exploratory research design has been considered as an ideal choice for this study because the issue of the supply chain was largely ignored in the past, and it has been recently that the supply chain as an essential element of contemporary business has gained importance among academicians and practitioners. Hence, there are not many studies and pieces of literature investigating optimum strategies that can be utilized for cost reduction without hampering the efficiency; of End-to-End supply chain systems in the manufacturing industry, which makes the exploratory research an ideal research design for this study.
Data collection is an integral part of a research study. It is vital for the researcher to collect data relevant to the study topic in order to efficiently achieve the aim and objectives of the study. There are two different sources of data collection that are secondary data sources and primary data sources. This study is desk research, which implies that this research involves the use of secondary data only. Accordingly, this study consists of the collection of data from articles, journals, and books. In order to search relevant data, a thorough literature search has been conducted across different databases. More importantly, this study involves the use of Google scholar as the database for locating the relevant articles and journals. The Google scholar has been used for the literature search as this database indexes a large volume of peer-reviewed journals as well as articles on different fields of study and subjects (Haddaway et al., 2015). At the same time, Boolean operators AND, OR, and NOT have been extensively used for conducting literature research. Once, literature search has been completed, and it has been followed by the screening of the abstracts. The screening of the abstracts was conducted in order for the inclusion of the most relevant literature. After the screening of the abstracts was done, the articles and journals were stored in separate folders based on specific themes, which were used for extraction of the relevant data for the analysis of the data (Knoll et al., 2018).
Data analysis is perhaps the most essential component of a research study because even if the collected data are relevant. Still, the analysis is not performed accurately, which can lead to preliminary research findings (Flick, 2009). Hence, considerable attention has been laid on the selection of the data analysis technique. Accordingly, this study involves the use of a thematic analysis technique for the analysis of the secondary data obtained from the literature search. The thematic analysis technique has been considered an ideal choice because it is the most commonly applied qualitative data analysis technique. Moreover, the use of the thematic analysis technique offers the researcher increased flexibility in the analysis and interpretations of the study findings (Wang et al., 2018)...
Throughout the study, a high standard of ethics has been maintained. In this regard, secondary data used in the study were collected from reliable sources. At the same time, data in this research study has been collected from multiple sources in order to evaluate the research issue from different perspectives and for ensuring the reliability of the study findings. Moreover, any data manipulation was strictly avoided. Finally, all the secondary sources used in the study were acknowledged and cited appropriately (et al., 2009).
Volkswagen in China has faced the problem of cost in the supply chain. In China, the company has entered the automobile business through a joint venture. In the Chinese market, there is always a high demand for vehicles, but the company has discovered that it faces problems in producing vehicles efficiently in the supply chain. The dealers used to delay in product delivery, and sometimes there is the occurrence of wrong quantity or wrong method of delivery. These aspects impact the manufacture directly and obviously. To deal with this issue, the company utilizes a third-party logistics company so as to manage the logistics and supply chain. The essential costs the company optimized in the supply chain are order cost, inventory cost, and stockout cost. In order to maximize the price, the management information system has played a vital role. Traditionally, the company ran its logistics through the department of transportation without a progressive joint transportation management system. The previous Enterprise Resource Planning (ERP) system cannot fulfill the growing demand of warehouse management. Confronted with this problem, Volkswagen needs to equip two information management structures, which are transportation management system and warehouse management system. Concerning order cost, the company recognized three kinds of expenses, which are fixed expense, operation expense, and variable expense. Fixed costs comprise the payment of vehicles. Irrespective of the size, the materials require to be delivered by the company. The operating fee is included in the fixed price, which considers insurance expense and maintenance expense. Although these are fixed expenses, Volkswagen always has a mind to order raw materials economically through economic order quantity (EOQ). This strategy is utilized each time Volkswagen contains the materials and has a positive influence on minimizing the ordering expense. Volkswagen employs various warehouses in Shanghai of China and confronts a considerable number of charges. It categorizes the materials into three groups, which are raw materials that are used in production in high frequency, second is materials that are less frequently required for production, and third are materials that are rarely used. Due to varying demand, Volkswagen maintains raw materials to a specific level in warehouses. Furthermore, Volkswagen applies the Just in Time (JIT) approach to keep a low level of stock and a significant amount of capital. Other costs comprise expenses for the delivery of vehicles to the customers. Volkswagen pays substantial consideration to the car, which is secure and undamaged to obtain its destination. Nevertheless, it is a significant issue for Volkswagen to provide vehicles from the producers to other locations. However, the company engaged third-party logistics, an expert in this field with competent employees to consider responsibility, some expenses involved while returning vehicles that are damaged throughout transportation. Not only is there an expense for repairing, but also a let delivery expense. Hence, they concentrate on delivering vehicles to the destination carefully, which helps to minimize the additional costs.
