Supply chain management is the active management of supply chain activities that aim at maximizing customer value and in achieving a sustainable competitive advantage. Supply chain management represents all the efforts or hard work that is put in place by the supply chain firms to effectively and efficiently run and develop the supply chain. The supply chain activities involve coverage of all activities from the product development, sourcing, production, logistics and information required to coordinate the activities. The most visible pieces of supply chain management that link organizations together are the physical flow and information flow. Physical flow entails transformation, movement, and storage of goods and materials while information flow provides a platform for the supply partners to coordinate their long-term plans and control day to day flow of goods and material.
In this essay, obstacles that might hinder the effectiveness of supply chain management will be discussed. The main obstacle will be emphasized, and ways to overcome the obstacles will be established. The issue of the security stock of the electrical power steering the Audi A6 in the automotive industry will be the obstacle that the supply chain management needs to overcome. The Audi group, which comprises two brands of Audis and Lamborghini, is one of the worlds leading carmakers in the premium and the segment (Happian-Smith, 2001). The companys Audi branch delights the customers due to their outstanding modern design, technological innovation, and builds high capacity.
The Audi Company works towards achieving the supply chain management activity that in some of the activities, its satisfactory is beyond a reasonable doubt. They delight customers worldwide due to their diligence, responsibility, and innovation creation. However, there is another obstacle that the Audi needs to look into so there can be efficient and successful supply chain management in their firm. Stock insecurity issue faces the company of Audi and solutions should be brought forth to avoid the collapse of the Audi A6. The Audi company has done an excellent job in coming up with great models over the years that captivated peoples attention and in turn it sales in the market went up at a great rate.
Their innovative and high-quality vehicles have been smooth in the supply chain management. In the progressive years, they have shown considerable growth in giving the customers worth brands. In the year 2011, there was a brand of Audi Q3, A4, A5, A7, A8, and A1. However, the introduction of Audi A6 captured everyone as it won the best reward of the year in the model production category (Bailes, Frommelt & Stockholms, 2004). The jury voted it, and it won three trophies. The Audi group is not only the leading premium brand but also regarded well due to its qualified and committed employees. It offers a better dynamic working environment for its employee and provides an attractive opportunity for development, good pay, and high job security.
Regarding investment, the Audi group has been the most profitable company in the automotive industry. The overall return on investment from 2011 to 2012 was 24.7 % and 35.4% respectively (Dun & Bradstreet Corporation, 1999). The results show that Audi Company was doing well regarding investment. Up to that level, Audi was controlling its supply chains in the supply chain management where the customer delight was far much spectacular, its information flow and the natural flow was also catered for in an upstanding manner due to the prevalence of well qualified and innovative employees.
Audi shares started trading in 2011 whereby the trend was just flat meaning that there was no profits or loss. Due to the Japans natural and nuclear disaster, Audis shares could not be able to resist the pattern of dramatic losses on the stock market worldwide (Cecil, 2011). Due to uncertainty in the financial market worldwide, the shares of the Audi will never be stable since stock security is undefined. The financial crisis brought about by the unresolved debts between the Europe and the USA made the trade price to decrease thus the shares that were recorded at that time were below the previous records. The shares dropped from EUR 550 to EUR 542.05 (Cardone, 2011). The greatest obstacle to successful chain management is the stock security since there isnt a one hundred percentage guarantee of a steady stock market increase. The global financial crises keep on reoccurring causing the rise and fall of the stock curve.
The company can have impressive innovative and high-quality products with great expertise like that which is portrayed by the Audi group. They have come up with automobile brands that have got sophisticated technologies, but the main agenda remain to mobilize the stock market that includes the companys shares from depreciating and losing its value. When the stock market of the Audi goes down, stake shareholders will pull out, and investments will go down thus the company might be at a risk of going bankrupt.
Supply chain management can never be successful if there is stock insecurity that is brought forth by many factors. Stock security in the Audi A6 can face challenges due to competition from other global automotive industries. An example of it is the emerging markets in China which have gained popularity and significance. Their shares in the vehicles todays is great as it amount to 35% of the global light vehicles sales and is expected to rise (Simmons & Dalgleish, 2006). Regardless of the fact that Audi A6 is an excellent brand of a car automotive industry, competition from other great nations like China need not to be overlooked since they have got the technical know-how of designing new models that will pose a threat to other industries.
