DECISION PHASES IN SUPPLY CHAIN MANAGEMENT

Abstract: Strong and effective supply chain management is an essential for

a company smooth operation of the business, quality projects or potential
benefits, thereby enhancing customer trust and business growth. To fall into
this phase of the association's business generation phase, all of this depends
on the best choices that must be taken to move the right way. These choices
are often the result of past events and external information that has been
incorporated to provide data or learning. Therefore, it is recommended that
the decision support system be able to aggregate data from the three main
decision stages of supply chain management, namely: (1) supply chain
design (strategy) phase, (2) supply chain management decision (plan)
phase, and (3) operations Level (operational) stage. The proposed
framework is targeted and facilitates the basic leadership process by bringing
together data to help stratify the basic leadership process.

Keywords: SCM, Strategic, Decision, Operational, Planning

1.0 INTRODUCTION
Supply Chain Management (SCM) is an integral part of any organization, and it is a
dependency or autonomous system of logistics or data flow from supplier to end customer.
With the development of globalization, the trade business relies on supply chain
management, and the world is brought closer through cooperation and coordination
between different agencies of logistics. Supply chain management requires multiple
options to identify data flows, projects and assets. Every choice should be made to
increase the excess of the store network.

A Decision Support System (DSS) is a system that helps stakeholders in the supply chain
make informed decisions based on information or data generated by some or all of the
supply chain pipeline. Its importance in each business area or communication flow pipeline
cannot be underestimated .

Supply Chain Management is the management of the flow of goods and services and
includes all processes that transform raw materials into final products. It involves the active
streamlining of business supply-side activities to maximize customer value and gain a
competitive advantage in the marketplace. SCM represents an effort by suppliers to
develop and implement supply chains that are as efficient and economical as possible.
Supply chains cover everything from production to product development to the information
systems needed to the direct undertakings.

A supply chain is the connected network of individuals, organizations, resources, activities,

and technologies involved in the manufacture and sale of a product or service. A supply
chain starts with the delivery of raw materials from a supplier to a manufacturer and ends
with the delivery of the finished product or service to the end consumer. SCM oversees
each touch point of a company’s product or service, from initial creation to the final sale.
With so many places along the supply chain that can add value through efficiencies or lose
value through increased expenses, proper SCM can increase revenues, decrease costs
and impact’s a company’s bottom line.

The SCM process begins in the earliest stages of procuring materiel from distributors
and suppliers, and it continues until the final delivery to the customer. The complete supply
chain encompasses sourcing raw material and parts, manufacturing, warehousing,
inventory management, customer service, and delivery of final product. Each element is
critical for a fully developed, high-performing supply chain; one weak link can prove
detrimental to the entire SCM process because all areas depend upon each other. SCM
aims to collectively improve each stage of product acquisition, storage, development and
delivery to ultimately maximize customer value and gain a more competitive advantage.
Efficiency of the supply chain is the result of integration of the performance of all members.
As such, managing the overall supply chain efficiency is a challenging task.

Development and presentation of supply chain within distinct companies has varied
widely. In essence, no two companies’ supply chains look alike. There are many supply
chain models, and these models only effectively deliver on their promise when aligned with
the way in which the company wants to go to market. Furthermore, most companies don’t
merely have one chain. With respect to complexity, supply chains can range from Avery
basic form to a very sophisticated complex chain and based on business impact, they
range from very traditional to a supply chain with competitive advantage.

At one point or another, there are various risks and uncertainties in the supply chain.
Some of these related risks may be public and easy to see, while others may require
technical or critical processing of information that may be hidden in complex data.
Therefore, DSS helps mitigate some of these risks. The adoption of DSS in the supply
chain also gives stakeholders the opportunity to automate processes and eliminate the
high error rates associated with the entire human intervention; it can further help reduce
costs by helping to integrate the need to control the flow of goods or services in the supply
chain pipeline configuration. And supply indicators, determine its components, resource
allocation, outsourcing or internal. Companies aim to increase supply chain surplus by
configuring their strategic goals. In order to avoid short-term alternation, companies must
consider all uncertain possibilities in the market over the next few years.