Toyota is another famous automobile company that has optimized cost in the supply chain. Toyota pays more consideration to minimize material and labour expenses. Toyota has accepted the labour localization approach in order to maximize the labour expenses. To optimize the logistics expenses, the company cooperates with Logistics Company. The logistics company helps to maintain outbound logistics of raw materials, vehicles, and other essential elements. It avoids the aspect of logistics that impact organizational production and sales. The company has mastered the demand for logistics, packaging approaches, and distribution of suppliers, and estimated logistics expenditures. In order to optimize cost and minimize waste, Toyota uses a sensible production strategy through JIT and automation. These strategies are based on constant developments, which is to enhance and eradicate any unnecessary procedures in production. Through these strategies, Toyota obtains an advantage through cost minimization. Toyota has also established typical lean programming. The effective utilization of poor in production procedure not only minimizes the inventory expenses but also enhances the production effectiveness of Toyota. The company chooses suppliers through a bidding process. While selecting suppliers, the company balances quality and price. Furthermore, the company does not make long-run cooperation with suppliers, which has a positive influence on choosing the best supplier and disregarding those who have poor performance. Moreover, the company makes certain adjustments and development regularly through historical experience. Toyota requests the logistics company to have a good blueprint for future and present occurrence. The traditional blueprint plays a significant part in the cost minimization of logistics, particularly a new route or variation of logistics approaches. The company changes or improves the transportation courses of raw materials and products to obtain the best method to reach at destination in time. The logistics company also uses water transportation to assist Toyota in minimizing expenses in the supply chain because the charges for road transportation are 30% more costly in comparison with water transportation. Toyota also reduces warehouse expenses. It has set certain areas, for example, temporary yard, where raw materials and components are stored for only a few hours, and after that, they are put into production. On the basis of the JIT system, various production elements are not manufactured unless the demand for the following production procedure occurs. This reduces the inventory carrying expenses. The company has introduced a system where raw materials and elements are kept for only a few hours. Nevertheless, to avoid incidents like stock out, the warehouse maintains inventory for one or two days. Hence, it can be stated that the company implements cost-cutting measures through enhancing employee productivity, eradicating waste, enhancing equipment usage, and saving operational and administrative expenses.
