Supply chain management is the management of interconnection of organisations that links between the processes that produce value to the consumer in the form of products and services (Mottram, K. 2015). Supply chain management is like a “pipeline”, distributing liquid to the end consumer. Basically, there are several independent firms involved in manufacturing a product, a raw material and a component producer would have product assemblers, wholesalers, retailer merchants and transportation companies who will all be a member of the supply chain (Londe, L. Bernard, J. and Masters, J.M. 1994).
Traditional Supply Chain
The traditional supply chains however, “primarily focuses on one key outcome such as speed or cost, best value supply chains excel along an array of uniquely integrated priorities—cost, quality, speed, and flexibility” (Ketchen, D.J. and Hult, G.T.M. 2007).
“Figure 1” is a diagram from a lecture portraying the traditional supply chain with the flow of goods and the flow of information. We can see that the supplier starts of the process. It is then taken to the manufacturing process transformed into a physical good, which is then distributed to the retailers to meet the end consumer. However, this is not the end. The flow of information can be for example, feedback from a customer to rate the company.
Figure 1 Barnett-Richards, K (2016)
The end customers are anyone who purchases the bottled water. Customers purchases it from the retailers. This can be from either a big supermarket like Tesco, or even a small chain firms like from a corner shop. The distributors will depend upon the retailers themselves meaning, a big supermarket maybe their own distributor where for the corner shops, they will have to purchase it through wholesalers. Distributors however, will receive their goods from the manufacturers which will depend on the brand itself which can be anyone like Smart Water, Nestle Waters, Evian and many more. Finally, the suppliers are the one to provide manufacturers with raw materials for example from the bottle itself, lids for the bottle, label and many more. Nestle Waters have portrayed their supply chain process in Figure 2 by stating their packaging, manufacturing and distributing process. They have also factored in the recycling process which creates a loop in the supply chain.
Figure 2 Nestle Waters Life Cycle (2016)
Challenges to Supply Chain
There are challenges to the supply chain like efficiency, safety and quality. There are various ways to improve the supply chains by increasing information sharing by being efficient in distributing information, channel alignment by adopting a same or similar decision making process and operational efficiency by eliminating inefficient or ineffectiveness in the chain (Mottram, K. (2015).
Safety and Quality
In the bottled water industry, safety and quality is key due to the competitiveness. Consumers are now focused on their health and the consumption of bottled water has surpassed that of milk, coffee and beer (JPMorgan 2005). Therefore, the competition and awareness of the consumers’ raises awareness for firms like Nestle Water’s need to focus on their safety and quality. The number of product recalls are growing where Niagara Waters have recently recalled their spring water (Niagara Waters 2015). This eventually damages the company’s reputation and can be expensive. Also, the quality standards are different in various countries where a globalised company like Nestle Waters must adhere to them.
In order to ensure a high quality bottled water, firms must choose the correct and the best raw materials as well as having the right production method. This can be a long process undertaking many tests as possible before launching the product. Companies must research new countries before launching the bottled water to meet their requirements (Boariu, N 2015). This ensures that the product meets the safety and quality requirements, giving them the self-belief of their products and services.
With market demands changing constantly, companies are forced to embark a lean journey. Firms must become efficient both money and time wise. Planning is an important factor. A firm will need to make note of their quickest routes to take when transporting their goods. However, there will be major delays on the motorways as accidents can happen on the way and rush hours in between to stall the delivery time. The time delayed will eventually add up to make a loss to the company.
To avoid being caught on delays, the deliveries needs to be set out ahead of time. Deliveries must bring something back on the way so they are efficient. Being efficient earns a positive public reputation. This is because customers care about their community and environment they live in. Time compression is also important, this is because it attempts to increase the throughput speed of the operations in the chain (Mottram, K. 2015). Bottled water should also be stacked in a way where they have less packaging to allow more space to put as much stock as possible to cut down delivery trips.
Barnett-Richards, K. (2016) Bullwhip Effect [online lecture] module 238SAM, January 2016. Coventry: Coventry University. available from: <https://cumoodle.coventry.ac.uk/course/view.php?id=28570> [5 February 2016]
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Boariu, N (2015) 4 Major Issues Facing Your Supply Chain Manager [online] available from: <http://blog.procurify.com/2015/06/10/4-major-issues-facing-your-supply-chain-manager/> [6 …February 2016]
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