2.0 DECISION PHASES

In supply chain management the change from pre-arranging (the phase that happens
before an inventory network is conveyed) to start (the primary stages in the genuine
sending of the store network), confront choices difficulties, for example,
distinguishing the particular conditions that trigger the requirement for progress and
planning continuous inventory network stream while at the same time reconfiguring the
engineering of that production network. Each decision phases have different roles and
time working duration. Every decision phase has a distinctive role and time span, which
ought to be made more viable when worked with existing accessible information for
each stage. Fig1. Shows the basis supply chain decision phases
 Fig 1 Supply chain decision phases

Managers at all levels must make decisions on behalf of a company. The difference
between decisions at various levels lies in the scope of the choices made. Long term
decisions affecting the company as a whole belong to the highest management levels,
while decisions affecting day-to-day operations fall to bottom management. All decisions
relate directly or indirectly to broader management functions: planning, organizing, leading,
staffing and controlling. Different management levels spend more time on certain functions
than on others.

Decision phases can be defined as the different stages involved in supply chain
management for taking an action or decision related to some product or services.
Successful supply chain management requires decisions on the flow of information,
product, and funds that fall into three decision phases.

The different decision phases are

2.1 SUPPLY CHAIN STRATEGY OR DESIGN DECISIONS

All business and management activity follows from a company’s mission – its reason for
being in business. A company’s board or owners create the mission and write a mission
statement for the internal and external audiences. Success in accomplishing the mission
could take many forms. The form chosen gives a company its vision, an ideal the business
seeks to actualize. A caterer, for instance, might envision becoming the first choice for jet-
set soirees. Besides defining a lofty ambition and the existential question of mission, a
company’s board or owners also articulate a company’s core values, those standards the
business will never compromise.

Upper management must translate the vast scope of mission and vision into concrete
achievements over time. In other words, upper management needs a strategic plan.
Decisions related to strategy involve company-wide matters enacted over the long term.
The goals are what the company hopes to accomplish at least a year more often five
years into the future. Management then chooses a grand strategy, such as growth or
diversification, to reach strategic goals. Of all management levels, upper managers spend
the most time making decisions involving plans. They also have decision power over
middle management.

In this phase, decision is taken by the management mostly. The decision to be made
considers the sections like long term prediction and involves price of goods that are very
expensive if it goes wrong. It is very important to study the market conditions at this stage.
These decisions consider the prevailing and future conditions of the market. They
comprise the structural layout of supply chain. After the layout is prepared, the tasks and
duties of each is laid out. All the strategic decisions are taken by the higher authority or the
senior management. These decisions include deciding manufacturing the material, factory
location, which should be easy for transporters to load material and to dispatch at their
mentioned location, location of warehouses for storage of completed product or goods and
many more.

The major strategic decisions in a firm are:

2.1.1 Product Development

Product development strategy is the process of bringing a new innovation to consumers

from concept to testing through distribution. When existing business revenue platforms
have plateaued, it is time to look at new growth strategies. New product development
strategies look at improving existing products to invigorate an existing market or create
new products that the market seeks. The steps involved in product development are
similar in each type of strategy.

Senior management has to define a strategic direction when considering the products that
the company should manufacture and offer to their customers. As product cycles mature
or products sales decline, management has to make strategic decisions to develop and
introduce new versions of existing products into the marketplace, rationalize the current
product offering, or developing a new range of products and services. These strategic
decisions may include the need to acquire another company or sell existing businesses.
When making these strategic product development decisions, the overall objectives of the
firm should be the determining factor.

The different product development strategies that can be adopted are improving the
existing product or to develop a new and innovative product

2.1.2 Customers

At the strategic level, a company has to identify the customers for its products and
services. When company management makes strategic decisions on the products to
manufacture, they need to then identify the key customer segments where company
marketing and advertising will be targeted.

Once target segments are identified, the marketing manager selects a targeting strategy
that will be the best fit for reaching them. Targeted marketing enables the marketing and
sales teams to customize their message to the targeted group(s) of consumers in a
focused manner. The targeting strategy is where the marketing mix comes together to
create the right offer and marketing approach for each target segment.

