CHAPTER ONE BACKGROUND OF THE STUDY 1.1 Introduction In present day SC is the recognized discipline to shorten cycle time, transforming purchasing from tactical operation to strategic source, reduce inventories, decrease logistics costs, and stream line communication process across a total network from initial suppliers to final consumption and post-sale services. It is a mechanism through diverse organizations finds the way to form alliance to a new form of internet-oriented consumer demand (Charles C. poirier and baver, 2002). Supply chain is now a core business improvement effect form most companies as senior management directive in that area becoming common place. Supply chain optimization has emerged as a central objective for an organized effort enhances quality moved logically to logistics and distribution, and then to total supply chain performance (Charles C. perior and Michael baver, 2006). A company’s supply chain structure depends on the maturity of their markets, products, and customer relationship. A start-up group may to have to begin with loss virtual chain where, there is no formal long term supplier organization (someerkumar and willian A. krobb, (2005). In order to achieve an organization’s goals, a good supply chain decision is critical. SC requires many decisions related with the flow of information, product and funds. There are phases (levels) of SC decisions: 1 st strategic level which involves a long term time horizon and at this level the firms establish objectives that are consistent with a higher order mission statement and define strategies to achieve each of those objectives (mantzer, 1993). 2 nd Tactical level in this level the decision that need to be updated regularly (i.e. monthly, quarterly and yearly the 3 rd level is operational level with day to day short term SC decisions. 1
1.2. Statement of problem There is a close connection between the design and management of supply chain flows (product, information, and funds) and the success of the SC (Chopra, and peter, 2007). The study shows that the success and failurity of the company is depend on supply chain decisions (online sc .com). Tomas, et al. (2010) conducted a research on Risk, uncertainty and supply chain decisions. The result shows that bad supply chain decision led to crisis, similarly poor design and manufacturing decision created loss to the company. The companies like Wal- Mart who is the known world retail company, Dell computer company who is known by its computer production and others that built their success on superior design, planning and operation of their supply chain (Chopra, and peter,2007). There are different problems related with supply chain decisions. Among these, the first one is the problem which is related with strategy or design, because of low level of skilled man power to design a good strategy. The strategic decision is critical in order to stay in business (Johnson, 2007). There is also the problems related with planning which leads the companies to failurity and this kind of problem occurs due to the problem of collaboration in the company and across the company. The third problem is related with
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