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Trade-Off between Time and Cost 1

Trade-Off between Time and Cost


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Trade-Off between Time and Cost 2


Trade-Off between Time and Cost
Introduction
Market globalization, customized demand, and technology are growing rapidly. In this
background, supply chain management has become a novel and promising means of a
competitive edge in the marketplace. The supply chain management is defined as an arrangement
of interdependent organizations, which operate together to manage, improve, and control the
flow of products, materials, information and services, from the point of origin to the point of
delivery to meet the needs of the customers, at the least possible costs to all members. Supply
chain also denotes the different activities and processes, which yield value in form of services
and products to the end user/consumer. Additionally, offering the right services and products, at
the right time and place, in the appropriate quantities and specifications to the consumer in an
effective and efficient manner, need to be attended appropriately. This ensures a relentless flow
within the chain of supply. Thus, to fulfil its objective, the chain of supply is challenged by a
growing number of paradigms of management. These paradigms include time, cost, lean, agile,
responsiveness, and quality. It is recommended contemporary strategies of management need to
address these paradigms. Thus, this paper aims to discuss how trade-off between time and cost in
global supply chain is critically important.
Trade-offs amid Paradigms

Lean organization denotes almost zero inventories while a resilient firm ought to have adequate
inventories to respond to the impact of disruptions, which may transpire in chain of supply.
These notions appear to contradict. However, it would be perfect to have both paradigms
functioning together in an organization (Peck 2005; (Narus and Anderson 1996). Additionally, it

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is focal to create a design for an environment system that ensures that the management of the
production system us sustainable. Hence, the same concept applies to time and cost paradigms,
and these paradigms must be developed upon a basis of compatibility (Tang 2006).
Time and Cost Trade-off

Currently, a widespread approach to organizational procurement needs companies to consider


costs and times in supply chains. Thus, although the low-cost-nation strategy of sourcing is
deemed profitable, the most profitable source however might be closer than most people think.
The current parochial pursuit of sourcing from the lowcost countries as a main strategy of cost
mitigation is ending (Monczka, Trent, and Handfield 2005; (Gonalves, Hines, and Sterman
2005). This change has been caused by a majority of forecasts of worldwide consumer demand
indicate that a substantial amount of future growth in demand will come from todays lowcost
areas. Additionally, this change will also move those areas from lowcost nations to emerging
markets. Organizations, which sell to evolving markets will require to balance and cost
effectively, as well as will force most of them to undertake a strategic and customeroriented
supply chain (Bozarth and Handfield 2006).

As much as low-cost production may primarily prove appealing, a total cost of supply chain
perspective provides a far more practical approach to formulating sourcing decisions (Monczka,
Trent, and Handfield 2005). In todays economy, a cost outlook has become more crucial than
ever, especially as increasing costs of energy have pushed up logistics, distribution, and
transportation expenses as a total percentage cost. Thus, as these expenses increases, they could

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obscure the benefits obtained from manufacturing goods from lowcost countries (Childerhouse
and Towill 2000).

Supply chain strategies today need to consider how fast suppliers deliver materials and parts to
manufacturers (Rosenfield, Shapiro and Bohn 1985). At times, lowcost nation sourcing does not
add up, for instance, if constraints of leadtime counterbalance any cost benefits. Certainly, in
some instances, leadtime considerations might essentially be of greater importance than cost or
they may need to be taken into account as part of the extensive cost equation (Chopra and
Meindl 2004; (Gonalves, Hines, and Sterman 2005).

Therefore, a time and cost trade-off is a wise supply chain strategy to balance demand with
supply to build an international supply network distribution, which best caters for the business
objectives of the company. Thus, companies recognize that the chain of supply is the
indispensable ingredient for international competition (Monczka, Trent, and Handfield 2005).
Thus, managers must take into account the chain of supply in extensive business decisions,
particularly the cost pressures in transportation and sourcing. They will possibly increase their
software application use, for example, as systems execution of supply chain, as means of cost
management. Additionally, there is decreased tolerance for waste from supply chain and clear
proof that the involvement of supply chain in the novel development and launch of a product can
both accelerate the procedure and decrease rework (Gonalves, Hines, and Sterman 2005).

Risk management is also a key to going global. It becomes a precedence as organizations strive
to move past multiregional processes to truly international supply networks (Gonalves, Hines,

Trade-Off between Time and Cost 5


and Sterman 2005). Risk management allows firms to stabilize the trade-offs intrinsic in such
approaches in sourcing low-cost nation, profitable proximity, as well as extensive supply
networks (Monczka, Trent, and Handfield 2005). Furthermore, a renewed emphasis on the
fundamentals raises the profile of Six Sigma, lean, as well as other controls of quality in the
supply chain. Thu, as firms enforce these controls of quality, they still need to balance
productivity and cost with customer service (Hau and Billington 1992).

Suppliers problems become a companys problems, particularly when they are linked to
sustainability. Thus, suppliers have to integrate regulatory compliance and environmental factors
in the metrics of operations (Monczka, Trent, and Handfield 2005). The pervasiveness of
discussions on sustainability means that consumers are more and more demanding discernibility
into operations as well as those of their suppliers (Holweg 2005).
Conclusion

Conclusively, whether companies are concerned about handling risk of supply chain and
business continuity, sustainability or reliability and quality, organizations have to re-evaluate
their strategy of supply network to mirror total cost. Moreover, the total cost of supply chain is a
major influence for the implementation of a time sourcing strategy. Thus, a trade-off between
time and cost is critically focal to global supply chains to meet the needs of the company and
those of the customers.

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References
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Childerhouse, P and Towill, D 2000, Engineering supply chains to match customer
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Chopra, S and Meindl, P 2004, Supply Chain Management, Upper Saddle River, New Jersey:
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Gonalves, P, Hines, J and Sterman, J 2005, The impact of endogenous demand on push-pull
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Hau, LL and Billington, C 1992, Managing Supply Chain Inventory: Pitfalls and Opportunities,
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Tang, CS 2006, Robust strategies for mitigating supply chain disruptions, International Journal
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Peck, H, 2005, Drivers of supply chain vulnerability: an integrated framework, International
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Rosenfield, D, Shapiro, R and Bohn, R 1985, Implications of cost-service trade-offs on industry


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