The target market typically consists of consumers who exhibit similar characteristics (such
as age, location, income or lifestyle) and are considered most likely to buy a business's
market offerings or are likely to be the most profitable segments for the business to
service. Once the target market(s) have been identified, the business will normally tailor
the marketing mix (4Ps) with the needs and expectations of the target in mind. This may
involve carrying out additional consumer research in order to gain deep insights into the
typical consumer's motivations, purchasing habits and media usage patterns.The choice of
a suitable target market is one of the final steps in the market segmentation process. The
choice of a target market relies heavily on the marketer's judgement, after carrying out
basic research to identify those segments with the greatest potential for the business.

2.1.3 Suppliers

Company management has to decide on the strategic supply chain policies with regards to
suppliers. Reducing the purchasing spend for a company can directly relate to an increase
in profit and strategically there are a number of decisions that can be made to obtain that
result. Leveraging the total company’s purchases over many businesses can allow
company management to select strategic global suppliers who offer the greatest
discounts. But these decisions have to correspond with the overall company objectives.

For example, The make-or-buy decision is the act of making a strategic choice between
producing an item internally (in-house) or buying it externally (from an outside supplier).
The buy side of the decision also is referred to as outsourcing. Make-or-buy decisions
usually arise when a firm that has developed a product or part—or significantly modified a
product or part—is having trouble with current suppliers, or has diminishing capacity or
changing demand. Make-or-buy analysis is conducted at the strategic and operational
level. Obviously, the strategic level is the more long-range of the two. Variables considered
at the strategic level include analysis of the future, as well as the current environment.
Issues like government regulation, competing firms, and market trends all have a strategic
impact on the make-or-buy decision. Of course, firms should make items that reinforce or
are in-line with their core competencies. These are areas in which the firm is strongest and
which give the firm a competitive advantage.

2.1.4 Logistics

As well as strategic decisions on manufacturing locations, the logistics function is key to

the success of the supply chain. Order fulfillment is an important part of the supply chain
and company management needs to make strategic decisions on the logistics network.
The design and operation of the network have a significant influence on the performance
of the supply chain.

Strategic decisions are required in warehouses, distribution centers which transportation

modes should be used. If the overall company objectives identify the use of more third-
party subcontracting, the company may strategically decide to use third-party logistics
companies in the supply chain. Strategic decisions determine the overall direction of the
company’s supply chain. They should be made in conjunction with the companies overall
objectives and not biased towards any particular product or regional location.

These high-level decisions can be refined, as required, to the specific needs of the
company at the lower levels which allow for tactical and operational supply chain decisions
to be made.

2.1.5 Location

A company's location strategy should conform with, and be part of, its overall corporate
strategy. Hence, if a company strives to become a global leader in telecommunications
equipment, for example, it must consider establishing plants and warehouses in regions
that are consistent with its strategy and that are optimally located to serve its global
customers. A company's executives and managers often develop location strategies, but
they may select consultants (or economic development groups) to undertake the task of
developing a location strategy, or at least to assist in the process, especially if they have
little experience in selecting locations.

2.2 SUPPLY CHAIN PLANNING DECISIONS

Once upper management decides the overall direction of the company, it’s up to middle
management to choose smaller tactical objectives that, put together, accomplish strategic
goals. Middle managers create tactical plans, which have more detail than strategic plans.
The tactics often are geared toward some function or department such as production,
where a possible objective could involve some measurable efficiency or quality
improvement. Middle management’s choices and plans see fruition in a year or less.
Managers in this tier oversee other middle managers or operational managers.

Supply chain planning should be done according to the demand and supply view. In order
to understand customers’ demands, a market research should be done. The second thing
to consider is awareness and updated information about the competitors and strategies
used by them to satisfy their customer demands and requirements. As we know, different
markets have different demands and should be dealt with a different approach.

This phase includes it all, starting from predicting the market demand to which market will
be provided the finished goods to which plant is planned in this stage. All the participants
or employees involved with the company should make efforts to make the entire process
as flexible as they can. A supply chain design phase is considered successful if it performs
well in short-term planning.