AGCO is an international manufacturing organization, which manufactures and supplies agricultural machinery. The organization expanded considerably throughout twenty years, accomplishing a significant portion of that growth by a method of acquisition. As usually occurs when organizations grow, AGCO faced a growing level of supply chain complications, combined with a related increase in expenses. However, owing to the decentralized and fragmented characteristics of its international network, the company unable to address this cost problem in the supply chain. Later, the organization identified this situation and chosen to establish a long-run program of strategic optimization. With five separate brands within the umbrella of the organization, the product portfolio is enormous. When optimization planning started, sourcing and inbound logistics were administered by teams in different nations, each with a diverse degree of supply chain management maturity and utilizing various instruments and systems. Consequently, in a decentralized setting, where inbound logistics and transportation management were distinct operational areas, there was inadequate transparency in the supply chain. The organization as a whole unable to exploit synergies and economies of scale. These problems existed against a background of an unstable and seasonal market. Following a supply chain benchmarking application, the organization decided to approach cost minimization by merging new technology in the form of an internationally integrated transportation management system, with a promise to develop an association with an appropriate and efficient 3PL provider. Since the North and South American divisions of the organization were performing with the transportation management system, the organization decided to familiarize a merged strategy in the European region, promising to mirror the framework, if effective in other areas. With technology and conglomeration in position, a logistics control area was created, which incorporates and synchronizes every regular inbound supply function within the European region, i.e., from the negotiation of shipper freight rates, by inbound shipment scheduling and transportation plan optimization for carrier payment. After seeking a proper associate, the organization is chosen 4flow. Its overall concept for cost minimization and performance development was an attractive opportunity for AGCO. 4flow also certified rapid its application in the entire European region. It links above 1500 dealers, 9 European production factories, and spare parts centers in one international network. AGCO and 4flow also incorporated water transportation for North and South America (4flow, 2021). The organization presently obtains profit through synergies of an international production network in road transportation and is ready for global rollout. Due to the strategies taken by the company, 50% of its European logistics solutions gone live, and the organization accomplished minimization of consignment expenses by about 18% and has continued to save between 3% to 5% of carriage expenses on a yearly basis. With the roll-out of a new operational framework in other countries, the organization has minimized inbound logistics expenditures by about 28%m enhanced network performance by about 25% and reduce the stock level by a quarter. They were applying iTMS and optimizing the international network empowered AGCO to minimize the transportation expenditures by above 25% on a quantity adjusted basis. This was a remarkable accomplishment, particularly regarding the sharp reduction in market quantity for agricultural machinery (Banker, 2017). Furthermore, there was depreciation in stocks and external warehousing expenditures. In the meantime, inbound traffic transparency is also enhanced. It became possible to monitor every shipment in the supply chain system autonomously, irrespective of the service provider. The enhanced transparency is advantageous to dealers and service provider development.
On the basis of the pieces of literature and the above case studies, a framework has been developed, which can be used by manufacturing organizations for cost reduction. According to this framework, cost reduction can be obtained through simultaneous consideration of manufacturing and distribution.
Based on the above framework, from a manufacturing perspective, cost minimization can be achieved by controlling the manufacturing and material expenses, reducing the cycle times, enhancing the capacity, and optimizing the locations of manufacturing plants. From a distribution perspective, cost minimization in the supply chain can be achieved by optimizing the warehouse location, the supply networks, the overall distribution network comprising the logistics and level of services.
From analyzing the case, it is clear that inventory optimization is a critical success factor for cost reduction in the supply chain. This inventory can be optimized by utilizing a two-stage procedure. The first stage is based on the evaluation and visualization of the supply chain and manufacturing and its configuration. Important figures for existing plants and future manufacturing organizing are vital in this phase. A comprehensive observation at manufacturing evaluates factors, for example, production lines or loading capability for every location. Factors, for example, lot sizes and cycle time, have much impact on inventory optimization. Apart from simplifying the recording of input aspects, the first level serves explicitly the objective of increasing consciousness to recognize the requirement for change within the company. Group-oriented optimization strategies are developed and synchronized with every applicable stakeholder, according to inventory arrangement for every product and afterward combined for every chosen group. Extra evaluation can then be conducted, for example, empty and safety inventory evaluation. Simultaneously, every influencing aspect and typical restraints are addressed along the supply chain for evaluating the real reasons for stock levels. This strategy is subject to systematic comprehension and goes more than standard stock minimization measures. In the second level, several circumstances are stimulated and evaluated based on the framework. Regular activities are encouraged on the basis of data defining actual stock circulation, along with forecasted ordering behaviour of the customers. In a database-supported and customer-oriented stimulation atmosphere, it is likely to consider interdependencies in different situations without an operative threat. Meaningful reports on performance and conditions create the basis for decisions about approach, planning, and optimization.
