Supply chain management can become another tool for improving the company’s performance. It is especially advantageous in the case of financial activities, as it has been proved that the companies that learned to exploit it effectively as well increased their revenues, became more competitive, and gained more customers. The concept of supply chain refers to the whole set of activities that the company conducts to reach its consumers and supply them with the final product or service. It is believed that before the customers receive their goods, it travels through the competence of various departments of one or even several organizations that are interconnected and work for the convenience of the client.
It is where the word ‘chain’ comes from the phrase. Except for the goods, the company might want to transmit information, funds, people and other similar assets through the supply chain. That said, supply chain management is about trying to monitor and turn it into the needed direction. What is specific about this type of management is that it as well controls funds. So, when there are cases in which the company receives extra revenue or has some savings, they can be redistributed and shared with the aim of improving the organization’s performance or simply put aside as the net income. That means that there is a separate value chain (Meredith & Shafer, 2013) inside the supply chain that is advantageous for the firm as the whole.
General Motors is the company that focuses primarily on satisfying the customers and delivering the final good to them as soon as possible. That is why it spent efforts on developing the supply chain that would simplify and speed up the whole process. The specificity of the firm’s supply chain is that the primary focus is made on compliance with the laws especially certifications and standards regarding the production of automobile parts it buys from suppliers. Moreover, it is seen as the contractual guarantee of providing the consumer with the best quality and safe product. In addition to that, GM is concerned about human dignity, that is why special attention is paid to fair working conditions granted to all employees (General Motors, 2016).
The current supply chain design and areas for improvement
GM’s current supply chain is monitored by the global material and logistics controlling organizations that have managing and distributing the companies resources according to the company’s needs all over the globe. There are several major elements of the firm’s supply chain. First, there are suppliers of raw materials and vehicle details that the company does not assemble by itself. Second, there are contributors to the company – the companies that together with GM work on supplying the goods to the consumer but are not suppliers (in fact, investors).
Third, there is also a logistics system comprising thousands of dealers all over the globe. Finally, the web-enabled element that helps to reduce order wait times (Yu & Bauer, 2014). There are some areas for improvement, however. What can be included in GM’s supply chain is the newest technologies, e.g. web-based systems for sharing knowledge and experiences, as the company operates on a multinational scale.
The metrics used to measure supply chain performance and their usefulness
There are some approaches used to measure the performance and effectiveness of supply chain management. In fact, most of them are financial, and they include the following metrics: lower levels of need for working capital and cost of goods sold, a higher level of return on assets, return on sales, operating incomes, contribution margins, and total revenue as the whole. Another significant measure for assessing the effectiveness of supply chain management is the cash conversion cycle that as well helps determine whether the company is productive in managing capital. Finally, there is such metrics like inventory turnover that is measured as the number of times one piece of inventory is used to obtain the total sales (Meredith & Shafer, 2013).
I believe that there might be options for choosing other approaches to measuring the effectiveness of supply chain management. For example, the company might be interested in determining the return on investments funded from the sources redistributed or gained using the value chain. It may be another way to check the company’s performance in controlling capital. Another possible metric is assessing whether the use of the supply chain decreases the level of work spent on providing the customer with the final good. If so, it will show that the company’s total revenues as well grow because less is spent on production.
Outsourcing and offshoring in the supply chain and the effectiveness of these approaches
Outsourcing and offshoring are often used as elements of the supply chain. That said, outsourcing is about changing internal suppliers of goods and services with the external ones who might offer more beneficial conditions of cooperation, prices or provide the company with the needed knowledge (Meredith & Shafer, 2013). It is another source of the benefit of the supply chain, especially in the cases when the company works on temporary or experimental projects, so, it is better to involve outer employees that teach the existing ones. However, there should be constant control over outsourcing, as it may hollow out the company, i.e. use its technologies for producing the good under its own brand. As of offshoring, it is going overseas to find the best conditions for outsourcing.
Speaking of GM, it has become known as the company that effectively uses such approaches as outsourcing and offshoring in its supply chain. Think, for example, about locations where GM opened or plans to open its plants. Except for the USA, there are also China, Mexico, India, South Korea, and some others. This trend proves that the company went global seeking locations close to raw materials suppliers and cheap labor. Such steps cannot but increase net revenues, as the company spends less on production.
The use of technology in the supply chain and additional technology to improve supply chain performance
Technology in the supply management can be viewed from two perspectives – inventory used for manufacturing and other technologies such as information and communication, banking, etc. exploited for the movement of assets other than those physically transformed in the process of production throughout the supply chain. Speaking of inventory, everything is clear because it is about physical input in manufacturing.
There are more concerns with what can be referred to as intangible technologies, i.e. skills and knowledge as well as various software used by the company. It might become the source of additional expenditures, as it requires constants upgrading because we live in a rapidly developing world. But the fact of the matter is that they improve supply chain management since they offer new ways of making it more effective because they include financial, human resources, services, logistics and other technologies (Meredith & Shafer, 2013).
As of the technologies used in GM’s supply chain, the company improves not only the inventory but also the level of its’ employees education and skills and communication with its consumers. What can still be done is launching a global web-based system for sharing knowledge that would help the workers with different backgrounds exchange skills and make the company even more productive as well as monitor the newest developments in the information technologies.
References
General Motors. (2016). Supply chain responsibility.
Meredith, J. R., & Shafer, S. M. (2013). Operations management for MBAs (5th ed.). Hoboken, NJ: John Wiley & Sons. Web.
Yu, Q., & Bauer, G. (2014). General Motors.