1. Supply Chain 1
Running Head: SUPPLY CHAIN
Manufacturing and Marketing of a Supply Chain
[Name of the Writer]
[Name of the Institution]

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Manufacturing and Marketing of a Supply Chain
Introduction
The plan is to manufacture and market a line of power hand tools, including electric
drills, saws, and sanders. A supply chain has to be established for which a business report
prepared that address the challenges of ensuring all business units (Choi, 2006).
Supply chain refers to the production and distribution process involved in the raw
material suppliers, manufacturers, distributors, retailers and ultimately consumers and other
members with the upstream and downstream members of the connection (linkage) composition
of the network structure. Examples of competitive priorities are low cost, quality, on time
delivery (Choi, 2006).
Supply Chain Management
A moderately novel management procedure that had great momentum in the past decade
and generates significant cost reductions by allowing companies greater higher profits and
competitiveness. In the new millennium, competition occurs between supply chains rather than
between individual companies. The management of the supply chain revolves around the
efficient integration of retailers, distributors, manufacturers, and suppliers in this way is achieved
substantially reduce costs and at the same time improve customer service levels (Chopra, 2004).
Vertical Integration
For the supply chain of the power tools and drills, a vertical integrated strategy will be
used. The extent at which an organization posses its buyers and suppliers is called as the Vertical

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Integration. The vertical scale of an organization is a significant corporate strategy’s
consideration (Chopra, 2004). When deciding to vertically integrate, the two of the concerns
which ought to be considered are control and cost. The second issue is the impact of asset
control, which can impact barriers to entry and which can assure cooperation of key value-
adding players. In comparison to the horizontal integration, the vertical integration is more
effective as in horizontal integration a company has to pay too much up-front and realize too
little on back end. In horizontal integration, it is hard to merge resources, capabilities & cultures
of different firms (even within same industry).
Metrics for Measuring Performance
There are many metrics which can be utilized for measuring the supply chain. All of
these metrics helps in providing an overview of the performance of the supply chain, not just in
the conditions of cost and spend but in terms of the information of the supplier as well as aspects
of the operation (Dooley, 2001). The Key common supply chain metrics used in this supply
chain business will be:
Cost
The cost will be in terms of the cost of purchase, transportation and travel cost, cost of
the delivery of the storied items as well as the administrating supplies and revenue costs. Costs
should be a common metric because the cost is imperative to the efficacy of the supply chain.

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Forecast Accuracy
The forecast of the item’s need which are to be supplied will tell about the efficiency of
the supply chain. The more customers’ demand of the product the better is the quality.
Quality/Defects
Deliveries are an important part of the supply chain. The quality needs to be of good
standards and the defects should be at a minimum. A standard measure is PPM or Defects in
Parts per Million.
Stock outs
Stock outs are pricey as they are the reason for the delays in the supply chain and have an
effect on its overall performance to the consumer. The stock out quantity will have a significant
effect in terms of transportation, costs concerns etc, which is why it is a vital metric to evaluate
the performance of the supply chain.
Productivity
Measuring the output of the supply chain in relation to the staff will be a vital pointer
which will help in evaluating the performance. This might be in turns of products manufactured
or even purchase order raised. Productivity indicators can be crucial to understand the
effectiveness of the supply chain and help in understanding how to improve further.
Process Risks
Following risks can be encountered in the integrated supply chain

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Delivery Process
The customers may not be able to come to the supply chain to get their orders and if they
have large orders it will be difficult for the customers to handle their orders. The company needs
to hire or buy large shipping trucks to facilitate the customers.
Creating Brand Image
As this is a new company, it will be a little difficult to carter the customers as they may
already have selected stores in which they buy their tools from. There is a strong need to attract
the customers so that a brand image is created and the company gains customers.
Control Risks
Following are some of the effective management methods which will be applied on the
integrated supply chain.
Delivery Process
Those companies, which followed the customer-oriented approach, had started this trend
of giving value other than the product itself. Home delivery of these services represents a great
value for our customers modern (Simon, 2005). Specially designed delivery system of goods
online stores and other organizations can deliver the goods at very reasonable customer value,
and cooperation on an ongoing basis (Simon, 2005).