Various supply chain planning decisions are:

2.2.1 Data Collection

Forecasts are usually based on historical data manipulated in some way using either
judgment or a statistical technique. Thus, the forecast is only as good as the data on which
it is based.

2.2.2 Inventory Management

Physical space may cap the amount of material held on-site. At a manufacturing site,
space for raw materials must be adequate to supply production for a given period of time.
Since square footage devoted to storage does not contribute directly to sales, most
decisions attempt to reduce the amount of floor space used without jeopardizing supply for
production. Smaller supply shipments more frequently may be one solution. Finished
goods may also be shipped frequently or sent to off-site storage to maximize room for raw
materials.

Several cost factors influence inventory management decisions. The value of raw
materials represents stalled cash flow, assets that don't actively contribute to the bottom
line. This feeds the theory of "just in time" delivery, where raw materials arrive as they are
consumed, thus eliminating costs associated with warehouse space and unused inventory.
Bulk purchasing is the flip side of the scenario. Suppliers may offer discounts on quantities
of materials in excess of your immediate needs. This can improve profit margin on finished
goods, but only if additional warehousing and finance charges are avoided.

2.2.3 Inefficiency identification

Having an accurate supply chain production plan can enable organizations to find
inefficiencies such as waste, miscalculations, missing inventory and unnecessary costs.

2.2.4 Consumer Forecasting

Forecasting is the process of making predictions of the future based on past and present
data and most commonly by analysis of trends. A commonplace example might be
estimation of some variable of interest at some specified future date. Prediction is a
similar, but more general term.

Quantitative forecasting models are used to forecast future data as a function of past data.
They are appropriate to use when past numerical data is available and when it is
reasonable to assume that some of the patterns in the data are expected to continue into
the future. These methods are usually applied to short- or intermediate-range decisions.
Examples of quantitative forecasting methods are[citation needed] last period demand,
simple and weighted N-Period moving averages, simple exponential smoothing, poisson
process model based forecasting and multiplicative seasonal indexes. Previous research
shows that different methods may lead to different level of forecasting accuracy.

2.3 SUPPLY CHAIN OPERATION DECISIONS

The third and last decision phase consists of the various functional decisions that are to be
made instantly within minutes, hours or days. The objective behind this decisional phase is
minimizing uncertainty and performance optimization. Starting from handling the customer
order to supplying the customer with that product, everything is included in this phase.

For example, imagine a customer demanding an item manufactured by your company.

Initially, the marketing department is responsible for taking the order and forwarding it to
production department and inventory department. The production department then
responds to the customer demand by sending the demanded item to the warehouse
through a proper medium and the distributor sends it to the customer within a time frame.
All the departments engaged in this process need to work with an aim of improving the
performance and minimizing uncertainty.
The tactical level prescribes material flow management policy, including production levels
at all plants, assembly policy, inventory levels, and lot sizes. It deals with material flow
from suppliers to production facilities, to assembly plants, through warehouses and on to
customers. The strategic level must deal with a number of uncertainties, and the tactical
level, which deals with the time horizon of, perhaps, 6-24 months, affords an opportunity to
refine production plans to compensate for political and financial processes as they unfold.
Products ordered for delivery in the near term may be known with certainty but, still, later
periods in the tactical horizon may be subject to some degree of uncertainty.

Different operational decisions are;

2.3.1 Capacity Planning

The production system design planning considers input requirements, conversion process
and output. After considering the forecast and long-term planning organization should
undertake capacity planning. Capacity is defined as the ability to achieve, store or
produce. For an organization, capacity would be the ability of a given system to produce
output within the specific time period. In operations, management capacity is referred as
an amount of the input resources available to produce relative output over period of time.

In general, terms capacity is referred as maximum production capacity, which can be

attained within a normal working schedule. Capacity planning is essential to be
determining optimum utilization of resource and plays an important role decision-making
process, for example, extension of existing operations, modification to product lines,
starting new products, etc.