Stock security can hinder effective supply chain management due to high export ratio, especially to the high-end premium vehicle. A volume slowdown will have a global impact on the suppliers, and it cannot be compensated thus the company ends up incurring losses instead of making profits. Preference of the model features also might affect the stocks as the majority of the customers will opt to go for the fully featured models that yield above average margins. Due to this characteristic, Chinese premium customers will prefer the China model (O'Reilly, 2014). Stock market for the Audis will have a tough time in the market and thus reduction in the stocks shares. The results will mean that supply chain management will not be successful.
Requirements for doing business keep deviating over the years, and that means that the automotive industries should try to keep up with the speed, failure to which they can forget about their goals in the profit making trends. There is limited and fewer lessons learned and the market adaptation since financial crises keep happening in various ways. The industries recover from one crisis and try to rise while they are faced with yet another one. This gives them little time to learn and discover the sustainable measures that should be put in place so that they can become resilient to another crisis. The issue of disaster attack is unavoidable, and thus the stock level will keep fluctuating.
For supply chain management to be successful, the Audi company needs to do a lot of stockpiling so that they could control a situation where they have run out of stock and the customers are in need for purchase. The company needs to do a price forecast in the short term and long term prices for component material and the services that are mainly undertaken by the enterprise so that they can deliver their products and services to the customers. Variability and rapid escalation of prices in the market are also another key that can help make the management successful. Prices are always driven by the supply and demand as well as the strategic inputs like the technological capabilities, information sharing and operational streamlining. Price forecast, therefore, will help the Audi group to have sufficient and efficient business strategy for the Audi A6 sales to rise with the demand and supply chain. By so doing the security stock of the Audi A6 will be well developed and the supply chain activities managed to the latter.
There are common stocks piling strategy that can help in ensuring that the security is strengthened thus successful supply chain management. These strategies include aggressive buying and hedging. Forward hedging involves purchasing and buying more than what is required and keeping the material or commodity for use in the coming months or years. The strategy will provide confidence in the manufacturing and production of Audi A6 since the management will not have to worry about the rise of particular material when they are manufacturing the automotive vehicles (Machinery, 2002). That state will equip them with giving them an added advantage to produce more Audis and, therefore, meet the demand of the market. In cases where there are price fluctuations, they would have bought the materials needed security thus.
Stockpiling ensures that if the commodity lets say automotive vehicles prices rises in the stock market, the materials to manufacture the vehicle will increase too. If the company had bought the materials for a large amount, then their price will not need to shoot so much, and this will attract more buyers to the Audis A6 than any other brand. When demand for the commodity rises, the supply of that item rises too and leads to more profit for the firm.
The main agenda is selling right technological and innovative Audi A6 and in the addition that is the stronghold of every investor is to make a profit. Once the Audi group focuses on profit making, then the investments in the stock market for Audi A6 will be higher, and this development will cause the shares of Audi A6 to be more valuable and expensive. The end achievement that is sought by the management through supply chain activities is to achieve profit and earn more profitable investors who will raise the companys value. At the same time through the investments, acquiring of new techniques of service provision and satisfactory of the customer should be met. By doing so, they would have helped manage the obstacle in supply chain management through the stock security enhancement.
Use of Purchaser Managers Kit is important so that the company can be aware of the overall purchase spend and the percentage changes. It helps to find out whether investments increase or it decreases. Purchasing Managers Kit involves the records of all the purchases done on a monthly basis, and the total of the purchasing expenditure is taken. The analysts then compare the total purchase of the previous months with the current purchases. The numbers are then totaled, and the status for overall spending is ascertained to be the percentage change. The data is rated and then published on a scale of 1 to 100. Data that is found below 50% is indicated as the decreasing purchase spends, and the data that is obtained above 50% is considered as the increased purchase spends (Giermanski, 2013). Carrying a total of purchase spending percentage will help the automotive company to determine the overall health of the economy.
The purchase spending records will enhance effective supply chain management into establishing how the economies of other industries are trending alongside theirs (Culp, 2013). This will allow them to establish plans to manage competition from other newly emerging automotive vehicle industry. The strategies will include enforcement of physical and information flow that will enable efficient supply chain activities and security in the companys investments in shares and stocks.
For effective supply chain management, the company should...
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