According to the framework, the key factors, which impact inventory optimization, are product demand, product portfolio, lead time, and inbound activities. One vital aspect of accomplishing balance for an optimal stock is safety inventory level. Minimum stock level is particularly critical for reducing the expenses in the end-to-end supply chain. An inclusive strategy to set optimal safety inventory level considers ambiguity and threats on both, supply and demand portion. The predicting correctness, which is computed by utilizing a contrast of predicted amounts to actual productivity for every stock, is a vital measure of quality for planning procedure and planning accurateness (KPMG, 2015). The outcomes conclude in dynamic and systematic optimization of minimum stock level for every product.
There are six steps for an organization to follow in order to optimize cost in the end-to-end supply chain.
Supplier management: The suppliers provide components, raw materials, and services for manufacturing products. Therefore, organizations require understanding the suppliers, negotiating with them to reduce the cost of goods sold and lead times. With increasing visibility, organizations deal quantity pricing (Nichols, 2018).
Dealer cost of goods sold administration: The second step is to control the cost of goods sold. Organizations require negotiating year-over-year price depreciation in the order, which is created into supplier contracts. Organizations determine their procedure by applying six sigma or lean optimization instruments to reduce the expenditures in the supply chain.
Demand planning: The third step is to forecast the demand for products among the customers. Vigorous demand planning help to reduce the expedited charges and other logistics expenses that increase the cost in the end-to-end supply chain. Sales history, market evaluation, seasonality, and competitive environment, among others, are used for forecasting the demand.
Supplier stock management: In the fourth step, for optimizing the supplier stock, information regarding the forecasted demand is to be shared among the suppliers. It will help to certify that suppliers are optimizing their stores. Comprehending the lead time of suppliers is also critical for controlling the stock (Marion, 2020). The organizations require understanding if the suppliers can respond to growing demand.
Stock control: In the next phase, it is essential to control the stock of the organization. It can be accomplished by undertaking regular, methodical cycle counts and physical inventories. Information technology is used for controlling the supply and maintaining accurateness in stock (Balaji, 2013).
Logistics: The final step, the logistics require to be appropriately managed for the adequate performance of the supply chain—poor logistics management results in unnecessary shipping expenses. Robust demand planning and lead time control assist in reducing the costs on logistics advance and rush charges.
After evaluating the relevant data from literature review and findings of the study, it is essential to possess discussions so that the topic of the research is comprehended properly. The chief objective of this chapter has been to associate the findings of the study with that of the literature review and helps in attaining the research objectives. This particular study has aimed at ascertaining the optimum strategies that can be used for the purpose of cost minimization without hampering the effectiveness of End-to-End supply chain systems in the manufacturing industry. In order to attain the research objectives, it has been identified that the researcher has made use of the secondary data sources such as Google scholar in order to search for all the relevant information. It can be revealed that the study takes into account qualitative research method because the study is completely subjective in nature and demands through explanation of the topic being studied in this dissertation. The data have been analysed with the help of case studies of three different companies such as Toyota, Volkswagen and AGCO. It can be discussed that because of Covid, the study could not collect primary data which limits the scope of the study to a great extent. However, in the near future, primary and secondary data sources needs to be collected for making the study reliable. End-to-end comprises of the entire supply chain methods beginning from product design as well as attainment of raw materials to the delivery of final products and offering the customers with facilities such as after sales customer service. It can be discussed in relation to literature review and findings of the study that since the business operations are sophisticated and there is huge advancements in the technology, the origin of the supply chain has arisen into active