2.3.2 Materials Management

Material management is an approach for planning, organizing, and controlling all those
activities principally concerned with the flow of materials into an organisation. The scope of
Materials Management varies greatly from company to company and may include material
planning and control, production planning, Purchasing, inventory control, in-plant materials
movement, and waste management.

It is a business function for planning, purchasing, moving, storing material in a optimum

way which help organisation to minimise the various costs like inventory, purchasing,
material handling and distribution costs. Thus the quantity, quality or the type of material
required may vary in a very short span of time and thus material management comes
under operational decision.

2.3.3 Customer Feedbacks

Customer feedback is information provided by clients about whether they are satisfied or
dissatisfied with a product or service and about general experience they had with a
company. Their opinion is a resource for improving customer experience and adjusting
your actions to their needs. This information can be collected with different kinds of
surveys (prompted feedback), but you can also find opinions and reviews your clients post
online (unprompted feedback) and collect them using Internet monitoring tools. Both
sources are important to get a full picture of how your clients perceive your brand.
Top performing companies understand an important role that customer feedback plays in
business. They consistently listen to the voice of their clients. Not only they search for
opinions they clients publish on social media and reviews they provide on websites
designed for gathering feedback, but they also deliberately ask for feedback using distinct
kinds of surveys. If you want to stay ahead of competition you should never stop listening
to customer feedback whether it is positive or negative, prompted or unprompted.

2.3.4 Daily Works

Basic idea of tasks management is to organize your daily life so that you could easier and
quicker reach your ultimate goals. However, only a bunch of disciplined minds manages
not to lose their hearts dealing with complex time organizers, schedulers and heaps of
papers. The majority of common people consider them an attribute of corporate life while
still too boring and time-consuming thing to implement in a daily routine.

3.0 DECISION SUPPORT SYSTEM

Decision support systems are systems which are basically made up of some specific
parts that need drives this system consist of the language system (LS)-which deals
with the instructions or con-tents that the system is capable of accepting, an aspect that
has the capability or the responsibility to display information the DSS wants show
(presentation system (PS)), the knowledge system (KS), consisting of the information
or data and or knowledge that the system contains for analysis; and the problem-
processing sys-tem (PPS) made of the set of tools or software engine that drives the
system by trying to realize and find solutions to the problem at hand. All of these
components of the system tend to work hand-in-hand and therefore have to understand
each other in order to function appropriately to provide the required or expected support
they are meant for. However, these systems do not act or function in isolation, as they
demand human or device interaction to be able to input data, instruction or issue
queries to the system.

A decision support system (DSS) is an information system that supports business or

organizational decision making activities. DSSs serve the management, operations and
planning levels of an organization (usually mid and higher management) and help people
make decisions about problems that may be rapidly changing and not easily specified in
advance i.e. unstructured and semi-structured decision problems. Decision support
systems can be either fully computerized or human powered, or a combination of both.

While academics have perceived DSS as a tool to support decision making processes,
DSS users see DSS as a tool to facilitate organizational processes. Some authors have
extended the definition of DSS to include any system that might support decision making
and some DSS include a decision-making software component.

3.1 Features of DSS

DSS tends to be aimed at the less well structured, underspecified problem that upper level
managers typically face;

DSS attempts to combine the use of models or analytic techniques with traditional data
access and retrieval functions;
DSS specifically focuses on features which make them easy to use by non-computer-
proficient people in an interactive mode; and

DSS emphasizes flexibility and adaptability to accommodate changes in the environment

and the decision making approach of the user.

DSSs include knowledge-based systems. A properly designed DSS is an interactive

software-based system intended to help decision makers compile useful information from
a combination of raw data, documents, and personal knowledge, or business models to
identify and solve problems and make decisions.

4.0 CONCLUSION

The primary and overriding goal of any supply chain is to make sure a company is
delivering the orders its customers want when its customers want those orders—and
accomplish this by spending as little money as possible. Only by lowering costs and
improving performance can a supply chain be truly optimized.

When a supply chain is managed at the operational, tactical and strategic levels it has the
best chance of helping its company reach its goals.

When the strategic supply chain is optimized, a company is delivering what its customers
want, when its customers want it and spending as little money as possible getting that
done.

5.0 REFERENCES

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