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Creating Brand Image
The main purpose of will be to assemble customer demand for assured delivery of high
quality and low cost with minimum lead-time. In order to accomplish this objective, the
company needs to have better presence and command into the whole supply chain process of the
strategy of their own as well as those of their suppliers and customers. The individual customers
are more likely to select the company that is providing services at the least cost.
Environmental Risks
As this is a supply chain which will manufacture its own tools and deliver them, there
will be certain environmental risks due to the manufacturing process.
Increase in Waste in the Environment
When the company is manufacturing tools it will release toxic materials in the
environment which can be very harmful. The company should make sure that the manufacturing
process is done in an industrial area so that the residential areas do not get affected. The
company should also use environmental friendly materials so preserve the environment.
Organizational Structure
Following departments are needed to run the company,

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Management Department
The management department is an important department which will manage the other
departments. They will look out for any problems or issues which arise during the process. They
will ensure that the productivity of the company is continuous.
HR Department
The Human Resource department is the most important department of any company. This
department ensures that proper and qualified people are recruited in the company. They evaluate
each candidate according to the job description and recruit those who are best suited for the job
and the company.
Finance Department
The finance department is also necessary for the company as they take care of all the
finances of the company. They make sure that the company’s financial situation remains intact.
Manufacturing Department
The manufacturing department manufactures the goods of the company. This department
will have sub divisions within for different kinds of tools. Each tool will be manufactured under
a different division.

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Delivery Department
This department will make all the deliveries of the goods to their designation. They will
ensure that the delivery is on time and all the quantity is what the customer asked for and that the
delivery is done to the right place.
Quality Assurance Department
This department will ensure that all the goods of the company are of high quality. Each
part used in the tools is bought from a reliable company to ensure the quality of the overall
product.
Maintenance Department
This department will look after all the maintenance of the company. They will do all the
repairs and preservation whenever needed. They will also take care of the goods which needs
repairing.
Organizational Components
The following are the organizational components for the supply chain business which
will benefit the company (Tan, 1999).
Plan
This is the strategic segment of supply chain management. Strategies and business plans
are made in order to carry out the remaining stages efficiently. Strategies are devised by the
supply chain managers of the company devising best policies and strategies for the business.

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Source
The next component is the selection of suppliers who will supply the services and goods,
required to produce a good or service (Tan, 1999). Build up a set of delivery, payment and
pricing procedures with suppliers and generate metrics for checking and improving the terms and
relations with the suppliers. Further, one needs to design procedures for managing the inventory
of goods and services he receives from suppliers, including receiving shipments, their
verification, transference to the manufacturing facilities and approving payments of the
suppliers.
Make
This is the manufacturing step. One needs to plan the activities that are essential for
manufacturing, testing, packaging and preparation for delivery. It is the most metric-intensive
segment of the supply chain, that measures quality levels, production output and worker
productivity.
Deliver
This part will include the coordination of the receipts of orders from customers,
development of a network of storehouses, picking up of carriers to take goods to customers and
setting up of an invoicing system to receive payments.

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Return
Client/customer would return the good or product back to the company if it fails to meet
effective quality control criteria (Van, 1999). The origination gets in touch with the customer to
record and keeps a track of his/her complaints so that the company's SCM and Complaint center
department together deals with the issue and get it sorted out as quickly as possible.
Mass Customization
Mass customization is a new paradigm that encompasses the technologies and systems
needed to deliver products that meet individual customers’ needs with near mass production
efficiency. In order to accomplish this, the company must adopt a flexible, demand-oriented
strategy to provide a range of custom options. Efficiency is a key strategy as mass customization
is as much a business practice as it is a technology practice. Implementing mass customization
demands new processes and services—new capabilities that are not in place in most
organizations. To succeed, the company must design products that create enough customer value
to justify any additional customization expenses.
Strategic Operations Management
Typically, the supply chain business will focus on three to five forces which will help in
spanning the life cycle of a supply chain strategy, from go-to-market model, to process
effectiveness, to complexity management, to nonstop improvements and manufacturing
superiority (Van, 1999).