end-to-end vision covering supplier management, production, distribution and scheduling. It becomes quite difficult to weave the different stages of the supply chain into faultless systems. One of the chief principles of the end-to-end supply chain management has been associated with collaboration (Veinott, 2005). New technology in the context of shipping and transportation has led to complexities that has become unmanageable for the team members. Most of the supply chain management theories are developed based upon the principles of cutting the cost. However, according to the research, it has been identified that companies try to look for enhanced cost-efficiency but the scope to enhance appear to be declining. It has been identified from the study above that the chief principle of developing an efficient end-to-end supply chain has been to create good association with the suppliers. It becomes quite significant to develop good association with the suppliers (Zhong & Et. al., 2017). Different sectors tend to face different problems in relation to the supply chain. Healthcare industry, food industry, automobile industry and among others are some of them that faces constant issues in relation to high inventory cost. It has been identified that different strategies are implemented in order to minimise the supply chain costs. One of them has been minimisation of human errors because errors in supply chain processes and data collection methods tend to add to the costs of company (Pettersson, 2015). Manual process needs to be made automated by utilising the supply chain software in healthcare sectors. In case of automobile industry, it is noted that present Covid-19 situation have made automobile industry to comprehend the ways in which supply chain would be impacted because of the disruptions. Because of lockdowns, manufacturing process stopped in china that has impacted different countries such as India, USA and Europe. In pandemic times, they faced issues in manufacturing and thus looked for local suppliers who would be capable of suplying in short time. From the findings of the study and from literature review it has been noted that companies such as Volkswagen, Toyota and among others have implemented two main strategies for optimisation of the supply chain costs. One of them has been minimisation of the production costs and other has been maximisation of the sales revenues. Such a strategy is identified as lean manufacturing systems. The automobile companies possessing global supply chain needs to possess data driven supply chain management systems. The data driven method helps in tracking flow if information, products, procurement of the materials and delivery of the finished products to customers. One main benefits of supply chain optimisation has been cost minimisation. It is by means of supply chain optimisation, the company can maintain optimum inventory levels in order to meet the needs of the customers. It has been noted that company such as Volkswagen tends to implement Just in Time methods for maintaining low levels of stocks and possessing adequate levels of capital in the organisation (Michigan State University, 2019). In Toyota, for optimising cost and minimisation of the waste, the company tends to implement sensible production strategy by means of JIT and automation. Such strategies tend to be based upon constant developments that have been to improve and remove unnecessary methods in the production methods. Toyota is also found to minimise its warehouse expenses. The company tends to implement cost-cutting measures by means of improving employee output, removal of wastage, improving the equipment usage and saving of administrative expenses.
It has been noted from the findings of the study and from literature review that from the manufacturing perspectives, cost mimimisation can be easily attained by controlling of the manufacturing and material expenses, minimisation of the cycle time, improving the capacity. It can be revealed that minimisation of the supply chain cost proves to be a challenging factor for the company (Siemens, 2021). In order to attain this, most of the companies can possess intelligent, decision making optimisation solutions such as ICRON. With this, the company shall be capable of assessing end-to-end supply chain through real-time and historical data. It would assist in creating an understanding of interplay and interdependencies between the operations in distinct areas and the impact of cutting costs in one area of overall operation. An end-to-end supply chain persists in every product and services in the organisation. Hence, it is quite imperative to enhance and optimise these chains in order to ensure the fact that the company possess products available for the customers and it can save time and money as well.
This research aims to find the best cost-cutting solutions for end-to-end supply chain processes in the manufacturing sector that do not compromise productivity. The researcher attempted to discuss three critical research objectives in this report. It is also possible to argue that all three study objectives have been completed successfully. The first objective to be achieved in this analysis was the comprehension of cost issues in the supply chain. This research thesis then revealed that "Supply chain optimization" means the maximization of the productivity of the supply chain in order to guarantee consumers the maximum degree of benefit and relatively cheap quality goods. In this regard, the research study showed that the disturbing increase in production costs makes it impossible for business to supply the bulk. It has been found from the analysis that the optimization of the supply chain costs depends on two aspects that constitute the company's net running costs and the rough return on the stock spent. According to the findings of the report, healthcare organizations lack access to supply chain data, which has an impact on their ability to provide a prompt response. The healthcare sector also has to deal with undisclosed risks regarding medication prices. However, the most significant impact that the company is dealing with is medicine shortages. It is also identified from the study that the food industry is also confronted with end-to-end supply chain issues. It is really hard for the food industry to estimate demand and therefore affect the management of the supply chain. Furthermore, effective resource handling is often an issue that spoils foods and thus impacts the management of the supply chain, revenue and the organization’s profit margins. In addition to the pharmaceutical sector, it is also comprehended from the analysis that the automotive industry even now faces issues with the supply chain. Because of the new Covid-19 pandemic, most car companies have recognized the local supply benefit that enables rapid pivoting. Another major issue is data accessibility, which is described as a lack of information about commodity availability, facilities, and delivery, which causes supply chain management to be confusing. Additionally, the second objective that this study attempted to achieve has been determining the cost-cutting strategies in the end-to-end supply chain that have been used in a variety of industries, including health care, automobiles, and the grocery industry. Because of the structure of the market, lowering supply chain costs in the healthcare sector is a challenging challenge, as seen in the preceding section. In this connection this research study postulated that it is essential for the organization, in order to monitor overall stocks and goods so that outdated supplies bring costs into the inventory, to establish a correct monitoring system. Besides healthcare, there are still challenges for the food industry to reduce the supply chain costs. According to the study, one of the most important methods for lowering end-to-end supply chain costs is to reduce consumer demand. Another important tactic for a food manufacturer to lower supply costs is to ensure that the goods are well packaged. It is also comprehended that another important tactic for a food manufacturer to lower supply costs is to ensure that the goods are well packaged. It has been found from the analysis that Activity Based Costing (ABC) is a modern and efficient cost accounting method in the automotive industry. In this respect, it should be noted that in the car industry, the two most important methods for optimizing profit are lowering manufacturing costs and increasing sales revenue. The third objective that has been drawn in the study has been to evaluate a better understanding of how supply chain cost efficiency will benefit manufacturing companies. In the current situation, a supply chain management system powered by data becomes essential for automotive businesses with a global supply chain. In this context, it should be emphasized that optimization of the supply chain will give the car companies far too many advantages.
It has been clear from the aforementioned review that lack of supply chain knowledge management will influence the overall operations of the enterprise. The ability to reduce costs is yet another advantage of supply chain optimization. The optimization of different supply chain operations costs such as warehouse, distribution and logistical costs contributes to the monitoring and maintenance of the company's total costs. A further advantage of optimizing costs is to increase the probability of risks in the supply chain. In this aspect, reliable supply chain data should be illuminated in order to recognize possible risks and allow car firms to prepare for unpredictable circumstances. However, the study findings suggest case study analysis for automobile and manufacturing companies. The case of Volkswagen demonstrated that the dealers used to postpone the order, and often the incorrect amount or form of delivery occurs. The corporation uses third party distribution companies to handle the supply chain and logistics to cope with the problem. Toyota is another prominent car manufacturer that has optimized supply chain costs. Toyota uses a sensible manufacturing approach via JIT and automation to reduce costs and mitigate waste. Via these tactics, Toyota benefits from reducing costs. On the other hand, the Case of AGCO, which is an international manufacturing organization reviewed that, in association with related expenditure rise, AGCO faced increasing levels of supply chain complications. The company agreed to address cost minimization by combining emerging technologies in the form of a globally incorporated transport management system and, after an application for a supply chain benchmarking application, it promised to create an association with an effective, reliable 3PL service provider. A method for cost savings has been established based on the literature and the case studies described above. So, it can be concluded owing to this concept that, cost savings will be achieved by considering production and delivery at the same time for all the respective industries mentioned above.
In this particular research study, certain limitations have been encountered, which has one way or the other influenced the overall outcome of the study altogether. It is important to note that the research has been conducted following a qualitative research method with collection of information mainly from secondary sources such as journals as literature. Hence, the absence of primary data in this research work can be regarded as a potential limitation. This is largely owing to the fact that in the current pandemic situation, there is restrictions in travel and communication owing to certain norms, which has further disabled the use of primary data in this study to a major extent. Correspondingly, it can be recommended that future research conducted in this topic can consider primary data collection from both surveys and interviews so that better and extensive data can be attained which can further extend the research and generalizability of the research altogether.
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