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Effective Complexity Management
The designing procedure may take longer than that of competitors as extra time will be
spent to make certain that the new products conform to existing modern process and, therefore,
can be accessible at comparatively lower prices.
Low-Cost Manufacturing Foot Print and an Efficient Distribution Network
Factories will gradually be placed in different developing nations, and comparatively
economical logistics approach, like container shipping and railroads, will be adopted.
Mature Strategic Sourcing Approach
Relationship with suppliers will be refined so that they last for a longer period which will
be valuable in volume and cost for both partners, and will be supportive so that process for all
phases of the supply chain can be continuously evaluated for improvement areas.
Manufacturing Excellence
A definite importance will be placed on executing lean manufacturing methods in all
services.
Manufacturing Facility
Following are some of the ways in which cost-effectiveness of the manufacturing facility
can be improved.

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Know Your Cost
A proper budget must be designed monthly or quarterly, the aim of the company should
be not to go over that recommended budget cost. All the materials and delivery process should
be done keeping the budget target in mind.
Monitor Productivity
The productivity of the entire workforce should be monitored; if someone is not
performing well they should be trained and coached, so that they can properly perform their
tasks.
Creating Teams or Groups
By creating different teams and groups to work on selected project, the company will
ensure more productivity. The work will be more managed and organized.
Training
Proper training must be given to the employees so that they perform their job more
effectively and efficiently.
Improvement in Cost Effectiveness in Supply Chain
The following improvement in the cost effectiveness will surely benefit the supply chain
business and will help in improving the quality and standards of the chain as well as customer
satisfaction (Choi, 2006).

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Best Values
It is one of the vital elements in proper decision making connected to purchasing. The
company should consider every option available. The supply chain will offer best values to
customers as well as the best quality products which will improve customer satisfaction and
hence, will improve the sales of the supply chain (Choi, 2006).
Control and Management of Contracts
The company ought to adequately manage the contracts. The administration will also
firmly direct all the ventures to guarantee proper completion of the purchases of each venture
inside the allotted finances and with the observance of regulation and rules.
Minimizing and Assessing Risk
The risks associated with all the purchasing will be taken into deliberation and contradict
methods will be exercised to reduce the involved risks in the projects.
Experienced and Qualified Staff
All the staff members hired will be have the required qualification and will have
experience in the supply chain field so that they can handle the financial, legal as well as other
issues in a better way.
Conclusion
Supply Chain Management is not just the completion of the order but includes all the
operations and processes that start from generating the products through the ending of life

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disposal and recycling. Therefore, proper strategies and planning is needed to overcome this
competition. The quality and cost assurance is needed to attain the loyalty and satisfaction of the
consumer. This will ensure that this supply chain will gain profits and will achieve operational
excellence. It will ensure the economic growth and will also ensure the competitive advantage to
this supply chain over other (Chopra, 2004).

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References
Choi, T.Y. and Krause, D.R. (2006), “The supply base and its complexity: Implications for
transaction costs, risks, responsiveness, and innovation,” Journal of Operations
Management.
Chopra, S. and Sodhi, M.S. (2004), “Managing risk to avoid supply chain breakdown,” Sloan
Management Review
Dooley, K. (2001), “Organizational complexity, “International encyclopedia of business and
management. London: Thompson Learning
Greaver, Maurice F. (2008), “Strategic Outsourcing: A Structured Approach to Outsourcing
Decisions and Initiatives,” New York: Oxford University Press.
Simon, J.T. (2005), “Competitive Purchasing Policies under Price Volatility,” Advances in
Competitiveness Research.
Tan, A. (1999), "The use of information technology to enhance supply chain management,"
Production and Inventory Management Journal, Vol. 40 No.3
Van Hoek, R.I. (1999), "From reverse logistics to green supply chains," Supply Chain
Management, Vol. 4 No.3